An auto loan is a loan secured by a car and lets consumers pay off their car with fixed monthly payments rather than paying cash upfront. Consumers who want to pay off their car over time can use a car loan to buy or refinance a new or used car.
The best auto loan rates allow car-buyers to save money over the life of their loan by charging them less interest, and often come with easy application processes, flexible repayment terms, and financing options for either new or used vehicles.
Best Car Loan Rates of January 2022
Best Overall : PenFed Credit Union
PenFed Credit Union provides some of the best rates available. It also has flexible loan amounts and a number of auto loan options for members. Even though membership is required, a disadvantage for some, PenFed makes the requirements to join fairly straightforward.
Offers new, used, and refinance loans
Loan amounts from $500 to $100,000
Provides rate discounts for using its car buying service
Borrow up to 125% on new and used vehicles
High minimum loan amount for longer terms
Excellent credit history required for lowest rates
Membership in the credit union is required
Our top pick for auto loan rates, PenFed Credit Union, offers some of the lowest rates available.
At PenFed, rates for 36-month refinance loans start as low as 1.79%. Deep discounts are available for members who use the credit union's car buying service, with rates starting as low as 0.99% annual percentage rate (APR) for a new car and 1.99% APR for a used vehicle.
You'll have to become a member of the credit union, but the requirements to join are fairly easy to meet. Car loans from PenFed start as low as $500 and move up to $100,000, a wide range that beats out many of the lenders we surveyed.
The downside to PenFed is that the most flexible loan amounts are only offered on the shortest terms. For example, 36-month new car loans from the lender have a $500 minimum loan amount, while new car loans of 73 to 84 months have a minimum of $20,000. As with most lenders, you'll need excellent credit to get the lowest rates.
Best Online Auto Loan : LightStream
LightStream offers a fully online process for its extensive list of vehicle loan options. It's very transparent about its rates and terms, and it has few restrictions on what kind of car it will finance. It's also strong on customer service, receiving the top score in the J.D. Power 2020 U.S. Consumer Lending Satisfaction Study for personal loans.
Completely online process
AutoPay discount of 0.5%
No restrictions on make, model, or mileage
Offers unsecured loans to borrowers with excellent credit
Online application only
Prefers borrowers with good credit
LightStream is the online lending arm of SunTrust Bank. It stands out for its online lending process. Borrowers can apply online, e-sign the loan agreement, and receive funds via direct deposit as soon as the same day.
LightStream also offers a remarkably wide range of auto loan options, including new and used dealer purchases, refinancing, lease buyouts, and classic cars. It even offers unsecured loans for those with excellent credit.
Rates from the lender start as low as 4.99%, which includes a 0.5%-point discount for autopay. The maximum APR on an auto loan is 9.49%.
The downside is that the lowest rates from LightStream are only available to borrowers with excellent credit. That's not unusual, but it means that this isn't the best lender for those with a damaged credit profile. LightStream doesn't publish its exact credit requirements, but it generally defines excellent credit as having a credit history of several years with various account types, an excellent payment history, a proven ability to save, and stable and sufficient income.
Best Bank for Auto Loans : Bank of America
Bank of America auto loans come with the backing of a major financial institution. Low rates and a big selection of loan options make it a major competitor in the auto loan landscape. In J.D. Power's 2020 Consumer Financing Satisfaction Study, which deals with auto loans, Bank of America ranked seventh out of 12 in its segment and scored equal to the average.
Offers new, used, and refinance auto loans
Transparent rates and terms online
Well-known financial institution
Quick financing decision
Restrictions on which vehicles it will finance
High minimum loan amount
Bank of America (BofA) is a large financial institution offering a number of auto loan options, including new, used, refinance, lease buyout, and private party loans.
For the most creditworthy borrowers, APRs start at 2.14% for new vehicles. Used vehicle loans start at 2.34% APR, while refinances start at 3.14% APR. Customers of the bank who are Preferred Rewards members can get up to a 0.5% discount on their rate.
BofA provides a no-fee online application that it claims can offer a decision within 60 seconds. You can choose from a 48-, 60-, or 72-month term online, but there are additional options ranging from 12 to 75 months if you complete the application process at a branch or over the phone.
The main disadvantage to getting an auto loan through Bank of America is its restrictions on which vehicles it will finance. It won't provide loans for vehicles more than 10 years old, those with 125,000 miles or more, or vehicles worth less than $6,000. It also won't provide a loan amount of less than $7,500.
Best Credit Union for Auto Loans : Consumers Credit Union
Credit unions often provide some of the best rates available, but many restrict their membership. Not only does Consumers Credit Union (CCU) make it easy to join, but it is relatively inexpensive to do so. CCU also provides flexible loan amounts and terms to its members.
No minimum or maximum loan amount
Offers new, used, and refinance loans
Offers transparent rates and terms
Lowest rates require excellent credit
Membership in credit union is required
Consumers Credit Union offers auto loan rates to its members as low as 2.24% for new car loans up to 60 months. Like other credit unions, it requires membership, but it's easy to join. You can become a member by paying a one-time $5 membership fee. There are no geographic or employer requirements.
CCU doesn't have a minimum or maximum loan amount. Your loan is approved based on your credit score, credit report, and vehicle information. There's also no minimum loan term—you submit a request based on what you need.
Generally, borrowers with excellent credit will qualify for the lowest rates from Consumers Credit Union. But even members who have less than excellent credit have access to discounts. There's a 0.5% discount available for those who autopay from a CCU account. The discount falls to 0.25% for those who make automatic payments from an outside financial institution.
Best for Used Cars : Chase Auto
Chase Auto offers the security of a stable financial institution with competitive rates, high loan amounts, and a concierge car-buying program that makes it easy to get the best rates and financing options for a used car.
High loan amounts
Pre-qualify with a soft credit pull
Car-buying and car-management services
0.25% discount for Chase Private Clients
Must finance from a Chase network dealer
New application needed when switching dealers
Chase Auto is the car financing arm of J.P. Morgan Chase & Co., the largest bank by assets in the U.S., and allows users to shop for, finance, and manage their vehicle all from one account.
Although Chase Auto doesn’t list rates online, it has a calculator that will allow you to get an idea of your potential rate. Chase also offers generous loan amounts ranging from $4,000 to $600,000 and 12 to 84 months flexible repayment terms.
Chase Auto doesn’t require you to make a down payment for a loan, though putting money down can reduce the total amount you need to borrow and your monthly payments. You can also get a 0.25% interest rate discount as a Chase Private Client, which requires you to have a minimum average daily balance of $150,000 in qualifying personal, business, and investment accounts or a Chase Platinum Business Checking account.
Financing a car with Chase Auto requires you to choose a dealer in the Chase dealer network. Chase also offers an Auto Preferred program that connects you with a dedicated concierge at a local dealership who can help you find the best discounts and financing options. Unfortunately, if you switch dealers at any point, you will need to start your loan application all over again.
Chase also offers a car-management service called MyCar to all of its customers regardless of whether or not they have a car loan with the bank. This service makes it easy to keep track of maintenance schedules, estimated market value, safety recalls, and more for any car you own.
Best for Bad Credit : myAutoloan
myAutoloan not only offers reasonable low rates, but it also has lenders that work with people who have a history of credit problems. The marketplace provides a great opportunity for borrowers with poor credit to shop deals from multiple lenders at once.
Accepts borrowers with poor credit
Offers new, used, and refinance loans
Sources offers from multiple lenders
Higher minimum loan amount requirements
Not available in Hawaii or Alaska
myAutoloan is a marketplace that allows you to compare multiple offers from lenders based on your credit profile. This type of company can help you cast a wide net and get the best offer available. It offers new, used, refinance, private party, and lease buyout loans.
Speed is one of myAutoloan's benefits. Its online form takes just a couple of minutes to fill out and, once submitted, matches you with up to 4 lender offers. After you choose a lender, you can receive an online certificate or a check within as little as 24 hours.
Requirements in myAutoloan's market vary by lender, but they say they have lenders who work with borrowers with lower scores.
Best for Refinance : AUTOPAY
AUTOPAY offers several different refinance options, competitive rates, and has flexible credit requirements. Borrowers can easily compare offers from different lenders on AUTOPAY's site and choose the best deal.
Offers multiple refinance options
Marketplace matches you with best offer
Considers all credit profiles
Excellent credit required for the best rates
While AUTOPAY's rates start at 1.99%, only those with excellent credit will qualify. According to AUTOPAY, they can, on average, cut your rate in half on a refinance.
AUTOPAY offers more refinance options than many lenders. In addition to traditional auto refinancing, borrowers can choose cash-back refinancing and lease payoff refinancing.
AUTOPAY is a marketplace that makes it easy to shop around for the best deal. It caters to individuals who are rebuilding credit or improving their credit.
Best for Fair Credit : Carvana
For fair credit borrowers in the market for a used vehicle, Carvana provides the ability to shop online for financing and a vehicle at the same time. It has no minimum credit score requirement, providing a financing solution for those with damaged credit.
No minimum credit requirement
Entirely online dealer and lender
Excellent credit borrowers get the lowest rates
Minimum income requirement of $4,000 annually
Only for used vehicles
As with most lenders, borrowers with the best credit get Carvana's most competitive rates. Carvana does not advertise its rates or publish a table, but you can estimate your monthly payment with an online calculator. That said, even the calculator does not reveal the rate it is using. You must prequalify to know what your interest rate will be.
Carvana is a completely online used car dealer that also provides direct financing. It makes it possible to secure financing, shop for a vehicle, and get a used vehicle delivered without leaving your house. There is no credit score minimum for its financing program, making this an attractive option for fair credit borrowers. However, you must have an income of at least $4,000 annually and no active bankruptcies.
Getting a low auto loan rate can help you avoid spending more on your new or used car than you should. Before you start shopping for a vehicle, it’s important to get quotes from several different lenders. Consider looking at credit unions, banks, and private lenders for the best rates.
If you’re not sure where to start, we recommend getting a quote from PenFed Credit union. Although you need to be a member, joining is easy, and the credit union offers some of the lowest rates we found as well as flexible loan limits and repayment terms.
Compare the Best Auto Loan Rates
|Lender||Lowest Rate||Loan Amount||Terms|
|PenFed Credit Union
|0.99%||$500 to $100,000||36 to 84 months|
Best Online Auto Loan
|4.99%||$5,000 to $100,000||24 to 84 months|
|Bank of America
Best Bank for Auto Loans
|2.14%||$7,500+||12 to 75 months|
|Consumers Credit Union
Best Credit Union for Auto Loans
|2.24%||No minimum or maximum||0 to 84 months|
Best for Used Cars
|Not Advertised||$4,000 to $600,000||12 to 84 months|
Best for Bad Credit
|2.09%||$8,000 to $100,000||24 to 84 months|
Best for Refinance
|1.99%||$2,500 to $100,000||24 to 84 months|
Best for Fair Credit
|Not Advertised||Any Car They Are Selling||36 to 72 months|
Auto Loan Rates By Credit Score
|Credit Score||Average APR (New Car)||Average APR (Used Car)|
Source: Experian: State of the Automotive Finance Market Q2 2021
How Do Car Loans Work?
Car loans are secured loans. The loan is paid off in equal installments over a predetermined period of time. Generally, the vehicle you're purchasing is used as collateral, which means the lender can seize the car if you default on loan repayments.
What Should You Consider When Choosing an Auto Loan?
In a recent interview with Kathryn J. Morrison, consumer affairs expert and instructor at South Dakota State University, she said "When shopping for an auto loan, one needs to consider more than just the interest rate. Are there any additional fees that you will be charged? Do you need to have a down payment to qualify for this rate? What is the total loan amount, and how much interest will you be paying over the life of the loan?"
There's a lot to take into account when choosing an auto loan. Your credit score, for example, has a major impact on the rates you get. The best rates typically go to those with excellent credit. At the end of Q2 2021, the average credit score was 732 for a new-car loan and 665 for a used car loan, according to a report from Experian.
In Q2 2021, borrowers who received the lowest rates had a score of 781 or higher. Those borrowers, also known as super-prime borrowers, received an average APR of 2.34% for new cars and 3.66% for used cars. Prime borrowers with a credit score between 661 and 780 received an average APR of 3.48% for new loans and 5.41% for used loans, while nonprime borrowers with credit scores between 601 and 660 received an average APR of 6.61% for new car loans and 10.49% for used.
It's also important to consider what term fits your financial situation. Longer terms generally have lower payments but cost more over the life of the loan.
How Do You Get a Car Loan?
Some consumers can pay cash for a new vehicle, but most use financing from a bank, credit union, nonbank auto lender, or dealer. Here are steps you can take in order to get a car loan:
- Check your credit report and fix any errors. Your credit score determines what interest rate you'll receive.
- Shop around at multiple lenders, including big banks, community banks, credit unions, and online lenders. Compare rates, terms, credit score requirements, and other factors.
- Apply and get preapproved for a loan from several lenders to see which offer is the best. Keep in mind that any credit inquires that take place within a 14- to 45-day period only count as a single inquiry on your credit, so it's best to do all of your loan shopping within a short time span.
- Find your vehicle and compare the dealer's financing offer to your preapproval offer.
- Finalize the offer with your lender, following instructions and filling out paperwork to complete the loan transaction. Ensure that the loan is what you've agreed upon. Check the APR, amount financed, and finance charge before you sign off on the loan.
Should You Get an Auto Loan From a Bank or Dealership?
It's worth shopping at both banks and dealerships for an auto loan. New car dealers and manufacturers, just like banks, can have attractive loan products. Depending on the borrower's credit score and market-driven circumstances, the interest rate offered by a car dealer can be as low as zero percent or under the going rates offered by banks.
It's important to keep dealership financing as a possibility, but make sure to look for auto financing before deciding where to buy a car. Know your credit score and search online for bank and other lender rates. This should give you a range of what you can expect in the open market and help you determine if seller financing is a better deal for you.
How Long Are Car Loans?
It's common to see 24-, 36-, 48-, 60-, and 72-month car loans. Terms can be as high as 84 months.
In Q2 2021, the average new vehicle loan was 69.36 months.
Can You Refinance a Car Loan?
Yes, many lenders offer auto loan refinance opportunities, and several promise to make the process quick and easy. It can pay to refinance your loan in several different circumstances. For example, you might be able to improve your rate and monthly payment, shorten the term of your loan repayment, or extend the term if you're having trouble making payments.
Can You Sell a Car with a Loan?
It is possible to sell a vehicle when you still have a loan, but it adds a few extra steps. There are a few different options in this situation. One option is to pay off the loan in full before selling the vehicle, which involves contacting your lender to determine your payoff amount. After paying off the loan, your lender will release the lien.
You can sell a vehicle that's financed without paying it off by selling it to a private buyer or trading it in with a dealer.
What Is the Difference Between an Auto Loan and a Personal Loan?
It's possible to use a personal loan or an auto loan to finance a vehicle, but the two differ in some important ways:
- Purpose: Personal loans are unsecured or secured and can be used for many different purposes, including to finance a vehicle, pay for a vacation, or make improvements to a home. Car loans, however, are strictly to finance a vehicle and are secured against the vehicle you purchase. The vehicle serves as collateral.
- Interest rates: Because auto loans are secured, rates on car loans are generally lower than personal loans.
- Availability: Auto loans are typically easier to obtain than personal loans, especially for those with a poor credit history.
To select the lenders featured on this list, we evaluated loan offerings from 25 different auto lenders using several criteria. First, we looked at auto loan rates, particularly the APR, and loan options available to borrowers. We also considered loan amount ranges, loan types offered, repayment term options, and credit score requirements. Only companies with a solid reputation were considered. Finally, we reviewed customer service satisfaction and each lender's national reach.