Rising Treasury Yields May Make Car Loans Cost More

Car buyers may soon pay more to borrow money as US Treasury yields continue to rise. Experts say higher yields can push auto loan rates higher.

The five year and 10 year Treasury yields are important for many car loans. Both have moved higher in recent weeks. The 30 year Treasury yield also reached a level not seen since 2004.

Auto loan rates have already started to rise. Rates for new cars increased by about 0.20 percentage points over the past two months. Used car rates rose by about 0.10 percentage points during the same time.

Still, average car loan rates are lower than they were one year ago. In the second quarter of 2026, the average rate for a new car loan was 6.35%. The average rate for a used-car loan was about 11.2%.

A higher rate can make a big difference over time. For example, a $43,000 car loan for six years at 6.35% would have a monthly payment of about $720. Total interest would be about $8,823.

At 8.35%, the monthly payment would rise to about $761. Total interest would reach about $11,814. That is almost $3,000 more in interest.

Credit scores also play an important role. People with stronger credit may qualify for lower rates. Used car loans also often have higher rates than new car loans.

Experts say shoppers should compare several lenders before buying a car. Banks and credit unions may offer different rates. Buyers can also check special rates from car companies.

Getting pre approved for a loan can also help. It gives buyers a rate to compare with the dealer's offer.

As Treasury yields rise, car buyers should look beyond the monthly payment. Checking the interest rate and total loan cost can help them understand what the car will really cost.