In Focus – SCCCU Blog

Aside from buying a home or perhaps paying for a college education, buying a car will most likely be your most expensive purchase as an adult. The average monthly new car payment in early 2026 was $772, while the average used car payment was $537 (according to Edmunds and Experian). With that said, your car payment can be an enormous part of your monthly budget, which is why it’s so important to secure the best possible deal on an auto loan and ensure you aren’t paying more than necessary in interest.

What’s the best way to do that? And what’s the truth behind those “0% financing” deals you’ve seen? Here’s a rundown on how to find the best deal on an auto loan so you can drive off into the sunset with confidence.

Financing is Just as Critical as the Car 

Sometimes car shoppers get laser-focused on just shopping for a car that they overlook getting a great loan. While negotiating the price of your vehicle is important (especially in this market), financing rates can vary widely and make a significant difference in your monthly outlay.

Here’s an example: If you put $6,000 down on a $30,000 car purchase, with an interest rate of 9% and a loan term of 60 months, you’ll spend $498 every month over the course of five years. But if you can lock in an interest rate that’s 2 percentage points lower at 7%, your monthly expenses drop to $475, for a savings of $1,380 over the life of the loan. And at 5%? It’ll be $453 a month, for a total savings of $2,700.

What’s in a Loan Rate?

There are a number of factors that play a role in the interest rate you’ll pay — chief among them your credit score. According to the U.S. New and World Report, in March 2026, a great credit score (781-850) would net you an average rate of about 4.7% on a new car, 7.7% on a used car, and a good score (661-780) would mean an average 6.27% on a new car, 9.98% on a used one. Furthermore, a fair score (601-660) merited an average 8.9% on a new car, 13.3% on a used one, and a score under 600 meant you’d pay an average 9.57% on a new car, 14.49% on a used one. In general, used car loans carry higher rates because the car is more likely to fail, and the borrower may then be less likely to pay back the loan if they’re suddenly without a car to get to work.

Clearly, that’s reason enough to keep your credit score as high as possible. But credit score isn’t the only factor in the mix. Let's take a look:

• Your rate can also be adjusted based on your down payment. According to Edmunch (an automotive advice site), car buyers should aim to put down at least 20% to get the best rate.
• The length of your loan (the term) makes a difference — shorter translates into a lower rate because the risk to the lender is less when you have the money for a fewer number of years.
• The car's price can change during negotiations at the dealership.

Typically, you can use a car loan calculator to plug in these variables to see what your payment would be.

You Better Shop Around

Comparison shopping is critical to finding the best auto loan rate in your area. Credit unions across the country have some of the best auto loan rates — for used cars as well as new. After chatting with your credit union, you can search for the best rates across the country using rate comparison tools offered from sites like Bankrate and LendingTree (which will often include the minimum required credit score to secure an offer). Once you’ve done your homework, you’ll have several rates in hand and can compare them all to make sure you’re getting the best deal.

Take a look at the latest rates at SCCCU here.

What About Dealer Financing?

The only time dealer financing makes sense is if you can get a great deal. We’ve all seen advertisements offering 0% financing on a new vehicle. But how do they work, exactly? For starters, the repayment period for a 0% financing deal may be shorter than what you’re comfortable with. A 0% offer might require you to pay off the loan in 48 months rather than 60 or 72 months, which may push your monthly payments above what you can reasonably afford. And usually, the 0% offer doesn't apply to used cars (and sometimes the offer doesn't apply to all new cars on the lot).

Additionally, taking a 0% offer may eliminate the possibility of cash-back rebates or price reductions, and it may even make the dealer less likely to negotiate the sticker price. If you’re considering a 0% financing offer, you’ll need to put pen to paper and figure out how much you stand to save by negotiating vs. how much you'd save in interest with a 0% financing deal.