Auto Loan
Best Auto loan Rates and Lenders in 2023
Unhappy with your current auto loan terms? Click here to refinance and drive home some savings!
Unhappy with your current auto loan terms? Click here to refinance and drive home some savings!
Key Takeaways
If you are out of cash to buy a car, it might seem impossible, but an auto loan can help you with financing. An auto loan is backed by your car, and you can pay it back in fixed monthly payments instead of all at once.
The best auto loan rates help you save money while making monthly payments by charging you less interest. These loans should also be easy to apply for, have flexible terms for paying them back, and offer to finance both new and used cars.
You can get an auto loan to get the money you need to buy a car. Car loans are usually "secured," meaning you have to use the car you buy as collateral. You will usually have to pay a fixed monthly interest rate and payment for 24 to 84 months, after which your car will be paid off.
You can get auto loans via banks, credit unions, and online lenders, but many dealerships also offer their financing. Compare APRs from different lenders when looking for an auto loan to ensure you get a good rate. Look for lenders with low-interest rates and payment plans that work for you.
| Vehicle type | Average APRs for a 36-month term | Average APRs for a 48-month term | Average APRs for a 60-month term |
|---|---|---|---|
| New car | 5.64 % | 5.67 % | 5.69 % |
| Used car | 6.00% | 6.31 % | 7.31% |
You can get a loan for more than just a new or used car. Each type of auto loan is used for different things; if you know what you need, it will be easier to look for a loan.
1. New car loan
While you want to buy a new car, you should look into getting a new car loan. You can get financing for a new car at a dealership, but you can also get it from banks, credit unions, and online lenders. Shop around and research enough to find the best rate and terms for your loan.
2. Used car loan
You need a used car loan to buy a used car from a dealer. You can get a used car loan from the same places you can get a new car loan. There are often limits on how old a car can get and how many miles it can have.
3. Auto refinance
If you took out a loan at a dealership that seems unmanageable to repay or didn't get a good rate, you might want to refinance and get a better rate. Or, you can change the terms, so your monthly payment goes down. You can't get these loans through dealerships.
4. Cash-out auto refinance
You can get a cash-out to refinance a loan to get a little extra cash when you refinance. Along with the balance you are refinancing, you can borrow against the value of your car.
5. Private party
You might need a private party auto loan if you want to buy a used car via a private seller but don't have cash. These loans are less common, but some banks, credit unions, and online lenders offer them.
6. Lease buyout
If you choose to lease a car, you may be able to buy your car when the lease is up. You can do this by getting a loan to buy out your lease.
| Lender | Estimated APR | Loan amount | Minimum credit score |
|---|---|---|---|
| Consumers Credit Union - Used car purchase loan | 5.44-21.24% | $7,500-No max. | 620 |
| LightStream - Used car purchase loan | 6.49-12.49% | $5,000-$100,000 | 660 |
| MyAutoloan - Used car purchase loan | 3.94-21.00% | $8,000-$100,000 | 575 |
| Carvana - Used car purchase loan | 3.90-27.90% | $1,000-$100,000 | 450 |
| Capital One - Used car purchase loan | N/A | $4,000-Max. not disclosed | Did not disclose |
| Autopay - Used car purchase loan | 1.99-17.99% | $2,500-$100,000 | 560 |
| Bank of America - Used car purchase loan | N/A | $7,500-Max. not disclosed | Did not disclose |
| CarMax - Used car purchase loan | 2.95-26.00% | $500-$100,000 | None |
| PenFed Credit Union - Used car purchase loan | 5.64-11.34% | $500-$100,000 | Did not disclose |
| Digital Federal Credit Union - Used car purchase loan | 3.74-13.24% | $2,500-$500,000 | Did not disclose |
| Vroom - Used car purchase loan | N/A | $5,000-$100,000 | Did not disclose |
| Chase Auto - Used car purchase loan | N/A | $4,000-Max. not disclosed | Did not disclose |
| Consumers Credit Union - New car purchase loan | 5.19-17.54% | $7,500-No max. | 620 |
| MyAutoloan - New car purchase loan | 3.69-21.00% | $8,000-$100,000 | 575 |
| LightStream - New car purchase loan | 6.49-12.49% | $5,000-$100,000 | 660 |
| Capital One - New car purchase loan | N/A | $4,000-Max. not disclosed | Did not disclose |
| Autopay - New car purchase loan | 1.99-17.99% | $2,500-$100,000 | 560 |
| Bank of America - New car purchase loan | N/A | $7,500-Max. not disclosed | Did not disclose |
| Digital Federal Credit Union - New car purchase loan | 3.74-13.24% | $2,500-$500,000 | Did not disclose |
| PenFed Credit Union - New car purchase loan | 4.44-10.19% | $500-$100,000 | Did not disclose |
| Chase Auto - New car purchase loan | N/A | $4,000-Max. not disclosed | Did not disclose |
For Auto loan rates
| Lender | Current APR | Term | Loan Amount |
|---|---|---|---|
| LightStream | 5.99% to 11.99% (with autopay) | 24 to 84 months | $5,000 to $100,000 |
| Bank of America | Starting at 4.99% | 48 to 72 months | Starting at $7,500 |
| Capital One | Not specified | 24 to 84 months | Starting at $4,000 |
| Carvana | Starting at 6.85% | 12 to 72 months | Not specified |
| myAutoLoan | Starting at 3.69% | 24 to 84 months | $5,000 to $100,000 |
| Upstart | 5.61% to 29.99% | 24 to 84 months | $9,000 to $60,000 |
For Bad Credit Auto Loan rates
| Lender | Current APR | Term | Loan Amount |
|---|---|---|---|
| Capital One | Not specified | 24 to 84 months | Starting at $4,000 |
| Autopay | Starting at 2.99% | 24 to 96 months | $2,500 to $100,000 |
| Carvana | Starting at 6.85% | 12 to 72 months | Not specified |
| iLending | Starting at 2.14% | 12 to 84 months | Starting at $7,500 |
For Auto Loan Refinance Rates
| Lender | Current APR | Term | Loan Amount |
|---|---|---|---|
| Lightstream | 6.49% to 12.49% (with autopay) | 24 to 84 months | $5,000 to $10,000 |
| Autopay | Starting at 3.24% | 24 to 96 months | $2,500 to $100,000 |
| Caribou | 2.32% to 36.00% | 24 to 60 months | Not specified |
| Upstart | 5.61% to 29.99% | 24 to 84 months | $9,000 to $60,000 |
| RefiJet | Starting at 2.49% | 48 to 60 months | Not specified |
| Lender | Estimated APR | Loan amount | Minimum credit score |
|---|---|---|---|
| Consumers Credit Union | 5.44-21.24% | $7,500-No max | 620 |
| LightStream | 6.49-12.49% | $5,000-$100,000 | 660 |
| MyAutoloan | 3.94-21.00% | $8,000-$100,000 | 575 |
| Lender | Estimated APR | Loan amount | Minimum credit score |
|---|---|---|---|
| Consumers Credit Union | 5.19-17.54% | $7,500-No max. | 620 |
| MyAutoloan | 3.69-21.00% | $8,000-$100,000 | 575 |
| LightStream | 6.49-12.49% | $5,000-$100,000 | 660 |
| Credit score | Average APR for a new car | Average APR for old car |
|---|---|---|
| 781-850 | 2.96% | 3.68% |
| 661-780 | 4.03% | 5.53% |
| 601-660 | 6.57% | 10.33% |
| 501-600 | 9.75% | 16.85% |
| 300-500 | 12.84% | 20.43% |
Your loan's interest rate changes based on your credit score. Most of the time, applicants with the best qualifications get the best rates, while applicants with bad credit get higher rates. A potentially good interest rate for a car loan, on the other hand, lets you buy a car with monthly payments that fit into your budget.
| Credit score tier and range | Average loan rate for a new car | Average loan rate for a used car |
|---|---|---|
| Deep subprime (579 or below) | 14.39% | 20.45% |
| Subprime (580 to 619) | 11.92% | 17.74% |
| Nonprime (620 to 659) | 7.65% | 11.26% |
| Prime (660 to 719) | 4.68% | 6.04% |
| Super prime (720 or above) | 3.65% | 4.29% |
The interest rates for a used car are always higher than for a new one. Even if your credit score can't make drastic changes. A new car loan can have an interest rate as high as 15%. On the other hand, some of the best lenders can only offer used car loans with interest rates as low as 20%.
While looking for a car loan, it's best to talk to a few different lenders before deciding. Each lender has its way of looking at your loan application and deciding your interest rate and terms.
Most of the time, your credit score will impact the rates you are offered. The APR you get will be lower the better your credit score is. You have enough options to finance a car, even with bad credit. If you have a higher credit score, you may be able to get a better loan or more options for how to pay it back.
If you choose a longer repayment term, your monthly payments will be lower, but you will pay more interest in the long run. If you like a few lenders, check to see if they offer pre-approval. This will let you know which rates you qualify for without affecting your credit score.
If you can, you should get a 60-month auto loan. A longer loan may have a more manageable monthly payment, but it also has several downsides. When it comes to used car loans, the trend is even worse, as just over 80% of terms were over 60 months.
Getting a loan for a car you can afford is the key to finding the right lender. You should get quotes from at least three lenders outside a car dealership before deciding which one is best for you. Especially pay attention to the following:
Every lender has different rules about what you need to do to get approved. Lenders will look at your credit history, income, and the amount of debt you have compared to your income. Rates are mostly based on how good or bad your credit is. Remember that your rates will usually be less competitive the worse your credit score is.
The APR shows how much interest you will have to pay over the course of the loan. Pay close attention to this number because a higher APR means more interest and a higher monthly cost. Also, don't just look at the monthly payment when shopping for a loan.
Even if a lower monthly payment sounds good, you should pay close attention to the terms and consider how the length of your loan will affect the total cost. With a longer loan term, you'll pay less each month but more in interest. On the other hand, a shorter loan term will cost more each month but less over the life of the loan.
Lenders collect information about you and your car, just like insurance companies do. Here are some things that can change the rate on your car loan:
Before making a choice, compare what is being offered by various lenders. Some lenders may place a higher value on your credit score than others. You can use a loan calculator and look at more than just the APR to see how much your loan will cost you in the long run.
The best way to get a low-interest rate on an auto loan is to research and be prepared. The following tips will come in handy while you are at it.
Make your credit score better. One of the most important things that affect your interest rate is your credit score. The lower your rate is, the better your credit score. To get a lower interest rate, it's important to fix your credit if you need to. Your credit score may go up quickly if you pay off your debts.
Find a lender by shopping around. There are different kinds of lenders. Find the best rates by getting quotes from different lenders at the dealership, your local bank, and online lenders.
Make a bigger down payment. Dealers ask people who want a car to put down a certain amount. If you pay a bigger down payment than your lender asks for, it shows that you have more skin in the game and are less of a risk to the lender. This could make the lender offer you a lower rate of interest.
Reduce the time you have to pay back. Risk is important for lenders, and shorter loan terms mean reduced risk. Most of the time, you'll get a better rate if you finance over five years instead of six or four years instead of five. This means you'll pay less over the life of the loan. But if you do that, your monthly payment will go up.
Add a co-signer. If your credit score is way too low to get a car loan, adding a co-signer might help you get a better rate. When you use a co-signer, consider their credit score for getting a better rate or getting approved for a loan. If you don't pay back your loan, your co-signer will have to do so.
Refinancing your auto loan is helpful for lowering your monthly payments and finding affordable interest rates. No matter why you want to refinance your auto loan, it's important to look around first to see what rate and loan costs you might face.
Yes. The refinance options can provide you with much cheaper rates and APRs. It's better to go for refinancing if you already have a loan that needs to be paid off.
The Federal Open Market Committee (FOMC) hiked the target rate to 3.75-4% during its November meeting. This was the sixth increase in a row, and it was done to keep inflation under control. Kelley Blue Book says that in August 2023, the average price of a new car will be over $48,300, and the gas at the pump will be at record highs. For drivers who already have to deal with these issues, the added burden of higher rates seems scary.
The benchmark rate doesn't change auto rates directly, but it does change lenders' numbers to figure out their rates. This means that the Fed's decision to raise interest rates could make it more expensive to get a car loan, but the Fed's decision is only one part of that increase. Even though prices are rising everywhere, there are still a few ways to plan and save money, no matter what the central bank does.
Getting a low interest rate on your auto loan will help you avoid overspending on a new or used vehicle. Before looking for a car, you should get quotes from a few different lenders. Consider looking for the best rates at credit unions, banks, and private lenders.
If you feel clueless, we suggest getting a quote from a credit union. You have to be a member, but it's easy to join, and the credit union has some of the best rates you could find, as well as flexible loan limits and terms for paying them back.
Depending on your credit score, and other personal information, the company that can give you the best rates on an auto loan can be different. Your best bet is to talk to at least three car loan companies until you find the best deal.
According to the most recent data from Experian, the average interest rate on any used car loan ranges from 3.68 percent to 20.43 percent for most borrowers. Most of the time, the rates for financing a used car are higher than those for a new car.
When you have a longer car loan, you often end up "underwater" or "upside down" on your loan. This is because cars tend to lose value quicker.
With a 72-month car loan, you pay off your debt more slowly, and for the first few years, you might owe more than your car is worth. But if you take out a longer car loan, you can get a lower monthly payment, which is important for your budget.
Most of the time, borrowers with credit scores above 781 are eligible for 0% APR offers that come with a new car. But if you are a borrower with a credit score range of 661 and 780, you may be able to qualify.
You can find out if you're eligible for an auto loan online and never have to leave your house. You just need to pick a lender from this list and use an online "get prequalified" or "apply for a loan" option. You can get prequalified for an auto loan from many lenders without checking your credit report.
Refinancing a car loan is the same as getting a new one, so most application steps are the same. You will also need information about your car, driver's license, your SSN etc. You will use your new loan to get rid of your old car loan if approved. Then, you will make monthly payments based on your new interest rates.
Certainly. Even if you owe money, you can still sell your car but you may have to take a few extra steps. Negative equity means that your car value is much less than what you still owe on loan. You might have to pay the difference out of your own pocket or refinance the rest of the loan with a different type of loan.
If, on the other hand, your car is worth more than the money you owe, you might be able to get the difference in cash when you sell it. No matter your situation, you should talk to your lender about your options. Each lender has different rules about how to sell a car that is still owed money.
It's hard to decide whether to opt dealership or a bank for an auto loan. Dealerships may have higher rates than banks, but this might not be the case for used cars. No matter what, you should get quotes from a few banks or online lenders first. That way, you'll be ready when you go to the dealership. Ask the dealership for a quote as well. Compare rates, terms, and any extra fees.
The credit score for getting an auto loan depends on where you buy the car and how much you want to borrow. At a buy-here, pay-here lot, you might not need as good of a credit score as you would elsewhere. Most of the time, you should try to get a credit score of 670 or higher to get rates that are close to average.
Interest rates on auto loans depend on several things, such as the amount you borrow, the length of the loan, the type of loan, and your credit history. According to reports, for a new car, the average interest rate is 4.33 percent, and that of a used car is 8.62 percent.
Most of the time, applicants with good credit are the only ones who can get 0% financing. Plus, they usually only let you borrow for a shorter period, so you have to pay more each month. You'll have to decide whether a lower monthly payment or overall loan cost is more important.
It is possible for you to still get a car loan with bad credit, but the interest rates will be higher. Try the following if you're having trouble getting approved or finding rates that work for you:
Usually, car loans have fixed interest rates and loan terms, but sometimes you can negotiate with your lender or the loan terms. Here are some things you can do to lower your rate:
Absolutely, yes. 2.9% is a good rate for a car loan. Reports say that a buyer of a new car with excellent credit can get a loan with an average APR of 2.47%.
Most car loans have terms of 24, 36, 48, 60, or 72 months. The terms can go up to 84 months. In Q2 2021, the average loan for a new car was 69.36 months.
Personal loans are of two kinds: unsecured or secured. They can be used for many different things, like paying for a car, a vacation, or home maintenance. On the other hand, car loans are only used to pay for cars and are backed by the car you buy. A car is a form of security. Because car loans are secured, the interest rates are usually lower than those for personal loans. Getting an auto loan is usually easier than getting a personal loan, especially for people with bad credit.