What is a good interest rate for a car loan?

"Good" is relative to your credit tier. Buyers with super-prime scores (781+) consistently get the lowest rates, while subprime borrowers pay several times more. Compare your offer against the market average for your credit band.

How lenders set your rate

Auto lenders use risk-based pricing: the higher your perceived default risk, the higher your rate. The CFPB explains that lenders weigh your credit score and history, income, outstanding debts, loan amount, down payment, and whether the vehicle is new or used. Lenders are not required to offer their best rate — which is why shopping multiple lenders matters.

Rates rise sharply as scores fall

Super prime (781+): lowest rates, broadest lender choice.
Prime (661–780): competitive rates at most banks and credit unions.
Near prime (601–660): noticeably higher rates.
Subprime (501–600) and deep subprime (300–500): financing available but expensive; larger down payments help.

Rate vs. APR — what to compare

The interest rate is the annual cost of the loan balance. The APR (Annual Percentage Rate) includes the interest rate plus fees, making it a more complete comparison number. The CFPB recommends comparing APRs across lenders — not just monthly payments — because a lower payment can hide a longer term and higher total cost.

How to improve the rate you're offered

Raise your credit score before applying — even moving from near-prime to prime can cut several percentage points.
Increase your down payment to lower the loan-to-value ratio.
Choose a shorter loan term — lenders often price 48-month loans lower than 72-month loans.
Get pre-approvals from a bank or credit union before visiting a dealer.
Apply to multiple lenders within a short window — multiple auto loan inquiries within 14–45 days typically count as a single inquiry for scoring purposes.

Data points

Average auto-loan rates rise steadily as credit scores fall, from super-prime through deep-subprime tiers. — Experian — State of the Automotive Finance Market
The Federal Reserve tracks average finance rates on new car loans at commercial banks and finance companies through its G.19 Consumer Credit release. — Federal Reserve — G.19 Consumer Credit
Lenders are not required to offer you the best rates; the CFPB recommends shopping among banks, credit unions, and dealers before committing. — CFPB

Key takeaways

Your credit score is the single biggest lever on your rate — improving it before you shop pays off.
Compare APR across lenders, not just the monthly payment.
Shorter terms often carry lower rates and save on total interest.
Multiple auto-loan inquiries within ~45 days typically count as one inquiry for credit-scoring purposes.