If you’re a dealer trying to help a customer obtain a loan at a less-than-astronomical rate, there’s a straightforward way for a consumer to boost their chances of getting a better rate: improve their credit score.
While that path may not be open to all, the good news is that credit is generally available to even to subprime borrowers, but it will cost them.
“It is highly likely that, with sales slowing, consumers will benefit from attractive financing offers for the rest of the summer, but the catch is that those offers are typically only available to well-qualified buyers,” says Jonathan Smoke, chief economist with Cox Automotive, in a recent piece.
To be sure, zero percent financing offers are appearing again. Nearly 7%t of consumers financing a new vehicle purchase at a dealer in July locked in zero percent financing, Smoke says.
But those are only available to the most qualified buyers, Andy Mayers, lender solutions strategist for Cox Automotive, tells Wards Auto.
Many gradients and variances occur in loan rates for individual customers, but for the most part, average auto loan rates have gone up, he says.
“Affordability is still the number one challenge that our lenders and consumers and dealers face with vehicles these days,” Mayers says.
Dramatic Variations
Average loan rates have improved “modestly” over the past two months, Smoke notes.
But Cox has seen little movement in loan rates over the past two years, regardless of the credit tier, Mayers says. For example, the average new auto loan rate was 9.01% in June of 2023 and 9.33% in June of 2025.
Variations among credit tiers are dramatic. According to Experian data, in the first quarter of 2025, the average new car loan rate for a deep subprime borrower was 15.19%. A super prime borrower could get a loan for 5.03%.
In the first quarter of 2023, the average subprime rate was 14.41% and the super prime rate was 5.19%, according to Experian.
On Cox Auto’s Dealertrack, an auto loan credit application processing platform, a quarter of applicants fall into the subprime category, Mayers says. Some 25% are prime or super prime.
Loans Available…For a Price
As Mayers points out, affordability is still the number one challenge faced by lenders and buyers. And vehicles are getting more expensive. In June, the new vehicle Average Transaction Price was $48,907, 0.4% higher than in May, according to Kelley Blue Book.
The good news is that – whatever a consumer’s credit tier – lenders are finding ways to finance a purchase and still make their required margin, Mayers says. Even subprime borrowers can get credit, he says, but “it is expensive.”
Dealers will be able to keep moving the metal, though for some consumers borrowing costs will remain high.
“Our industry is very resilient,” Mayers says, “and they figure out a way to make it work when it comes to financing and things like that. Both the lenders and the dealers.”
