Need to finance a new car or a new used car, but don’t know where to get the best auto loan rates? You can find low-rate auto loans with many banks, credit unions, online lenders and dealerships.
With so many financial institutions to choose from, finding the one that offers the lowest auto loan interest rates takes time. But shopping around can save you thousands of dollars over the life of your auto loan and reduce your monthly payments, so it’s well worth the time.
8 Lenders With the Best Auto Loan Rates
Not every lender is appropriate for every buyer, which is why we’ve listed the best auto financing among banks, credit unions and online lenders. While you can occasionally find annual percentage rates (or APRs) below 2%, most will be just north of that, ranging up to 4% depending on the financial institution. Keep in mind that you must have a credit score of 800 or higher to get the best auto loan rates. In addition, some of the listed providers dispense loans directly to consumers, while others match customers with loans.
|Best Auto Loan Rates||Lowest APR||Loan Amounts||Loan Term Length|
|PenFed Credit Union||2.14%||$500-$100,000||Up to 84 months|
|Auto Approve||2.25%||Varies by lender||12-84 months|
|Auto Credit Express||Varies by lender||Varies by lender||Varies by lender|
|RateGenius||2.39%||$12,000 to $100,000||36 to 72 months|
|myAutoloan||2.49%||$5,000 minimum||24-72 months|
|Wells Fargo||3.90%||$2,500 minimum||Up to 72 months|
PenFed Credit Union
America’s second-largest federal credit union, PenFed Credit Union, was founded in 1935 to serve military members, government employees and their families, but it is now open to everyone. It garnered an A+ rating from the Better Business Bureau (BBB), and our review team scores it 8.5 out of 10.0. While it’s not our highest-rated company, it has some of the lowest APRs in the industry, which in turn leads to lower monthly payments. PenFed loans range from $500 to $100,000 for up to an 84-month term, but you must have a minimum credit score of 610 to get them.
Among the lenders we’ve investigated, Auto Approve has scored our highest rating, earning 9.4 out of 10.0. The company’s minimum required income of $18,000 puts its auto loans within reach of many consumers. Auto Approve is accredited by the BBB, where it’s earned an A+ rating and a perfect customer score of 5.0 stars based on more than 500 customer reviews. The company only offers refinance loans, but given the money you can save by refinancing at a lower car loan rate, it’s well worth considering.
Auto Credit Express
For those with bad credit, the best lender to consider is Auto Credit Express, which specializes in this type of loan offer. Although the company has received a few bad customer reviews, overall, it’s a good place to start if you have little or no credit or have gone through bankruptcy. In addition, the company offers special rates to those who serve in the military. We give Auto Credit Express an overall score of 8.5 out of 10.0.
With competitive interest rates and a low minimum credit requirement of 550, RateGenius is one of your better loan options if you need to refinance your existing auto loan. RateGenius will refinance anywhere from $12,000 to $100,000 for 37 to 72 months. We rate the lender 8.5 out of 10.0 and give it an especially good score for borrower experience, as it has thousands of positive reviews online and customers seem very happy with their service overall.
What’s a Good Auto Loan Rate?
Many times, the best auto loan rates you can secure are higher than the lowest APR advertised by a lender. To make sure you’re getting a competitive rate for auto financing, it helps to know the average rates for your type of loan. Here are the average loan rates lenders are offering at credit unions and banks, according to the National Credit Union Administration:
|Loan Type||Loan Term||Credit Union National |
|Bank National |
|Used car loan||48 months||3.16%||5.16%|
|Used car loan||36 months||3.04%||5.10%|
|New car loan||60 months||3.09%||4.81%|
|New car loan||48 months||2.98%||4.70%|
How Are Loan Rates Determined?
Loan rates are determined by a variety of factors, including the type of loan, personal details and your credit score.
It starts with the type of loan you’re seeking. The most common types of loans sought by borrows are purchase loans, where you’re using the money to buy a new or used car, or refinancing loans, which are used to pay off an existing loan with a high APR. These are best for those whose credit scores have recently changed or if you’ve had a change in income. You can also get a lease buyout loan, which finances the purchase of your leased vehicle.
Additionally, lenders consider your income, your existing debts, the amount of the loan and the length of the loan. The longer the loan, the higher the interest rate.
Finally, and most importantly, your credit score will play a major role in how much you pay. The best auto loan rates are available to those with excellent credit. FICO® defines an “excellent” score as being between 800 and 850, and 21% of Americans fall into this range, according to Experian. Sixteen percent of Americans have “very poor” credit scores, which are lower than 579.
Tips for Getting the Best Auto Loan Rates
In order to get the lowest rates from a financial institution, you’ll want to check your credit report, which contains your credit score. This can be done for free through banks, credit card companies or online sites such as Credit Sesame.
If your credit score is not as high as you’d hoped, you can improve it by improving your debt-to-income ratio, aka how much you make vs. how much you spend. Paying down any debt helps improve this ratio and raise your credit score in the eyes of financial institutions. Similarly, you can ask your credit card companies for credit limit increases, which lowers the percentage of your available credit that you’re using, thus raising your credit score. Finally, make sure there aren’t any errors on your credit report. If there are, have them fixed as quickly as possible.
Saving up for a down payment can make a difference as well. A larger down payment reduces your loan amount, which shortens your loan term, lowers your APR and, in turn, reduces your monthly car payment. If you have bad credit, consider having a co-signer with a high credit score, which also reduces your cost of borrowing, as it gives your lender more confidence that the loan will be paid back.
You’ll also get a better rate by taking out a used auto loan instead of one for a new car. Less expensive than the same model purchased new, a used car will save you money, as your car loan will be smaller.
You might consider getting preapproval or prequalification for your car loan. By getting preapproval, you can not only get a lower interest rate on your car loan, but it will also incentivize your dealership to beat the rate you’ve been preapproved for, driving down your APR.
Finally, be sure to shop around for the best auto loan rates.
The Detroit Bureau collects data from every major lender to formulate rankings of the best auto loan companies. Our in-depth rating system takes into account loan quality, loan availability, the application process and the borrower experience. Each provider is given a weighted score in four categories, as well as an overall score out of 10.0.
We recommend auto loan companies based on these rankings, but we also encourage you to perform your own research and compare rates to find the best financing.