Auto loans for new vs used cars: what changes and how to shop
Loans for new and used cars work the same way, but lenders often price them differently, and used-car loans can carry higher rates. Whichever you buy, the CFPB's advice is the same: set your budget, get pre-approved by a bank or credit union before visiting the dealer, negotiate the car's price separately from financing, and compare offers by APR and total cost, not just the monthly payment.
Latest national averages for new-car loans
National averages, not an offer Benchmarks for education only. Your rate depends on your credit, down payment, loan type, term and lender. All rates, history and methodology.
New vs used: what's different
- Rates. Lenders set rates by vehicle age, mileage, loan term, your credit and the loan-to-value ratio. Ask each lender for both new and used quotes if you're undecided.
- Manufacturer financing. New cars sometimes come with promotional rates from the automaker's finance company. These can require top credit or mean giving up a cash rebate, so compare both.
- Depreciation. New cars lose value quickly at first, which raises the risk of negative equity with a small down payment or long term.
- Used-car protections. Dealers must post the FTC Buyers Guide on used cars, showing whether a car is sold "as is" or with a warranty.
The CFPB's shopping steps
- Know your budget and your credit before you shop.
- Get pre-approved by a bank, credit union or online lender. The CFPB says you're not required to finance through the dealer, and a pre-approval gives you a benchmark.
- Negotiate the vehicle price first, separately from financing and trade-in.
- Ask the dealer whether it can beat your pre-approval. Dealer-arranged rates can include a markup (see dealer vs bank financing).
- Review every line of the contract. Optional add-ons must be optional; see our negotiation guide.
Estimate payments with our auto loan calculator.
Frequently asked questions
Are used car loan rates higher than new?
Often, but not always. Lenders price loans by vehicle age, mileage, loan term and your credit. Get quotes for both.
Should I get pre-approved before going to the dealership?
The CFPB recommends it. A pre-approval tells you what rate you qualify for and gives you leverage when the dealer offers financing.
Do I have to finance through the dealer?
No. The CFPB says you can get financing from a bank, credit union or other lender instead.
What does the Federal Reserve auto loan rate mean?
It is the average rate on new-car loans at commercial banks reported in the Fed's G.19 release, a national benchmark, not an offer.
Sources
- CFPB: Auto loans (accessed October 29, 2026)
- CFPB: Take control of your auto loan (PDF) (accessed October 29, 2026)
- CFPB: Am I required to get my auto loan through a dealership? (accessed October 29, 2026)
- CFPB: What should I know before I shop for a car or auto loan? (accessed October 29, 2026)
- FTC: Buying a used car from a dealer (accessed October 29, 2026)
- FTC: Financing or leasing a car (accessed October 29, 2026)
- Federal Reserve: G.19 Consumer Credit (accessed October 29, 2026)