What is a good interest rate for a car loan?

For 2026: excellent credit (750+) gets 5-6% on new cars, 6-8% on used. Good credit (700-749): 6-8% new, 8-10% used. Below 650: expect 10-15%+.

Is a 72-month car loan a good idea?

Generally no. Longer loans mean lower payments but more interest and higher risk of being upside-down. Keep it to 48-60 months maximum.

Should I buy or lease a car?

Buy if you drive 12,000+ miles/year, want to own long-term, or hate mileage restrictions. Lease if you want lower monthly payments and a new car every 3 years.

Auto Loan Calculator

Estimate your monthly car payment, total interest, and total cost. See how down payment and loan term affect your bottom line.

How Auto Loans Work

An auto loan is a secured loan where the car serves as collateral. You make monthly payments (principal + interest) over a set term (usually 36-72 months). The lender holds the title until you pay it off. Default, and they can repossess the car.

Your interest rate depends heavily on your credit score. The difference between "fair" and "excellent" credit can mean paying $2,000-5,000 more in interest on the same car.

Current Auto Loan Rates (2026)

Excellent credit (750+): 5-6% new, 6-8% used
Good credit (700-749): 6-8% new, 8-10% used
Fair credit (650-699): 8-12% new, 10-14% used
Poor credit (below 650): 12-18%+ (consider a co-signer)

Always shop around — dealer financing is often 1-3% higher than bank or credit union rates. Get pre-approved before visiting the dealer.

How Down Payment Affects Your Loan

A bigger down payment means a smaller loan, lower monthly payments, and less interest. It also prevents being upside-down (owing more than the car is worth, which happens the moment you drive off the lot). Aim for at least 20% down on new cars, 10% on used.

Why Shorter Loans Are Better

72-month loans look attractive because of lower payments. But on a $30,000 car at 6.5%: 60 months = $587/month and $5,200 in interest. 72 months = $502/month but $6,100 in interest. You pay $900 more for the privilege of paying longer — and you're upside-down longer too. Keep your loan to 48-60 months.

Related Tools

Loan Calculator — general loan payments
Budget Calculator — see if the payment fits
50/30/20 Budget Guide

Frequently Asked Questions

What is a good car loan interest rate? ▼

For 2026: excellent credit (750+) gets 5-6% new, 6-8% used. Good credit: 6-8% new, 8-10% used. Always get pre-approved at a bank or credit union before going to the dealer.

How much should I put down? ▼

20% on new cars, 10% on used. This prevents being upside-down and significantly lowers your monthly payment and total interest.

Is a 72-month loan a good idea? ▼

Generally no. Lower payments but more total interest and longer period of being upside-down. Stick to 48-60 months maximum.

Buy or lease? ▼

Buy if you drive a lot or want long-term value. Lease for lower payments and a new car every 3 years. Leasing costs more long-term but less monthly.

Written by: David Chen | Reviewed for accuracy by: the Wealth Growth editorial team | Last updated: June 2026

Sources: Bankrate, Edmunds, Kelley Blue Book

This content is for educational purposes only and is not financial advice. Financial Disclaimer.