What Is the Highest APR on a Car Loan?

Q: Is 20% APR high for a car loan?

Yes, an APR of 20% is high for a car loan. The average interest rate for an auto loan is 6.35% for new cars and 11.62% for used cars. For those with poor credit, the average rate is 15.75% for new cars.

Q: What is a good interest rate for a 72-month car loan?

The average interest rate for a 72-month car loan is 6.86% for new cars and 12.8% for used cars. A good interest rate would be the average rate or lower.

Q: What APR will I get with a 750 credit score?

A score of 750 is considered a good credit score. It puts you in the prime lending category where the average interest rate is 6.40% for new cars and 9.95% for used cars, according to Experian.

Austin KilhamUpdated June 25, 2025

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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.

The average APR (annual percentage rate) on an auto loan for a new car is 6.35%, according to Experian’s State of the Automotive Finance Market report. But interest rates, as well as the highest APR for a car loan, can range significantly depending on the lender, your credit history, and where you live. Lenders consider a number of factors when determining how much interest to charge, including a borrower’s current employment, income, and credit history. If they view these factors favorably, they might offer you lower rates. If not, they could charge you more, possibly even the highest interest rate for a car loan. So, what is the highest interest rate on a car? Here’s what you need to know about the highest APR for a car loan and how to increase your chances at securing a lower rate.

Car Loan APR: A Quick Refresher

The APR on a car loan represents the interest on the loan plus the fees the lender charges to process and issue the loan. Interest is the amount you pay the lender to borrow money. How car loan interest rates work is that the lender may set their interest rate based on the prime rate (the base rate lenders use to set interest rates for loans), your credit history, and your financial standing. APR includes the interest rate and any fees for the loan, making it a more accurate representation of the cost of the loan. The APR will usually be higher than the interest rate. The federal Truth in Lending Act requires lenders to disclose the APR on a loan along with interest rates. Recommended: 10 Types of Car Loans

What Is the Highest Interest Rate for a Car Loan?

The highest interest rate for a car loan is upwards of 20%. For deep subprime borrowers, for example, the average rate on a used car is 21.81%. However, the highest car interest rate limits may vary by state. State laws, called usury laws, are meant to keep lenders from charging exorbitant rates, but there are loopholes in some of these laws. For instance, usury laws may apply to some types of lenders in certain states, but not others. It’s best to research the usury laws in your state so you know the maximum APR you can receive on an auto loan.

Factors That Influence Your Auto Loan APR

Several factors can influence the APR on your auto loan. Your credit score is a significant determinant, as lenders use it to assess your creditworthiness. A higher credit score typically results in a lower APR. Other factors that influence the APR your receive on your auto loan include:

Type of vehicle: New vehicles often have better rates than used ones.
Loan term: Longer terms may have higher APRs.
Down payment: Larger down payments can lower the APR.
Market conditions: Economic factors can affect interest rates.
Lender policies: Different lenders have varying APR structures.

Recommended: What Is the Average Car Loan Length?

Average APR by Credit Score

As mentioned above, your credit score has the most significant impact on the APR you receive. Here’s a look at average car loan APRs based on credit score, according to Experian.

Credit Score	New Car APR	Used Car APR
781+	4.77%	7.67%
661-780	6.40%	9.95%
601-660	9.59%	14.46%
501-600	13.08%	19.38%
300-500	15.75%	21.81%

Alternatives to High APR Loans

If the car loan you’re offered has an extremely high APR, you may decide that it’s too expensive to accept, but that doesn’t mean that you’re out of options. Here are two alternatives to consider instead.

Using a Cosigner

A cosigner on an auto loan is someone who agrees to make car loan payments on your behalf if you’re unable to do so. A cosigner is typically a family member or close friend who has a stronger credit history than you do. Your lender will consider the cosigner’s credit history when you apply for the loan, which may help you qualify for a loan with a lower APR. You can use a cosigner if you’re taking out a new auto loan or refinancing a car loan.A cosigner does not have any legal claim to the car. However, their credit score can be damaged if you miss payments or make late payments.

Wait and Build Your Credit Score

You could also put the car loan on pause for a bit and work on improving your financial situation before you apply. This could help you get a lower APR on a car loan. The best way to strengthen your credit score is to pay your bills on time and in full. You may also build your credit by paying down outstanding debts. It’s wise to check your credit report to make sure there are no errors that could be impacting your score. You can receive a free credit report from each of the three major credit reporting bureaus — TransUnion®, Equifax®, and Experian® — or from AnnualCreditReport.com. If you spot any mistakes on the report, alert the credit bureaus immediately about correcting the errors.

The Takeaway

While the average car loan interest rate is 6.35% for new cars, the maximum APR you might end up paying could be much higher. To protect yourself, learn as much as you can about your state’s usury laws, and do what you can to build your credit score to help you get the best rate you can.Finally, if you already have a car loan with a high APR, you may be able to refinance the loan. When you refinance a car, you take out a new loan — ideally, one with a lower interest rate or better terms — and pay off your old loan. If you’re looking to refinance, Lantern by SoFi can help simplify the process by letting you compare loan offers from multiple lenders all at once. This can make it quick and convenient to find the best car loan option for you.Find and compare auto refinancing rates today with Lantern.

Frequently Asked Questions

Is 20% APR high for a car loan?

What is a good interest rate for a 72-month car loan?

What APR will I get with a 750 credit score?

Photo credit: iStock/ADragan

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About the Author

Austin Kilham

Austin Kilham is a writer and journalist based in Los Angeles. He focuses on personal finance, retirement, business, and health care with an eye toward helping others understand complex topics.

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