When Will Auto Loan Rates Go Down?

Auto Loan Rates Are Uncertain This Year

Auto loan rates will continue to be difficult to predict this year, according to industry experts.

Some experts suggest a cautious outlook and note that consumers should expect rates to remain about the same this year. Inflation remains above the Federal Reserve's target, which suggests a substantial federal funds rate cut won't be on the immediate horizon. What's more, variables such as tariffs and conflict in the Middle East drive more economic uncertainty.

Rate predictions are based on current economic data and trends, and may change as new information comes in over the year.

Car Prices Are Rising

New car prices lingered near all-time highs throughout the beginning of 2026, though they're still slightly less than at their peak in 2023. Used car prices are significantly lower than their peak in 2022.

According to Experian data, the average car payment was $767 for a new car loan and $537 for a used car loan as of Q4 2025. If you're thinking about buying a car, using a car payment calculator can help you get a sense of how much you can afford to spend on an auto loan.

Car payment calculator

Should You Buy a Car in 2026?

The decision to buy a car depends on several factors, including vehicle prices and interest rates. Other things to keep in mind include:

• Transportation needs: If there are no major problems with your current vehicle, you may have the flexibility to wait until interest rates go down. That said, if your car is unreliable or requires excessive repairs, it may make more sense to buy a new one.
• Budget: Even with relatively high interest rates and car prices, it could make sense to buy a car if the decision results in a more affordable payment. However, if buying increases your total expenses, it may be better to hold off on the decision.
• Savings: A larger down payment can help mitigate the impact of high interest rates and vehicle prices. Just make sure you don't drain your savings account; otherwise, you may not have enough cash to weather potential financial emergencies.
• Credit score: The best interest rates are reserved for borrowers with good or excellent credit. Get free access to your Experian credit report and FICO^® Score^Θ to evaluate your creditworthiness. If your score needs some work, take steps to improve your credit before you apply for an auto loan.

Take your time to evaluate these and other factors that are important to you to determine the right time to buy a car.

Learn more: Should You Buy a Car This Year?

The Bottom Line

Ongoing inflation and economic uncertainties have led experts to take a conservative stance about rate cuts in 2026. But rates are just one thing to factor in when weighing the pros and cons of buying a car.

Before you decide to buy a car, take some time to consider interest rates, car prices, your credit score and other factors to determine if the timing is right. Also, be sure to practice good credit habits to build and maintain a good credit score and continue to monitor your credit to track your progress.