States Where Auto Loan Interest Rates Are Increasing the Most

Americans now carry nearly $1.7 trillion in auto loan debt, averaging nearly $14,000 per household. On average, interest rates for new car loans exceed 8% at commercial banks and 6% with other finance companies.

Auto loan rates aren’t rising evenly across the country. To identify where borrowers are feeling the pinch the most, WalletHub analyzed proprietary data from Q1 to Q2 2025 to rank the 50 states by how significantly auto loan interest rates increased.

Although auto loan interest rates remained elevated in Q2 2025, the Federal Reserve cut interest rates for the first time since December 2024 near the end of the third quarter, suggesting that auto loan rates could ease somewhat in the near future.

“Auto loans are unfortunately a necessity for many Americans, but there are plenty of good ways to decrease the amount of interest you’ll need to pay. For example, you can compare multiple loan offers, and buy a used vehicle or make a large down payment. Prior to buying a car, you should also practice good financial behavior with other types of credit, like credit cards, as better credit scores lead to lower interest rates. Finally, you can always refinance your car loan in the future to lower your interest rate.”

Chip Lupo, WalletHub Analyst

Main Findings

States Where Auto Loan Interest Rates Are Increasing the Most

Note: *No. 1 = Largest Increase

In-Depth Look at the States With the Biggest Increases

Wyoming

Residents of Wyoming saw the biggest increase in auto loan interest rates from Q1 2025 to Q2 2025, with the average rising by around 2.3%. That brought the average interest rate overall to around 9.5%.

The good news is that even with the large increase, Wyoming residents pay much less on their auto loans than people in many other states. In fact, their average interest rate in Q2 2025 was the 13th-lowest in the nation.

Wyomingites have been borrowing less to buy vehicles with the state ranking first among the states where auto loan debt is decreasing the most. Yet, even as interest rates climb, Wyoming still holds the third-smallest increase in auto loan delinquency rate, showing that borrowers are keeping their finances in check.

Vermont

Vermont residents experienced the second-biggest increase in auto loan interest rates from Q1 2025 to Q2 2025. The average interest rate rose by around 2.1%, reaching over 8.7%. Luckily for Vermonters, that’s still the second-lowest interest rate in the country.

While rates have gone up, Vermont residents haven’t cut back on borrowing as much as those in other states. In fact, Vermont ranks last in the nation, with the smallest decrease in auto loan debt. Fortunately, though, Vermont has the seventh-smallest increase in auto loan delinquency rate. Even with interest rates rising, residents appear to be managing their payments better than most states.

Washington

Washington residents had to deal with the third-biggest increase in auto loan interest rates from Q1 2025 to Q2 2025, at roughly 2%. As a result, the average interest rate rose to around 9.5%. But the good news is that it’s still the 12th-lowest in the country. For more context, the highest interest rate for any state is about 12.8%, and the lowest is around 8.4%.

Washington ranks 23rd among states with the largest decrease in auto loan debt. Even with this moderate reduction, rising interest rates mean borrowers may still see higher interest payments. That’s concerning when Washington already has the seventh-highest auto loan delinquency in the nation.

Methodology

To determine the states where auto loan interest rates are increasing the most, we analyzed WalletHub’s proprietary user data on auto loan interest rates from Q1 2025 to Q2 2025.

 
Sources: Data used to create this ranking were collected from WalletHub database.

Supporting Video Files:

• YouTube (for web embedding)
• Raw video files (for editing into clips)