Auto Loan Interest Rates Rose Following Treasury Yields
Higher borrowing costs are affecting families financing new and used vehicle purchases this year.
Updated on Sept. 24, 2026 in Buying/Selling
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Auto loan interest rates have climbed as Treasury yields reached their highest levels in two decades. These increases follow a recent hike in the federal funds rate and broader shifts in the national economic landscape.
Why it matters
Rising interest rates directly increase the monthly cost of vehicle ownership for families. Stronger-than-anticipated economic data prompted these shifts, raising costs for those planning a car purchase.
Average loan rates reached 6.35% for new vehicles and 11.2% for used cars during the second quarter of 2026. The 30-year Treasury bond yield hit 5.446% as of September 24, 2026.
The players
Federal Reserve
The central banking system of the United States that manages the nation's monetary policy and sets target ranges for the federal funds rate.
The details
Auto loan interest rates move in correlation with five-year and 10-year Treasury note yields, which serve as a benchmark for consumer lending. Lenders evaluate individual credit history and scores to determine the final interest rate offered to a borrower. Because of recent federal fund rate adjustments and inflationary pressures, these borrowing costs have trended upward over the last two months.
Timeline
The 30-year Treasury bond yield hit 5.446% on September 24, 2026.
The Federal Reserve increased the federal funds rate in September 2026.
New and used vehicle loan interest rates were recorded for Q2 2026.
The Home Front
Current Treasury yields have returned to levels not seen since 2004 for 30-year bonds and 2006 for 10-year notes. This environment marks a significant shift in borrowing costs compared to recent years for American households.
Review your credit report for accuracy before seeking a new auto loan to ensure you secure the most competitive rate available. Because borrowing costs are rising, calculate the total interest expense over the life of a loan to understand how it impacts your household budget.
The takeaway
Rising yields mean that auto financing is becoming more expensive for the average consumer. Prioritize understanding your total loan cost before signing any agreements at the dealership.
Further reading
For more on managing vehicle affordability in a changing market, see our Buying/Selling guide.
Source note: This article includes information reported by CNBC.
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