Frequently asked questions
What is a good car loan interest rate in 2026?
As of 2026, average auto loan rates are approximately 5–8% for new vehicles and 7–12% for used vehicles, depending on credit score. Excellent credit (750+) typically qualifies for rates under 5% for new cars. Credit unions often offer lower rates than banks or dealer financing. Always get pre-approved before visiting a dealership.
Should I choose a longer or shorter loan term?
A shorter term (36–48 months) means higher monthly payments but dramatically less total interest. A longer term (72–84 months) lowers monthly payments but you pay significantly more interest and are more likely to go "underwater" (owe more than the car is worth). The average new car loan in the US is 68 months — financial advisors generally recommend keeping it under 60.
What is a good down payment for a car?
A common recommendation is 20% down for new cars and 10% for used. This reduces your loan-to-value ratio, lowers monthly payments, and reduces the risk of being underwater. A larger down payment also typically means a lower interest rate, since lenders see less risk.