Used vs. New Car Loan Rates: Why a Used Car Usually Costs More to Finance
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 <a href="/calculators/used-car-value/">used car value tool</a> and <a href="/calculators/auto-loan/">loan calculator</a>.
Frequently asked questions
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?+
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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