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In 2025, good auto loan rates range from 5–7% APR for new cars with excellent credit (750+). Used car rates run 1–3% higher. Rates above 14% are considered high — if your rate is over 15%, consider improving your credit score or making a larger down payment before buying.

Financial experts recommend at least 20% down on a new car and 10% on a used car. A larger down payment reduces your monthly payment, lowers total interest paid, and prevents being 'underwater' (owing more than the car is worth). If you can't afford 20%, consider a cheaper vehicle.

Shorter terms (36–48 months) cost less in total interest but have higher monthly payments. Longer terms (72–84 months) reduce your monthly payment but you'll pay thousands more in interest and risk negative equity since cars depreciate faster than you pay down the loan. Avoid 84-month loans unless absolutely necessary.

In most U.S. states, sales tax is calculated on the purchase price minus the trade-in value. For example, if you buy a $35,000 car and trade in a vehicle worth $10,000, tax is calculated on $25,000. Some states (e.g., California, Hawaii) tax the full purchase price regardless of trade-in. Always check your state's rules.

Banks and credit unions typically offer lower rates than dealer financing (which includes a markup). However, dealers occasionally offer manufacturer-sponsored 0% APR promotions that beat any bank rate. Best strategy: get pre-approved by your bank first, then compare with the dealer's offer — and negotiate on price separate from financing.