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Buying a car is already tough enough, so it’s tempting to choose the first loan option put in front of you. But many people don’t realize that when you finance a car purchase, you’re actually buying two separate things: the car itself, and the car loan. By choosing the right lender, you can set yourself up for a less stressful experience, save money, and even pay off your car more quickly.
We’ve rounded up the best auto loan rates that can help you do just that, based on our review of 25 leading auto lenders. Lenders were examined and rated on their APRs, loan types, loan terms, vehicle and borrower requirements, and other factors. We also conducted a survey of 1,016 auto loan borrowers, collecting data on lender sentiment and the loan process.
Best Auto Loan Rates of July 2023
- Best Overall: PenFed
- Best for Low Rates/Bad Credit: 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
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- Used APR Range: 5.24%–17.99%
- Used Loan Amounts: $500–$150,000
- Minimum 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, at 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 has a pretty good relationship discount with it. Your loan could be funded the same day you’re approved, if you use this service.
- 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 Low Rates/Bad Credit : AUTOPAY
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AutoPay
- Used APR Range: As low as 2.99%
- Used Loan Amounts: $2,500–$100,000
- Minimum Credit Score: 500
Wide range of loan types
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 compared to other lenders and aggregators. And while it works with borrowers with credit scores as low as 500, 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).
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.
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.
- 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
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Consumers Credit Union
- Used APR Range: As low as 5.54%
- Used Loan Amounts: $500–$350,000
- Minimum 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 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.
- 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
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LendingTree
- Refinance APR Range: As low as 3.23%
- Refinance Loan Amounts: Not disclosed
- Minimum 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 good option if you’re looking for a car loan refinance, advertising extra-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.
- 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
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LendingClub
- APR Range: 4.99%–24.99%
- Loan Amounts: $4,000–$55,000
- Minimum 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, 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.
- 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
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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. You can apply for a 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.
- 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
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OpenRoad Lending
- Refinance APR Range: 1.99%–24.99%
- Refinance Loan Amounts: $7,500–$100,000
- Minimum Credit Score: 500
Maximum accepted mileage of 160,000, according to customer support
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.
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.
- 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: 8 years
- Maximum accepted mileage: 160,000 miles
- Maximum loan-to-value ratio: 180%
- 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 bad car loan.
Compare Providers
| Company | Refinance APR Range | Refinance Loan Amounts | Refinance Loan Terms | Minimum Credit Score |
|---|---|---|---|---|
| PenFed Best Overall | 5.24%–17.99% | $500–$150,000 | 3–7 years | Not disclosed |
| AUTOPAY Best for Low Rates/Bad Credit | As low as 2.99% | $2,500–$100,000 | 2–8 years | 500 |
| Consumers Credit Union Best Credit Union | As low as 5.54% | $500–$350,000 | 36–84 months | Not disclosed |
| LendingTree Best for Refinance | As low as 3.23% | Not disclosed | 36–72 months | Not disclosed |
| LendingClub Best for Fair Credit | 4.99%–24.99% | $4,000–$55,000 | 2–7 years | 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% | $7,500–$100,000 | 24–72 months | 500 |
In the News: According to Cox Automotive, access to auto financing has improved in June across all channels and lender types, meaning borrowers had an easier time accessing credit. Although June saw an improvement, there has been an overall downward trend in access to auto credit since the pandemic, with 2023 still more restrictive than 2022.
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 with the following details, for example:
- Loan amount: $30,000
- Down payment: $2,000
- Loan term: 72 months
- Credit: Fair (601–660 credit score)
- Interest rate: 7.14%
With those terms, you'd have a monthly loan payment of $479.26.
Car Loan Rates by Credit Score
Trends in Car Prices and Loans
New car loan amounts have remained fairly steady compared to last year, but have risen a bit over the past few years. According to Experian's State of the Automotive Finance Market Q1 2023 report, the average loan amount for a new vehicle in Q1 2023 was $40,851, compared to $39,638 in Q1 2022 and $35,383 in Q1 2021.
But average loan rates have risen sharply from 2022 to 2023, resulting in higher average payments. The average rate for a new car loan in Q1 2023 was 6.58%, compared to just 4.10% in Q1 2022 (and 4.15% in Q1 2021). Average monthly payments for a new car loan were $725 in Q1 2023, compared to $650 in Q1 2022 and $577 in Q1 2021.
According to Kelly Blue Book, new car prices have been increasing steadily. The average new-vehicle transaction price in 2023 is $48, 763, compared to around $38,000 in 2020 and $34,000 in 2015.
Used car financing tells a similar story. The average amount financed for a used car in Q1 2023 was $26,420, compared to $28,010 in 2022 and $22,392 in 2021. Average rates have gone up since last year, but average monthly payments remain around $510.
Used car prices spiked in late 2020, according to data from CarGurus. The used car index price had been around $20,000 since 2015, with a downward trend; but in late 2020 they jumped to about $30,000, and have been hovering around there ever since.
Auto Loans: Pros and Cons
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.
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.
Guide to Choosing the Best Car Loan
Types of Auto Financing
Auto loans fall into several different categories. You’re not going to end up with the wrong type of auto loan because your lender will usually make sure it’s correct, but it’s helpful to know how they’re different.
Some people even choose the type of car they get based on these differences. For example, new cars are definitely 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 larger amount 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 work by paying off your current loan contract and 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 20% of 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.
In addition, 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 Compare Auto Loans
It’s best to shop around with as many lenders as you can in order to find the best loan. As you get pre-approved, take notes on these features so you can compare them and choose the best option later:
- Annual percentage rate (APR): The total cost of the loan, including interest and fees. Use the APR on a car loan to compare offers, rather than the interest rate alone—which doesn’t tell the full story.
- Down payment: Some lenders require a down payment for the loan. Whether they require it or not, it’s a good idea anyway because it lowers the total cost of your loan; a larger down payment can help you pay it off sooner.
- Lender reviews: Read as many reviews and customer ratings about your top lenders as you can so you know how helpful your lender will be if you need assistance.
How to Apply for an Auto Loan
You can get an auto loan from a few 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 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 start the loan shopping process by getting pre-approved with different lenders, which completes the first loan check. If you’re pre-approved based on your qualifications, your 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, asking them to be a co-signer or co-borrower can nudge a lender to approve your loan.
If you default on a loan, it will damage your co-signer’s credit too and they’ll need to repay the loan for you.
Once you find the car you want, you can contact your chosen lender and provide the car’s details. The lender will provide you with instructions on how they handle loan disbursement so you can get your car.
Alternatives to Auto Loans
Auto loans are generally the best way to finance the purchase of a vehicle. But if you want to explore all of your options, here are some alternatives to consider:
- Paying cash: If you can afford to buy the car without depleting your savings entirely or sacrificing other financial goals, this option can help you avoid interest charges.
- Personal loan: Personal loans can offer similar repayment terms as auto loans—typically between one and seven years—and they're often unsecured, which means you don't need to use your vehicle as collateral. That said, personal loans typically charge higher interest rates, making them less appealing.
- Home equity line of credit: If you own your home and have a significant amount of equity in it, you could use a home equity line of credit (HELOC) to buy a car. Interest rates are generally low because the HELOC is secured by your home, and during the draw period, you may only need to pay interest on your balance. However, interest rates are generally variable, and if you fail to repay the loan, you could lose your home.
- 401(k) loan: If you have a sizable 401(k) balance, you may be able to borrow money from it to buy a car. There's no credit check involved, and any interest you pay goes back into your account. However, if you leave your job, you may need to pay back the loan quickly, or it may be treated as an early withdrawal and be subject to taxes and a penalty.
- Dealer loan: Some dealers, also called buy here, pay here (BHPH) dealers, offer in-house financing to car buyers with poor credit. You may consider this option if you can't qualify for a traditional auto loan, but BHPH loans are often incredibly expensive, and loan terms can border on predatory.
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 interest rates, flexibility in terms, and accessibility.
Common Auto Financing Terms
- Unsecured loan: A loan that doesn't require collateral to get approved. Common examples include personal loans and student loans.
- Secured loan: A loan that requires collateral, which the lender can seize in the event that you default on your payments. Common secured loans include auto loans and mortgage loans.
- Annual percentage rate (APR): The total cost of a loan expressed as an annual percentage. The APR includes interest, as well as other fees and finance charges.
- Interest rate: The total cost of interest on a loan expressed as an annual percentage. Lenders use the interest rate on an auto loan to calculate how much interest accrues each month.
- Amortization: The process of paying off a loan over a set repayment period, including principal and interest payments.
- Collateral: An asset used to secure a loan. For an auto loan, your collateral is usually the vehicle you're buying.
- Loan term: The length of time you have to pay off a loan. Auto loan terms typically range from one to seven years.
- Loan amount: The amount you're borrowing to finance your vehicle purchase. It may include the sales price plus taxes and other fees and add-ons, minus your down payment.
- Down payment: The amount of cash you immediately pay on the purchase to reduce your loan amount.
- Installment payments: Monthly payments you make on your auto loan.
- Actual Cash Value (ACV): The value of your vehicle as of today. ACV is typically used by auto insurance companies to determine how much to pay out in the event of a claim.
- Loan-to-value (LTV) ratio: The percentage of the car's value that you're borrowing. Some auto lenders allow you to borrow as much as 130% of the value of your vehicle.
- Gap insurance: Optional car insurance coverage that can help you pay off your auto loan if the vehicle is stolen or totaled and you owe more than it's worth.
- Force-placed insurance: Also called lender-placed insurance, it's an insurance policy put in place by your lender in the event that your personal policy has been canceled, has lapsed, or has been deemed insufficient. You'll pay the premiums, but the policy covers only the lender.
- Repossession: If you fail to make payments, the auto loan lender can seize the vehicle and sell it at auction to satisfy the remaining loan balance.
- Credit score: A three-digit number that indicates the overall health of your credit history. The higher your credit score, the better your odds of getting a loan with favorable terms.
- Credit inquiry: Credit inquiries occur when a lender checks your credit. If you're requesting pre-qualification it’s often just a soft inquiry, which won't impact your credit score. Hard inquiries occur when you officially apply (or get pre-approved, in some cases) and can temporarily negatively impact your credit score.
- Pre-approval: A loan approval process in which a loan officer or automated process runs a credit check to determine your chances of getting approved and provide an initial rate quote. Pre-approval can help you gauge your approval odds, but it doesn't guarantee approval or specific terms.
- Joint application: A loan application with two primary borrowers or a primary borrower and a co-signer.
- Co-borrower: An individual who applies with another borrower for an auto loan, presumably in instances where both borrowers would operate the vehicle.
- Co-signer: An individual who agrees to make loan payments if the primary borrower can't meet their obligation to pay. A co-signer can help someone with less-than-stellar credit qualify for a loan, but they won't necessarily operate the vehicle.
Frequently Asked Questions
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Which Lender Has the Lowest Auto Loan Rates?
Our top-rated lenders offer the lowest rates 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.
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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 to tip the odds more 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.
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Can You Get a 0% Interest Rate on a Car?
Yes, although 0% interest loans are pretty rare when demand and interest rates are high. These are typically offered through auto manufacturers themselves and may have several limitations. Zero-interest loans are generally offered for specific new car models and for people with excellent credit. Dealerships may try to make up the cost elsewhere such as add-ons, and the no-interest-offer may only apply for a portion of the total loan agreement.
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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 requirements. In general, if you have good or excellent credit (670 or higher), you’ll qualify for the best auto loan rates. See the best car loans for bad credit if you’re dealing with a lower score.
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Can You Negotiate Car Loan Interest Rates?
Yes, you may be able to negotiate lower rates even if you buy a car from a dealership. Before you go car shopping, take a bit of time to get pre-approved for car loans from as many lenders as you can, within a short timeframe. Take the best offer with you to the car dealership and when you find the car you’re interested in buying, pull out your auto loan offer and ask if they can beat it with a lower rate.
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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.
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How Do You Get Pre-Qualified for an Auto Loan?
Some lenders offer pre-qualification or pre-approval tools on their website that you can use to gauge your approval odds and view potential loan terms; this is usually done through a simple online application and soft credit check. Remember, though, that actual approval and loan terms won't be guaranteed until you go through the full application process and undergo a hard credit check.
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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.
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Which Credit Union Has the Best Auto Loan Rates?
Each credit union—and every other lender, for that matter—has its own set of interest rates and criteria for determining what borrowers qualify for. As a result, no credit union offers the lowest rates for every borrower.
To maximize your chances of getting a low interest rate, shop around and compare several lenders.
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What Is the Average Interest Rate on a Car Loan?
According to Experian, the average rates for the first quarter of 2023 were 6.58% for new cars and 11.17% for used cars. Your rate will vary depending on your credit score, income, and other factors.
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What Are Used Car Loan Interest Rates?
For the first quarter of 2023, the average interest rate for all used cars was 11.17%, according to Experian. Here's the average loan interest rate for each credit score range:
- Super prime: 6.79%
- Prime: 8.75%
- Near prime: 13.28%
- Subprime: 18.55%
- Deep subprime: 21.32%
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What Is a Good Interest Rate for a Car for 72 Months?
A good interest rate for a 72-month loan can vary depending on the type of vehicle you're buying, your credit, and your financial profile. Rates for superprime borrowers with the best credit can be as low as around 5%, while borrowers with poor credit can pay upwards of 14%. That said, long-term auto loans typically have higher interest rates compared to shorter terms, such as three or four years. If you can afford a higher monthly payment, consider a shorter term to save money.
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Is a 72-Month Car Loan a Bad Idea?
A 72-month auto loan can be beneficial if it helps make your monthly payments more affordable. However, longer-term loans typically carry higher interest rates and more total interest charges than short-term loans.
As a result, it's important to carefully weigh the advantages and disadvantages (i.e., the costs) of a 72-month car loan to determine if it's the right move for you.
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What Car Loan Interest Rate Can I Get With an 800 Credit Score?
An 800 credit score is considered to be a superprime credit score. According to Experian, interest rates for prime borrowers in the first quarter of 2023 were 5.18% for new cars and 6.79% for used cars.
However, your interest rate will also depend on your income, credit history, debt, and other factors.
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How Do You Negotiate a Car Loan With a Bank?
It may be possible to negotiate a loan's APR, particularly if you're applying for dealer-arranged financing. Dealer rates may be slightly higher than the rate offered by the lender—the dealer takes the difference as compensation for arranging your financing—so you may have some room for negotiation.
For example, you may offer to put more money down, get a co-signer, or request a shorter repayment term to qualify for a lower rate. If you're applying for a loan on your own through an online lender or neobank, however, you will likely have less room to negotiate.
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What Are Other Important Car Ownership Costs to Consider?
In addition to your auto loan payment, you'll also need to consider the following occasional and monthly costs:
- Insurance premiums
- Fuel
- Maintenance and repairs
- Annual testing and registration
- Depreciation
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What Is the Best Company to Refinance an Auto Loan With?
There's no single lender that works best for everyone. To find the best option for you, research and compare several lenders based on interest rates, loan terms, and other features that are important to you. See our picks for the best auto loan lenders above to get started.
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Should I Get Auto Financing From the Dealership or the Bank?
Having your dealer arrange financing on your behalf can save you some time, but it could result in a slightly higher interest rate. On the other hand, applying with multiple banks and credit unions on your own could help you find a lower interest rate, but it'll take more time and effort.
To determine the right path for you, consider the benefits and drawbacks of each option and your priorities.
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How Do I Refinance My Car Loan?
Refinancing your car loan means paying off your existing loan with a new one, usually to get a lower interest rate or monthly payment. The loan approval process is generally the same as a standard auto loan, except you already own the vehicle. Shop around with multiple lenders, then compare options to determine whether refinancing can help you save money. Take a look at our picks for the best auto refinance loans to check your rates.
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Can I Sell My Car With a Loan?
Yes, you can sell your car even if you still have a loan outstanding. When you sell the vehicle, however, you'll need to pay off the loan. If you trade in your car at a dealership, the dealer will handle the process on your behalf. Otherwise, you'll need to do it on your own.
If your car is worth less than the amount you owe, you may be able to roll the deficiency balance into a new loan through a dealer. But if you sell your car to a private party, you'll typically need to come up with the cash on your own.
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 Motorcycle Loans
- Best RV Loans
Methodology
Investopedia is dedicated to providing consumers with unbiased, comprehensive reviews of auto loan lenders. To rate providers, we collected hundreds of data points 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.
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