Used vs. New Car Loan Rates: Why a Used Car Usually Costs
Lenders charge more to finance a used car because it is worth less and depreciates faster — a riskier collateral. The rate gap often offsets part of the purchase savings, but not all of it.
Key takeaways
- Used-car APRs typically run 1–4 points higher than new-car rates.
- The car is riskier collateral: lower value, faster depreciation.
- Certified pre-owned often gets rates between new and used.
- A used car still usually wins on total cost despite the rate gap.
Why the gap exists
A new car is predictable collateral with a known price and slower early depreciation; a used car is worth less and loses value faster, so the lender's cushion is thinner. To compensate, they price used loans higher. The gap is typically 1–4 percentage points depending on the vehicle's age and your credit.
How the tiers roughly compare
| Credit tier | New APR (approx) | Used APR (approx) |
|---|---|---|
| Prime (661–780) | ~6–8% | ~8–11% |
| Nonprime (601–660) | ~9–11% | ~12–14% |
| Subprime (501–600) | ~13%+ | ~16%+ |
Where certified pre-owned fits
Certified pre-owned (CPO) vehicles are late-model, inspected used cars. Lenders often price CPO loans between new and ordinary used rates, making them a sweet spot for value and financing.
Does used still win overall?
Usually yes. Even with a higher rate, a used car's lower price and slower depreciation usually beat a new car's payment and interest combined — especially if you avoid the longest terms. Check the real numbers with our used car value tool and loan calculator.
What the rate gap costs over 60 months
| Amount financed | New APR | Used APR | Extra interest over 60 mo |
|---|---|---|---|
| $20,000 | 6.5% | 10.5% | about $1,080 |
| $30,000 | 6.5% | 10.5% | about $1,620 |
| $40,000 | 6.5% | 10.5% | about $2,160 |
How much the gap really offsets
The extra interest on a used loan is real but usually far smaller than the purchase-price saving. A used car that is $8,000 cheaper upfront still wins even after $1,000–$2,000 of extra interest — unless you are financing 100% with the longest term. The bigger risk is stretching the term, not the rate gap itself. See credit-score auto loan rate tiers to see where your score lands.
Frequently asked questions
How much extra interest does a used car loan cost?
Why are used car loan rates higher?
Are CPO loans cheaper than regular used?
Is a used car still cheaper overall?
Should I finance a very old used car?
Primary sources
The figures in this guide are compiled from primary public sources, including:
- Consumer Financial Protection Bureau(retrieved 2026-10-01)
- Federal Reserve(retrieved 2026-10-01)
Calculate monthly auto loan payments, total interest, and total cost of your new or used car loan. Factor in trade-in value, down payment, and sales tax for accurate 2026 estimates.
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