The interest rate on a car loan is determined by several factors, including your credit score, income, credit history, and the loans details. According to Experians State of the Automotive Finance Market report, the average auto loan interest rate for new cars in the first quarter of 2023 was 6.58%, while the average interest rate for used cars was 11.70% . However, the average auto loan interest rates across all credit profiles range from 5.07% to 14.18% for new cars and 7.09% to 21.38% for used cars. The interest rate you receive is based on your credit score, with higher credit scores generally resulting in lower interest rates. Here are the average car loan interest rates by credit score:

• Superprime (781-850): 5.07% for new cars, 7.09% for used cars
• Prime (661-780): 6.44% for new cars, 9.06% for used cars
• Nonprime (601-660): 8.99% for new cars, 13.49% for used cars
• Subprime (501-600): 11.72% for new cars, 17.93% for used cars

Its worth noting that when the Federal Reserve increases the federal funds rate, auto loan interest rates usually follow. The current Federal Reserve target interest rate is 5% to 5.25%, up from 2.25% to 2.50% in 2022. As a result, interest rates for the average auto loan have increased. If the Federal Reserve lowers interest rates in the coming months, the rates for auto loans are likely to drop as well.