:max_bytes(150000):strip_icc()/MHP-ChipHeadshot-2-d1d3928ade0f496abeb7411d3b2e1d4f.jpg)
:max_bytes(150000):strip_icc()/michael-logan-dfd2643b24ea4fba87ff5ed5c28bd969.jpg)
PenFed Credit Union is the best overall auto loan lender thanks to its wide selection of loan types and competitive rates, according to our research. It offers rates for used cars as low as 6.49%, and another one of our picks, OpenRoad Lending, offers rates as low as 1.99%. We reviewed 21 auto loan lenders and collected the best new, used, and refinance auto loan rates, evaluating APRs, loan types, loan terms, vehicle and borrower requirements, and other factors. We also surveyed 1,016 auto loan borrowers, asking how they felt about lenders and the loan process.
Compare Best Auto Loan Rates, Lenders, & Financing for May 2024 - Rates From 1.99%
- Best Overall: PenFed
- Best for Bad Credit/Low Rates: AUTOPAY
- Best Credit Union: Consumers Credit Union
- Best for Refinance: LendingTree
- Best for Fair Credit: LendingClub
- Best for Full Car Buying Experience: Carvana
- Best for High Maximum Accepted Mileage: OpenRoad Lending
Best Overall : PenFed
:fill(white):max_bytes(150000):strip_icc()/Pen-Fed-logo-f8c3ab7908564d66abcf5a6b19564ed9.jpeg){kind=logo}
- Used APR Range: 6.49%–17.99%
- Used Loan Amounts: $500–$150,000
- Minimum Recommended Credit Score: Not disclosed
Full suite of auto loan types available
Allows private-party vehicle purchases
Promotional offers if you use car-buying service
Must join credit union
Doesn’t allow co-signers
No rate discounts available
PenFed is our top pick overall for auto financing because it offers all of the loan types you’d ever hope to use, and offers competitive rates: loans for new or used cars, refinances, cash-out refinances, and even lease buyout loans. You can even use a used car loan to buy a car from a private seller, if you wish.
PenFed will mail you a check if you’re approved for any of its loans.
That can take a few days, but if you’re OK with using the TrueCar car-buying service, PenFed offers a pretty good relationship discount. Your loan could be funded the same day you’re approved, if you use this service.
PenFed's customer service is available by phone or secure online message. PenFed has been in business since 1935, and has headquarters in McLean, Virginia.
Read our full PenFed auto loans review.
- Used loan terms: 3–7 years
- Available in all 50 states and Washington, D.C.
- Must join the credit union by depositing at least $5 in a savings account.
- For loans less than seven years: No limit on vehicle age, and must have 125,000 miles or fewer
- For loans of seven years or more: Vehicle must be less than five years old and be under 60,000 miles
- Maximum loan-to-value ratio: 125%
- Allows private-party vehicle purchases: Yes
Best for Bad Credit/Low Rates : AUTOPAY
:fill(white):max_bytes(150000):strip_icc()/Autopay-ec4375470de24d2f8aca313b8f153804.jpg)
AutoPay
- Used APR Range: As low as 5.69%
- Used Loan Amounts: $2,500–$100,000
- Minimum Recommended Credit Score: 500
Relatively low rates
No payments for 45 days
Low minimum credit score requirement
Very sparse on loan details
Doesn’t disclose partner lenders
Can’t apply with a co-signer, only a co-borrower
AUTOPAY is a loan aggregator and it's a bit light on the details; maybe intentional in order to get you to bite. If you have excellent borrower qualifications, AUTOPAY certainly has the potential to be one of your cheapest financing options, advertising some of the best car loan rates today compared to other lenders and aggregators.
It's our top pick for bad credit because it works with borrowers with credit scores as low as 500; but it doesn’t specify the top end of the rate range you’d be likely to pay if you have poor credit, so you’ll need to be careful—especially since you can’t apply with a co-signer (only a co-borrower). But, if you do have good credit, you may enjoy some very good interest rates.
AUTOPAY does offer a full suite of auto loan types: used cars, new cars, refinances, cash-out refinances, and even lease buyout loans. It works with a network of partner lenders rather than offering the loans itself, and that’s how it can offer so much flexibility. For that reason, it’s a good choice to add to your shopping list, although we would prefer if it offered more concrete details.
AUTOPAY was founded in 2007, and is based in Denver, Colorado. You can get in touch with the company by phone or online message. Read more in our full AUTOPAY auto loans review.
The best auto loan rates are often advertised through third-party companies that network with partner lenders, like AUTOPAY. Most don’t disclose their partners, however, so you can’t always see all of the companies you’re actually checking your rates with. You may need to sign up for automatic payments to get the best rates, as well.
- Used loan terms: 2–8 years
- Recommened credit score of 500 or higher
- Available in all U.S. states and Washington, D.C.
- Maximum accepted vehicle age: 10 years
- Maximum accepted mileage: 150,000 miles
- Maximum loan-to-value ratio: Not disclosed
- Allows private-party vehicle purchases: Yes
Best Credit Union : Consumers Credit Union
:fill(white):max_bytes(150000):strip_icc()/Consumers_Credit-223ffc22f8644a9085928005b684f825.jpg)
Consumers Credit Union
- Used APR Range: As low as 6.84%
- Used Loan Amounts: $500–$350,000
- Minimum Recommended Credit Score: Not disclosed
Allows co-signers
No age or mileage restrictions
Offers a full suite of car loan options
Can only be used at a dealership
Must join credit union to receive loan
Lack of transparency about loan requirements
As our highest-rated credit union, Consumers Credit Union is a good choice for people who prefer to bank with these financial institutions. It’s also a good choice if you’re trying to buy an older car from a dealership because it’s one of the few lenders that doesn’t put any limits on your vehicle’s model year or mileage.
Consumers also offers an optional mechanical repair insurance plan through ForeverCar, which might be especially important if you are driving an older car.
Consumers doesn’t specify what sort of credit history you need to qualify for a loan (or any other qualifications, really), but it might be good to add this one to your shopping list if you have bad credit. The maximum rate you’ll pay for a refinance loan, for example, is about half of what some other lenders may charge. It also has a relatively low minimum loan amount.
Customer support is available by phone, email, or live online chat.
Consumers Credit Union was chartered in 1930, and has corporate headquarters in Round Lake Beach, Illinois.
- Used loan terms: 36–84 months
- Available to people living in all 50 states and Washington, D.C.
- Need to join Consumers Cooperative Association ($5 fee) and deposit $5 in a savings account to establish your membership, if approved for a loan
- Maximum accepted vehicle age: None
- Maximum accepted mileage: None
- Maximum loan-to-value ratio: 125%
- Allows private-party vehicle purchases: No
Best for Refinance : LendingTree
:fill(white):max_bytes(150000):strip_icc()/Lending_Tree-d0a3fa57948942248204c37c8ad26841.jpg)
LendingTree
- Refinance APR Range: As low as 5.99%
- Refinance Loan Amounts: Not disclosed
- Minimum Recommended Credit Score: Not disclosed
Potential for very low rates
Compare many refinance loan offers at once
No limits on age or mileage of vehicle
Can generate a lot of spam
Very low loan-to-value ratios
Doesn’t offer many details about its loans
LendingTree is another company that can help you quickly identify the best financing rates from among its network of lenders. It suffers from the same problems as other lender networks, however—namely, that it doesn’t tell you which lenders it’s checking your rates with, nor what the types of loans you might qualify for look like. You can also expect a lot of companies reaching out to you with spam, too.
Still, it’s a great option if you’re looking for a car loan refinance, advertising competitively low rates. You’ll just need to make sure you have plenty of equity in your vehicle since LendingTree lenders don’t offer loans with a loan-to-value ratio above 80%. That means underwater loans aren’t eligible for refinance.
You can contact LendingTree by phone, but if you used LendingTree to get a loan with a partner lender you'll likely need to contact that lender instead.
LendingTree was founded in 1996, and now has headquarters in Charlotte, North Carolina.
- Refinance loan terms: 36–72 months
- Available to residents of all 50 states and Washington, D.C.
- Maximum accepted vehicle age: None
- Maximum accepted mileage: None
- Maximum loan-to-value ratio: 80%
- Allows private-party vehicle purchases: Not disclosed
Best for Fair Credit : LendingClub
:fill(white):max_bytes(150000):strip_icc()/Lending_Club-51af42c5c7174fc1931ee8f86f263d15.jpg)
LendingClub
- Refinance APR Range: 4.99%–24.99%
- Refinance Loan Amounts: $4,000–$55,000
- Minimum Recommended Credit Score: 600
Minimum recommended credit score of 600
No loan fees
Can refinance with the same lender
Low rates for well-qualified borrowers
Doesn’t allow co-signers
Many residency and car restrictions
Doesn’t offer new or used auto loans
LendingClub, the former peer-to-peer lender, is now in the auto refinance business where it offers very good rates to borrowers with good credit. Borrowers with fair credit can be approved too—making it our top pick for this category, along with its high overall score as well—but if your credit is quite bad LendingTree may charge you a higher rate than most other lenders. On the bright side, LendingClub doesn’t charge any fees—origination fees, late fees, prepayment penalties, nothing.
LendingClub is one of a handful of lenders that allow you to refinance your current LendingClub loan with another LendingClub loan, if you happen to qualify. However, be aware that there are many loan limitations with this lender. It’s not available in many sparsely populated states, for example, and there are many makes and models of popular cars LendingClub won’t finance.
LendingClub was incorporated in 2007, and it's headquartered in San Francisco, California.
See more of the best auto loans for fair credit to explore your options.
- Refinance loan terms: 2–7 years
- 600 or higher recommended credit score
- Current auto loan must have been open for at least one month
- Current auto loan must have at least 24 months remaining
- Available to residents of all U.S. states except for: Alaska, District of Columbia, Hawaii, Maine, New Hampshire, North Dakota, Vermont, West Virginia, Wyoming
- You must be at least 18 years of age
- You must be a U.S. citizen or permanent resident or live in the U.S. on a valid long-term visa
- Maximum accepted vehicle age: 10 years
- Maximum accepted mileage: 120,000 miles
- Maximum loan-to-value ratio: Not disclosed
- Allows private-party vehicle purchases: No
In addition:
- The loan’s remaining balance must be between $5,000 and $55,000
- Can’t refinance business vehicles
- Vehicle must be registered in the same state you live
- Many cars not eligible for financing, such as Nissan Leafs and models from Suzuki, Saturn, Mercury, Saab, Pontiac, Oldsmobile, Hummer, and more
Best for Full Car Buying Experience : Carvana
:fill(white):max_bytes(150000):strip_icc()/Carvana-2fe03d13b669495ab4a5198f4d69896b.jpg)
Carvana
- APR Range: Not disclosed
- Loan Amounts: Not disclosed
- Minimum Credit Score: 500
Neat, techy way to buy a car
Offers seven-day return policy
Long 45-day pre-approval window
Not available outside of contiguous U.S.
Doesn’t allow co-borrowers, only co-signers
Delivery charges not refundable if you return car
Carvana is a used car dealership that offers a completely online car-buying experience, similar to TrueCar; it's our highest-rated company that offers this service.
You can apply for an auto loan online, find a car, and then pick it up or even have it delivered to you.
One of Carvana’s claims to fame, however, is its car vending machines. If you’re pre-approved for a loan you can schedule an appointment to take a car for a test drive from one of its giant vending machines. The company will even provide you with a token to use.
If you like the car, you can keep it. If not, you’ll have seven days to return it.
It’s a futuristic way to buy a car that many people like; however, there can be problems with the setup. If you have a car delivered and you don’t like it, for example, you can return it, but the shipping charge is nonrefundable. That makes it costly and impractical to test drive different models like you would at a dealership.
Carvana's customer support team is available by text or by live chat on the website. The company was founded in 2012, and is based in Tempe, Arizona.
- Loan terms: Not disclosed
- Minimum recommended credit score of 500
- Must be at least 18 years old
- Minimum annual income of $4,000
- Must not have any active bankruptcies
- Available to residents in contiguous U.S.
- Maximum accepted vehicle age: Varies
- Maximum accepted mileage: 140,000 miles
- Maximum loan-to-value ratio: Not disclosed
- Allows private-party vehicle purchases: No (only for used cars bought through the Carvana platform)
Best for High Maximum Accepted Mileage : OpenRoad Lending
:fill(white):max_bytes(150000):strip_icc()/Open_Road_Lending-37f22388fed54364bf8922b784cee9b9.jpg)
OpenRoad Lending
- Refinance APR Range: 1.99%–24.99%
- Refinance Loan Amounts: $7,500–$100,000
- Minimum Recommended Credit Score: 500
Maximum accepted mileage of 160,000, according to customer service
Offers lease buyout loans
Refinancing available if you’re underwater on loan
Can re-refinance your loan through OpenRoad again
Potentially high rates and fees
Doesn’t allow co-signers
Many vehicle restrictions
OpenRoad Lending’s website looks like it was designed in the previous decade. But it can be helpful if you’re struggling to make your auto loan payments and you’re not able to qualify for a better loan with another lender—especially if you need to refinance a loan for a high-mileage car, because OpenRoad Lending's 160,000 mile-limit is the highest disclosed limit among lenders we reviewed.
It comes with very high origination fees ranging from $249 to $449, a 5% late payment fee, and interest rates that zoom into credit-card-debt territory for less-qualified borrowers.
However, OpenRoad Lending is still better than many other types of alternative auto loans, such as those from buy-here-pay-here lenders. You can still qualify if you have a poor credit score, even if you’re underwater on your current loan—a common problem for people with bad car loans.
OpenRoad Lending has a maximum loan-to-value ratio of 180%, meaning you may be able to borrow nearly twice your car’s actual value in order to pay off your existing loan—far more than most other lenders.
OpenRoad Lending was founded in 2009, and is based in Fort Worth, Texas.
If you need help, you can get in touch with OpenRoad by phone or email. Read more in our full OpenRoad Lending auto loans review.
- Refinance loan terms: 24–72 months
- Minimum credit score of 500
- Must be at least 18 years old
- Available to residents in 46 U.S. states
- You must make at least $2,000 per month (earnings from Uber or similar services do not count toward the income requirement)
- Your DTI cannot exceed 40%
- Can only refinance auto loans issued by NCUA- or FDIC-insured lenders such as credit unions and banks
- Maximum accepted vehicle age: Not disclosed
- Maximum accepted mileage: 160,000 miles
- Maximum loan-to-value ratio: 175%
- Allows private-party vehicle purchases: No
- Business vehicles, Oldsmobile, Daewoo, Smart Car, and Isuzu vehicles are not eligible for refinancing
Final Verdict
If you’re looking for the best overall auto loans, try starting with PenFed; it's a credit union, but anyone can join for just $5 when approved for a loan. AUTOPAY is worth checking as well, especially if you'd like to browse a variety of lenders. LendingTree is also a top choice for a rate-comparison website. If you prefer sticking with credit unions, Consumers Credit Union is yet another good option that allows anyone to apply.
Or, if you’re not too picky about your car and prefer a more streamlined experience, Carvana offers some unique and affordable financing options. And finally, while expensive, OpenRoad Lending offers a lot of potential if you’re looking to get out of a car loan with a high rate.
Compare Best Auto Loan Lenders
| Company | Used APR Range | Used Loan Amounts | Used Loan Terms | Min. Rec. Credit Score |
|---|---|---|---|---|
| PenFed Best Overall | 6.49%–17.99% | $500–$150,000 | 3–7 years | Not disclosed |
| AUTOPAY Best for Bad Credit/Low Rates | As low as 5.69% | $2,500–$100,000 | 2–8 years | 500 |
| Consumers Credit Union Best Credit Union | As low as 6.84% | $500–$350,000 | 36–84 months | Not disclosed |
| LendingTree Best for Refinance | As low as 5.99% (Refinance) | Not disclosed | 36–72 months (Refinance) | Not disclosed |
| LendingClub Best for Fair Credit | 4.99%–24.99% (Refinance) | $4,000–$55,000 | 2–7 years (Refinance) | 600 |
| Carvana Best for Full Car Buying Experience | Not disclosed | Not disclosed | Not disclosed | 500 |
| OpenRoad Lending Best for High Maximum Accepted Mileage | 1.99%–24.99% (Refinance) | $7,500–$100,000 (Refinance) | 24–72 months (Refinance) | 500 |
Looking for a specific type of loan? See our top picks for auto loans in a variety of categories:
What Is an Auto Loan and How Does It Work?
An auto loan is an installment loan used to buy a new or used car, or to refinance an existing auto loan. Auto loans are usually secured, which means the vehicle serves as collateral for the loan. If you fail to make monthly car payments as agreed, the lender can seize the vehicle.
You can use a personal loan to make a car purchase, but secured auto loans typically have lower rates because lenders have more security if you don't pay as agreed.
Auto loan lenders may allow you to borrow more than the purchase price of the car, to account for taxes, fees, dealer upgrades, and other add-ons.
Like other installment loans, when you borrow money with an auto loan the funds are provided in a lump sum. The borrower makes equal monthly installment payments until the term loan is paid off. The money is lent at interest, so the borrower ends up paying back more than they originally borrow.
Auto Loan Rates
Longer loan terms may come with a lower monthly payment and lower annual percentage rates (APRs), but don't be fooled. In general, it's best to choose the shortest term and the highest monthly payments you can afford; this will make the overall loan as inexpensive as possible. When the loan is fully paid off, the vehicle belongs to the borrower (instead of the lender).
Where To Get an Auto Loan
Auto loans are available from traditional banks, online banks, credit unions, and lending marketplaces (which partner with banks and credit unions). You'll find new, used, and refinance auto loans from all of those sources, although some lenders only offer certain loan types; some lenders offer special deals for first-time car buyers, as well.
Auto loans are also available through dealerships that partner with banks; in some cases you may find lower rates through a dealership, but it's worth getting pre-approved with lenders on your own to see what kind of rates you can get. Then, you can go to the dealership with some bargaining power—see if the dealer will beat the best rate you found on your own.
Learn more in our expert explanation of how auto loans work.
Types of Auto Loans
Some people choose the type of car they get based on the type of loan they'd like. For example, new cars are more expensive, but the loans are often much cheaper than for used cars—and that’s one reason many people prefer new cars over used cars.
- New car loan: Just about every lender offers new car loans. They feature lower rates and may come with longer term lengths since you’ll likely be financing a car that costs more, given the higher price tag for new cars.
- Used car loan: Equally common, the rates on used car loans are generally a bit higher. Lenders may have more restrictions in place for loan approval, such as only being able to buy used cars from dealerships or cars below a certain age or mileage level.
- Auto loan refinance: Many lenders offer refinance loans, which are used to pay off your current loan contract, replacing it with a new one. You might do this to get lower monthly payments and/or to pay off your loan faster while saving money.
- Cash-out refinance: A cash-out refinance works the same as above, except you borrow a higher amount of money than you need. You get the difference back as cash that you can use for other things, like home repairs or debt consolidation.
- Auto title loan: These are similar to payday loans except your paid-off (or mostly paid-off) car serves as loan collateral. Auto title loans are extremely expensive and difficult to repay, resulting in some borrowers having their car repossessed, so we don't recommend them.
- Buy-here-pay-here loan: These dealerships market to people with bad credit. Your car may come installed with a tracking device to make it easier to repossess, and you may be charged exorbitantly high rates. We don’t recommend buy-here-pay-here loans.
- Lease buyout loan: It can be difficult and expensive to get out of a car lease contract early so you’ll need to calculate the costs for all of your options carefully. If you can’t pay cash, some lenders offer a lease buyout loan for this purpose.
- Private party auto loan: A private party auto loan is used to purchase a vehicle from a private seller—i.e., not a car dealership or business. Only some lenders provide loans for private party purchases.
- Bad credit car loans: Some lenders offer auto loans of various kinds for people with poor credit; these loans are just like any other kind of loan, but they typically come with higher interest rates and fees.
Auto loans can either be secured or unsecured. Most auto loans are secured by the very car you’re buying and offer lower rates because of that. Your car serves as collateral for the loan and if you don’t repay it, the lender will repossess your car.
Unsecured car loans aren’t as common, but some lenders (like LightStream) do offer them. They’re often faster to get but they charge much higher rates because the lender doesn’t have an easy way to get their money back if you default.
How to Get the Lowest Interest Rates On Your Auto Loan
Auto loan rates depend in part on the federal prime rate, but the borrower's qualifications play a large role as well.
- Shop around: Different lenders offer different interest rates; seek out lenders with low minimum APRs and get pre-approved to check your rates.
- Build your credit: There are many ways to improve your credit score—some can be quick, like reducing your credit utilization, while others can take some time, like building up a history of on-time payments.
- Increase your income: Having more money available (either for a down payment or for monthly payments) can improve your odds of getting a good rate.
Auto Loan Rates by Credit Score
| Credit Level/Score | Used Car Loans | New Car Loans |
|---|---|---|
| Super Prime: 781–850 | 7.43% | 5.61% |
| Prime: 661–780 | 9.33% | 6.88% |
| Nonprime: 601–660 | 13.53% | 9.29% |
| Subprime: 501-600 | 18.39% | 11.86% |
| Deep subprime: 300–500 | 14.17% | 21.18% |
How to Apply for an Auto Loan
- You can get an auto loan from several different types of lenders: online lenders, banks, and credit unions. Dealerships themselves also partner with these lenders to offer you financing.
- It’s best to do your loan shopping before you actually start looking for a car, because you can take the time to find the best loan options and you’ll have more bargaining power when you do find the car you want.
- Each lender will check two things in order to approve your loan: your financial situation and the car you want to buy.
- You can start the loan shopping process by getting pre-approved with multiple lenders. This may require a hard credit inquiry, in some cases. Chances are, some lenders will offer lower rates than others.
- If you’re pre-approved based on the initial details you provide, including personal details like Social Security number and some financial details, the lender will let you know what rates and terms you’re likely to qualify for.
- Lenders look for a few things. Your credit score, income, and debt payments are three of the most important factors, so it’s a good idea to clean up your credit in advance if it needs work and you have the time. Consider ways to reduce your debt-to-income ratio.
If you’re not able to qualify on your own and you have someone who’s willing to help, applying with a co-signer can improve your odds of qualifying for a loan.
“When my wife and I were shopping for a car last year, we prepared by getting a pre-qualification from our bank—Bank of America. We did it online, through our account portal. It was really easy, and because we have several accounts with BofA, we qualified for a rate discount. We planned on using the pre-approval as a negotiating tool, and figured the dealer would offer a better rate. To our surprise, the dealer couldn’t beat it. So now we have yet another account with BofA.” — Lars Peterson (Investopedia Senior Editor, Financial Products and Services).
Once you find the car you want, you can provide the details to your chosen lender and submit a full loan application. The lender will usually disburse the loan funds directly to you, either by check or bank deposit. In some cases lenders may send the money directly to dealerships; for refinance loans, lenders may send the money directly to the current holder of your loan.
Your new lender will provide you with details on how to set up an account, manage your loan, and make payments.
Auto Loan Calculator
See how much car you can afford with our auto loan calculator; plug in your details, and you can see how big your monthly payments will be at different terms and interest rates.
Say you take out a loan for a new 2024 Ford F-150 Platinum with the following details, for example:
- Car price: $64,915
- Down payment: $5,000
- Loan amount: $59,915
- Loan term: 72 months
- Credit: Fair (601–660 credit score)
- Interest rate: 7.14%
- Total paid over the life of the loan: $73,837.72
With those terms, you'd have a monthly loan payment of $1,025.52. If you were to make a larger down payment, such as $8,000, you could take out a smaller loan ($56,915), and your monthly payment would be $974.17. You'd pay less overall: $70,140.59 over the life of the loan.
In the News: Auto loan rates are related to the Federal Reserve's benchmark rate—if the Fed rate goes up, average auto loan rates usually will, as well. Today's interest rates are pushed up by the Federal Reserve’s rate-hike campaign that began in March 2022 to tame decades-high inflation. At the Fed's most recent meeting in March, the committee decided to hold rates steady—the fifth meeting in a row it has done so—but said again that it expects to cut rates later this year. The Fed's dot plot shows that Fed members believe there will be three rate cuts later this year. Interest rates closely follow the fed funds rate. Once it appears the Fed is ready to make a rate cut, interest rates are expected to fall.
Auto Loans: Pros and Cons
Pros
- Provides access to a car: If you need a car to get to work or school and can't afford to buy one with cash, an auto loan can give you that access to the transportation you need.
- Spreads out the expense of a vehicle purchase: Even if you have enough cash to buy a car, auto financing spreads out that expense, so you don’t deplete your savings all at once.
- You'll own the car: Your lender technically owns the car while you pay down your loan, but once it's paid off, you'll own the car outright. New car leases can save you money with lower monthly payments, but there's no vehicle ownership.
- Flexible loans: Auto loans can offer flexibility with loan amounts and repayment terms to help fit into your budget.
- Can help build credit: Like other installment loans, auto loans can be used to build credit as you make on-time monthly payments.
Cons
- Interest rates can be high: Auto loan rates are lower than what you can expect from a personal loan or credit card. But if your credit isn't in great shape, you can still end up with a high interest rate, which could make monthly payments unaffordable.
- Vehicles depreciate: While you're paying down your loan, the value of your vehicle is depreciating. If the vehicle's value is less than what you owe on your loan, you may have to pay the difference when you sell the car or if the vehicle gets totaled in an accident.
- Can damage your credit: If you miss a payment by 30 days or more, it could damage your credit score significantly.
- Default can result in repossession: If you fail to make payments for a longer period, your lender could repossess the vehicle and sell it to recoup the remaining loan balance. If there's a deficiency after the sale, you may still be on the hook for that debt.
Where Are the Big Banks?
We included big banks like Chase, Capital One, Bank of America, and U.S. Bank in our review of the auto loan industry, but these financial institutions don't always make our "Best" lists.
Why? Although these banks are reliable and used by millions of people, they usually don't offer the very best rates and terms. Online banks and lender marketplaces tend to have lower operating costs, and can pass those savings on to borrowers. Big banks tend to score well in our rankings, but they don't usually come out on top when it comes to auto loan interest rates, flexibility in terms, and accessibility.
Frequently Asked Questions
-
Which Companies Are Best for Car Loans?
Our top-rated lenders offer the lowest rates on new and used car loans in the auto financing industry—if you've got good credit and you want the best rates, take a look at PenFed, AUTOPAY, Consumers Credit Union, LendingTree, LendingClub, and OpenRoad Lending. You'll also find several good options for refinancing, as well.
-
How Do You Get the Best Car Loan Rate?
Not everyone qualifies for the best auto loan rates. Here are some things you can do before and during the application process to tip the odds in your favor:
- Check your rate with as many lenders as you can (within a short timeframe).
- Pay down your existing debt, especially credit card debt.
- Check your credit reports and fix any errors before you apply for a loan.
- Use your loan pre-approval offers to negotiate a lower rate with the dealership.
-
What Credit Score Do You Need to Qualify for a Car Loan?
There is no overall minimum credit score you’ll need to qualify for an auto loan. It depends on the lender; each lender has its own credit requirements. In general, if you have good or excellent credit (670 or higher), you’ll qualify for the best auto loan rates. Lenders typically use an auto-loan specific credit scoring model. See the best car loans for bad credit if you’re dealing with a lower score.
-
Where Can I Get an Auto Loan?
You can obtain an auto loan through a dealer in a dealer-arranged financing agreement or directly from an online lender, credit union, or traditional bank. Some dealers also offer in-house financing for car buyers with bad credit.
-
When Is the Best Time to Buy a Car?
Ultimately, the best time to buy a car is when you need one. But if you have some flexibility, experts recommend the following times:
- The end of the month, quarter, or year: Car salespeople often have to meet quotas for each month, quarter, and year, so they may be motivated to make a deal toward the end of those periods to ensure they make the cut.
- Three-day weekends: Dealerships often run sales events for President's Day, Memorial Day, Labor Day, and other three-day weekends. The same goes for other holidays, such as the Fourth of July and Black Friday.
- The end of the model year: Dealers may offer deals to get rid of inventory and make way for the latest model. Research when new models are released for the car you want and see if it can help you with negotiations.
-
What Is a Good APR for an Auto Loan?
According to a report by Experian in Nov. 2023, average rates for 2023 were 7.03% for new cars and 11.35% for used cars, although rates will have changed somewhat since then. If you get a rate lower than the average, you can generally feel like you're getting a good deal. Your rate will vary depending on your credit score, income, and other factors.
-
What Are Used Car Loan Interest Rates?
By Nov. 2023, the average interest rate for used cars in 2023 was 11.35%, according to Experian. Here's the average used car loan interest rate for each credit score range:
- Super prime: 7.43%
- Prime: 9.33%
- Near prime: 13.53%
- Subprime: 18.39%
- Deep subprime: 21.18%
-
Companies We Reviewed
We researched and reviewed 21 companies to find the best seven lenders you see on the list above. While we write individual reviews for most companies, we do not always write reviews for companies we would not recommend. Below are the companies we researched along with links to individual company reviews to help you learn more before making a decision:
Alliant Credit Union, AUTOPAY, Bank of America, Capital One, CarMax, Carvana, Chase Auto, Consumers Credit Union, Credible, First Tech FCU, LendingClub, LendingTree, LightStream, NASA FCU, Navy Federal Credit Union, OpenRoad Lending, PenFed, PNC Bank, U.S. Bank, USAA, Vroom.
Other Types of Auto Loans
- Best Used Car Loans
- Best Car Loans for Bad Credit
- Best Auto Refinance Loans
- Best Private Party Car Loans
- Best Car Loans for First Time Buyers
- Best Motorcycle Loans
- Best RV Loans
- Best Auto Repair Loans
Guide to Auto Loans
Learn more about auto loans:
- How Auto Loans Work
- How Credit Union Auto Loans Work
- How to Get Pre-Approved for a Car Loan
- How to Get a Car Loan
- How to Buy a New Car
- How to Refinance a Car Loan
- How to Buy a Car With No Credit
- Dealer Financing: What It Is, How It Works
- How to Buy a Car From a Dealership
- How Interest Rates Work on Car Loans
- Credit Union vs. Bank for Auto Loan: What’s the Best Choice?
- Personal Loans vs. Car Loans: What's the Difference?
- Subprime Auto Loan: Meaning, Rates, FAQs
- Car Title Loan: What It is, How It Works, Example
- Auto Loan Payment and Interest Calculator
- Auto Loan Review Methodology
How We Picked the Best Auto Loans
Investopedia is dedicated to providing consumers with unbiased, comprehensive reviews of auto loan lenders. To rate providers, we collected hundreds of data points for a period of over two months across more than 20 auto loan lenders, including interest rates, fees, loan amounts, borrower requirements, and vehicle requirements, to ensure that our reviews help users make informed decisions for their borrowing needs. We also conducted a survey of 1,016 auto loan borrowers for attitudes and opinions about lenders and the loan approval and disbursement process.
Why You Should Trust Us
Investopedia collected 1,176 key data points from 21 companies across three months to identify the most important factors for readers choosing an auto loan. We used this data to review each company for interest rates, loan requirements, and other features to provide unbiased, comprehensive reviews to ensure our readers make the right decision for their needs. Investopedia launched in 1999, and has been helping readers find the best auto loans since 2020.
:max_bytes(150000):strip_icc()/Best-auto-loan-rates-4846394_final-b7456e74b9574f56b09258598d31164e.png)
Investopedia / Michela Buttignol
:max_bytes(150000):strip_icc()/Primary-Image-best-auto-loans-for-fair-credit-of-2023-7486579-1cd0386e642a41a083a27049a2646f5b.jpg)
:max_bytes(150000):strip_icc()/Primary-Image-best-auto-refinance-loans-of-2023-5069118-d825bdb159404e5a90af4ef92135405e.jpg)
:max_bytes(150000):strip_icc()/Primary-Image-best-used-car-loans-of-2023-7373705-7a29f527417847138b92cecb34c33586.jpg)
:max_bytes(150000):strip_icc()/Primary-Image-best-motorcycle-loans-of-june-2023-5080905-fcdbe26975e34a1dab69e3f93a157fb3.jpg)
:max_bytes(150000):strip_icc()/Primary-Image-best-private-party-car-loans-of-2023-7372372-d2b02117b865444e9f1a6601975956e5.jpg)