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Car loan interest rates in the United States have decreased since mid-2024. Thus, the period of rapidly rising interest rates, when they increased from 3.85 percent in December 2021 to 7.89 percent in July 2024, has come to an end. As of May 2026, the interest rates stood at 6.97 percent. The Federal Reserve interest rate is one of the main causes of the interest rates of loans rising or falling. If inflation stays under control, the Federal Reserve will start cutting the interest rates, which would have the effect of the cost of car loans falling too.

How many cars have financing in the United States?

Car financing exists because not everyone who wants or needs a car can purchase it outright. A financial institution will then lend the money to the customer for purchasing the car, which must then be repaid with interest. Most new vehicles in the United States in 2025 were purchased using car loans. It is not as common to use car loans for purchasing used vehicles as for new ones, although over a third of used vehicles were purchased using loans.

The car industry in the United States

The car financing business is huge in the United States, due to the high sales of both new and used vehicles in the country. A lot of the United States is very car-centric, which means that, outside large cities, it can often be difficult to do their daily commutes through other transportation methods. In fact, only a small percentage of U.S. workers used public transport to go to work. That is one of the factors that has helped establish the importance of the automotive sector in North America. Nevertheless, there are still countries in Asia-Pacific, Africa, the Middle East, and Europe with higher car-ownership rates than the United States.