Auto Loan Rates Hold Near 7% as New Car Prices Near Record

The October car market in brief

Car buyers this October are dealing with high prices on almost every front. The average new vehicle sold for nearly a record amount last month. Wholesale used-car values rose again after a weak summer. A typical new-car loan still costs a little over 7%. The one real break is that credit is easy to get. Kelley Blue Book says buyers have not qualified for new-car loans this easily since April 2015, even as both new and used prices sit close to their highs.7 Put plainly, credit is available but it is not cheap, and cars are getting more expensive overall even though no single number has jumped.

The four costs that matter most to a buyer are interest, sticker price, used-car values and insurance. Each is covered below. Taken together, the data shows a market that is steady but expensive. It does not show a crisis or a recovery.

Auto loan rates: a small drop from a high level

Bankrate's weekly survey puts the average 60-month new-car loan at 7.14% as of mid-October.33 That is down slightly from 7.18% a week earlier. The same survey has 48-month new-car loans at 6.98%, 48-month used-car loans at 7.55% and 36-month used-car loans at 7.38%.33 These are very small weekly moves, and they do not point to a clear trend.

The averages hide a large gap between borrowers with different credit scores. In Bankrate's tiers, super-prime borrowers (scores of 781 to 850) average 4.55% on new cars and 6.30% on used cars. Deep-subprime borrowers pay about 16% on new and close to 22% on used.33 LendingTree's figures show the same pattern. Its averages run from about 5.3% for borrowers with excellent credit to 21.5% on new cars and 23% on used cars for those with poor credit.31 The two trackers measure differently and do not agree on exact numbers. They do agree on the main point: a buyer's credit score changes the cost of a loan more than any lender's advertised rate.

The best advertised rates are much lower than the averages, and most of them come from credit unions. Rate-tracking data as of October 19 shows new-car loans starting at 1.99% APR at Longshoremen's Local 4 FCU and at 2.00% at Cooperative Credit Union.32 PenFed advertises 3.39% on new cars bought through its TrueCar-powered buying service, or 4.19% without it.31 Navy Federal's published starting rate for new vehicles is 3.89%.40 Among large banks, Bank of America showed 4.94% for a 60-month new-car dealer loan as of early September, before relationship discounts.39 Capital One's starting rate is listed around 5.6% to 5.8%, depending on the source.3137

Those low rates come with conditions. Some require a direct-deposit arrangement or a checking account with the lender. Others raise the rate for older used vehicles or set a high minimum loan amount.3235 The gap of two to three percentage points between the best advertised rates and the Bankrate average mostly reflects how few borrowers actually qualify for the lowest rates. Our view: for a buyer with good credit, getting a pre-approval from a credit union before visiting the dealer is still the most reliable way to save money in this market.

New car prices: averages close to a record, discounts shrinking

Kelley Blue Book reports that the average new-vehicle transaction price rose for the fourth month in a row in September, reaching $50,562.9 That is about $50 below the December 2025 record.7 Prices have climbed steadily all year. They hit a 2026 high of $49,855 in July1, went above $50,000 for the first time this year in August at $50,0894, and then rose again.

Discounts have moved the other way. Incentives fell to 6.4% of the transaction price in July, the lowest level since January.1 They were 6.5% in August, compared with 7.2% a year earlier.6 KBB again put the September figure at about 6.5% of the average deal.7 In Cox Automotive's dealer sentiment survey, dealers said they feel less pressure to cut prices because inventories are under control.6 Electric vehicles show the same trend. EV incentives fell to 11% of the transaction price in September, the lowest level of the year, compared with 14.2% a year earlier.9

Cox's analysts consistently say the overall average understates how much prices are rising. Executive analyst Erin Keating said shoppers pay the price of a specific vehicle, not the industry average. She added that the average has risen only moderately because buyers are moving to cheaper segments.9 Segment data supports her. Compact car prices were up 3.2% year over year in September, faster than the overall market.9 KBB also notes that automakers offer 114 models priced at $60,000 or more this year, up from 61 in 2017. Dealers have been asking manufacturers for more mainstream vehicles.7 The industry is building more expensive cars while buyers try to spend less, and that gap is a structural problem.

In the near term, Cox has said prices usually rise in the second half of the year as next-model-year vehicles arrive.4 KBB says the average could set a new record in October or November.7 Buyers who are waiting for prices to fall before the end of the year will probably not see that happen.

Used car prices: firmer this month, but not because of demand

Used-car data from October is harder to read. Cox Automotive's Manheim Used Vehicle Value Index rose 0.7% in the first half of October to 207.4, and it is now 2.2% above last October.11 That followed a weak third quarter. September's index fell 1.1% to 205.9 and finished 0.6% below a year earlier, the first full-month annual decline of 2026.18 After that drop, Cox lowered its full-year forecast for the index from a 2% gain to about 0.2%.1517

Cox's Jonathan Gregory said the October gain does not show a market recovery. Unadjusted wholesale prices actually fell 2% in early October, which is normal for the month. Much of the year-over-year increase comes from comparing against an unusually weak October 2025.11 Gregory said the firmer prices came from tighter supply, not stronger buying. Wholesale supply fell from 28.7 days to 28.2 days, while dealer demand was roughly flat.1112

Sources describe used-car prices differently. KBB's consumer guidance says used prices have climbed back near their pandemic-era highs.7 Earlier in the year, KBB noted that first-half used prices reached a level not seen in more than three years.8 Cox's wholesale data shows only small gains and a lower forecast. These accounts can both be accurate. Retail prices were high entering the fall, and wholesale momentum has weakened since. As of August, the average used-vehicle listing price was $27,239, compared with more than $50,000 for new vehicles.15

Fuel prices are now driving demand across vehicle types. AAA put regular gasoline at $4.36 a gallon on October 7, nearly 40% higher than a year earlier.19 Values of non-EVs getting less than 15 mpg fell 15% during the third quarter.19 Compact-car values are up 5.6% year over year, and pickups remain weak.11 Used EVs are up 6.8% from a year ago, though they slipped 0.7% this month as more off-lease models came to market.11 For buyers, this means fuel-efficient used cars are holding their value and large trucks and SUVs are not. Shoppers who are willing to buy a less efficient vehicle have more room to negotiate.

Car insurance rates: trackers disagree

Insurance data varies more than any other cost covered here. Insurify reports that average full-coverage premiums rose 1% in the first half of 2026 to $2,237 a year, after falling 6% in 2025. It projects rates will rise in 32 states by year-end.21 Connecticut is expected to lead, with an increase of about 15%. Kentucky and West Virginia are each projected to rise about 8%.2124 Some of the most expensive markets, including New York, New Jersey and Washington, D.C., saw premiums fall at least 5% in the first half.21

Other trackers report different numbers. CNBC, citing The Zebra, reported an average of $1,162 for six months of coverage as of July, up 18% from a year earlier.22 NerdWallet found median premiums rose 32.3% between January 2023 and January 2026. The increase in the most recent year was only 2.6%, and most insurers have filed for no rate changes.25 A separate analysis put the 2026 increase at about 3%.23

Our reading: most of the data shows insurance costs leveling off after several years of steep increases. The Zebra's 18% figure stands apart from the others. Still, leveling off means prices are staying high, not falling. NerdWallet calculates that premiums have risen almost two and a half times as fast as personal income since 2023.25 Tariffs on imported parts could also push repair costs higher.2330

What it means for buyers

Adding these together gives a clearer picture of the total cost. A buyer pays a new-car price near $50,000, with discounts at their lowest level in months. They finance at around 7% unless their credit is strong enough to get a credit union's best rate. They then insure the car at roughly $2,200 or more a year in full-coverage premiums.93321 Easy loan approvals help more people buy, but the vehicles themselves are not getting cheaper.

The reports point to a few practical steps. Compare loan offers from credit unions and banks before going to the dealer. Get insurance quotes before signing. Consider fuel-efficient used cars, which are holding value, or less efficient models, which are losing it faster. KBB also suggests comparing late-model used cars with new ones, since some are now priced almost the same.7 The full October Manheim data comes out on November 6, and it will show whether this month's firmer used-car prices held up.11