When you decide to buy a car, understanding the car loan interest rate is one of the most important factors. The interest rate you get can make a big difference in how much you end up paying for your car over time. Whether you're looking at a new or used car, the interest rate will affect your monthly payments and the total amount you pay.

Firstly, let's define what a car loan interest rate is. This is the percentage of the loan amount that you pay to the lender as a fee for borrowing money. It's usually expressed as an annual percentage rate (APR). The car loan interest rate can vary based on several factors, including your credit score, the length of the loan, and whether the car is new or used.

For many buyers, the used car loan interest rate can be higher than that for new cars. This is because used cars are seen as riskier investments by lenders. They may have more wear and tear and could potentially break down, making them less valuable as collateral. Because of this risk, lenders often charge a higher interest rate on used car loans to protect themselves.