By MyAutoResource Editorial Team · Reviewed by Steven Sun · 6 min read · Updated July 27, 2026
- Used-car loans averaged 11.43% in the first quarter of 2026 against 6.39% for new cars, a gap of just over 5 percentage points.
- On an identical $24,000 loan over 72 months, the used-car rate adds $1,413 in interest at the top credit tier and $3,909 in the 601 to 660 range.
- A $32,000 new car at 9.67% produces $10,301 in interest. A $24,000 used car at 14.03% produces $11,634, more interest on the cheaper car.
- The gap widens as scores fall, so buyers who most need an affordable used car are charged the most to finance one.
In this article
– Why used-car money costs more – The rate gap in dollars, by credit tier – A worked comparison at one credit tier – How to shrink the gap before you sign – Frequently asked questions
Marcus Ellery walked onto a lot outside Dayton with a 638 credit score and two versions of the same compact SUV in mind. The new one was $32,000. A three-year-old example was $24,000. The used car saved him $8,000 on paper, which was the entire reason he was looking at it. Then he read both loan sheets side by side and found the cheaper car was scheduled to charge him $1,333 more in interest.
Why used-car money costs more
APR, or annual percentage rate, is the yearly cost of borrowing stated as a percentage. It decides how much of your payment goes to the lender instead of the car.
Used-car APRs run structurally higher than new-car APRs, and the spread is large. Experian’s quarterly data on average auto loan rates by credit score put the first-quarter 2026 average at 6.39% for new vehicles and 11.43% for used. The Federal Reserve’s G.19 consumer credit release reported the average 60-month new-car rate at commercial banks at 7.14% for May 2026.
Three things drive the premium.
The collateral is worth less and falls faster. If the lender repossesses and sells a six-year-old car, it recovers less than it would on a two-year-old one, and it prices that risk into your rate.
Used buyers default more often as a group. Lenders price the pool, not the person.
New cars get subsidized rates and used cars usually do not. Automakers own finance companies, called captive lenders, that buy down rates on new vehicles to move inventory. Ford Credit is one. Those promotional rates almost never reach an ordinary used car on a dealer lot.
The rate gap in dollars, by credit tier
The average gap is 5 points, but that average hides the part that matters to you. The spread is narrow for borrowers with the strongest credit and wide for everyone else.
The table below takes the same loan, $24,000 over 72 months, and prices it at each tier’s average new-car rate and average used-car rate. The final column is what the used-car rate adds in interest on that identical loan.
| Credit tier (VantageScore 4.0) | Average new APR | Average used APR | Gap | Added interest on a $24,000, 72-month loan |
|---|---|---|---|---|
| 781 and up (super prime) | 4.55% | 6.30% | 1.75 points | $1,413 |
| 661 to 780 (prime) | 6.23% | 8.77% | 2.54 points | $2,125 |
| 601 to 660 (near prime) | 9.67% | 14.03% | 4.36 points | $3,909 |
| 501 to 600 (subprime) | 13.44% | 19.42% | 5.98 points | $5,721 |
| 300 to 500 (deep subprime) | 16.01% | 21.77% | 5.76 points | $5,689 |
Read the first and last columns together. A borrower at 781 and up pays $1,413 extra to finance used. A borrower at 501 to 600 pays $5,721 extra on the same car, same loan. Nothing about the vehicle changed.
A worked comparison at one credit tier
Here is Marcus’s actual choice, run all the way out. Both loans run 72 months. Both use his tier’s average rate from the table above.
The new SUV: $32,000 financed at 9.67%. The payment is $588 a month. Total of payments is $42,301, of which $10,301 is interest.
The used SUV: $24,000 financed at 14.03%. The payment is $495 a month. Total of payments is $35,634, of which $11,634 is interest.
The used car is still cheaper. It costs $6,667 less in total and saves him $93 a month. But look at the $8,000 he thought he was saving. Only $6,667 survived. The rate consumed $1,333, about 17% of the discount, and the cheaper car produced more finance charges than the expensive one.
If you are weighing a new and a used version of the same model, do not compare sticker prices. That comparison favors the used car by more than it deserves. Ask each lender for the finance charge and the total of payments, which every auto loan agreement must disclose before you sign, and compare those instead. The Consumer Financial Protection Bureau’s auto loan guide shows where those figures sit on the contract. Our breakdown of how loan term changes total interest on a $30,000 loan shows the same effect from the term side.
How to shrink the gap before you sign
You cannot make the used-car market price money like the new-car market. You can close part of the gap.
Get preapproved at a bank or credit union before you shop. A preapproval gives you a real rate to hold the dealer’s offer against. Without one you cannot tell whether the rate on the sheet is the best the lender offered or a marked-up version of it.
Shorten the term instead of stretching it. A high rate hurts more the longer it runs. On Marcus’s $24,000 at 14.03%, moving from 72 months to 60 raises the payment about $63 and cuts thousands in interest.
Put more down on a used car than on a new one. A high rate makes every financed dollar more expensive, so dollars you keep out of the loan are worth more here.
Ask whether the vehicle qualifies for a certified pre-owned program, and whether that program carries a promotional rate. Certified pre-owned, or CPO, is a manufacturer-backed used-car program, and one of the few places a captive lender discounts a used rate. Sometimes the CPO price premium is smaller than the interest it saves.
Do your rate shopping inside about two weeks. Credit scoring models treat multiple auto loan inquiries in a short window as a single shopping event, so comparing four lenders does not cost you four times the score damage. Before you set the budget at all, read how much car loan your income actually supports.
Frequently asked questions
Why is my used car interest rate so much higher than the new-car rate I see advertised? Advertised new-car rates are usually promotional rates from the automaker’s own finance company, limited to top credit tiers. Used cars rarely get that subsidy, and lenders also price used loans for faster depreciation and higher default rates. That is why the average used APR was 11.43% against 6.39% for new in early 2026.
Does a shorter loan term lower my used-car rate, or just my total interest? Often both. Many lenders quote a lower rate on a 48 or 60 month term because their exposure ends sooner. Even at an identical rate, a shorter term cuts total interest sharply.
Is a certified pre-owned car worth the extra cost if it comes with a better rate? Sometimes, and it is arithmetic rather than a guess. Compare the CPO price premium against the interest saved at the lower rate over the full term. If a CPO version costs $900 more but drops your rate two points on a $24,000 loan, the rate usually wins.
How much does my credit score change the used-car penalty? A great deal. At 781 and above the used rate runs 1.75 points above the new rate. In the 501 to 600 range it runs 5.98 points higher, which is $5,721 in extra interest on a $24,000 loan over 72 months.
Should I buy new instead, since the rate is lower? Not on the rate alone. In Marcus’s comparison the used car still cost $6,667 less in total. The rate gap shrinks the advantage of buying used; it rarely erases it. Compare the total of payments on both contracts and let that number decide.
