The average rate on a new car loan climbed past 9% for the first time in years, and the used-car side isn't much kinder at roughly 14% for many borrowers.
That's not a headline you can shrug off if you're staring down a dying transmission or a lease that ends this fall.
Here's what those percentages actually cost you.
On a $35,000 new car with nothing down and a 60-month term, the difference between the 4% rates people bragged about in 2021 and today's 9% is around $5,000 in extra interest over the life of the loan.
Same car, same driveway, five grand that goes nowhere.
Used cars sting harder because the loans are smaller but the rates are bigger.
A $20,000 used car at 14% for 60 months runs about $8,000 in interest, which means you're paying nearly 40% of the car's price just for the privilege of borrowing.
Subprime borrowers see rates north of 20%, and at that point the loan can cost more than the depreciation.
The Federal Reserve pushed its benchmark rate up to fight inflation, and auto lenders price their loans off that foundation plus a risk premium.
When the Fed moves, dealership financing offices adjust within weeks.
The Fed has started cutting, but the drop is slow and lenders are keeping a healthy spread for themselves while delinquencies tick up.
So what do you do if you need a car this year?
First, get preapproved at a credit union before you set foot on a lot.
Credit unions routinely beat dealer financing by two or three points, and a preapproval letter turns the finance office from a negotiation into a comparison.
Second, shorten the term if you can survive the payment.
A 72-month loan at 9% is how people end up owing $18,000 on a car worth $11,000.
Third, put money down, even $2,000, because every dollar down is a dollar not accruing interest at double digits.
If you already have a loan, call your lender and ask about refinancing.
Rates on existing loans set two years ago are often high enough that a refi at today's terms still saves money, especially if your credit score has improved.
The Fed's path points toward gradually lower rates into next year, and every quarter you hold off is a quarter of interest you never pay.
The used market is also cooling as repo inventory rises, which pushes prices down independent of rates.
The uncomfortable truth is that the auto loan market punishes the people who can least afford it.
Borrowers with the best credit get the promo rates; everyone else funds the dealership's profit margin.
Final Thoughts
Until you're in that top tier, the smartest move is to treat financing as the real purchase and the car as the accessory.