You’ve found the perfect car or truck. It probably took you some research and a few test drives to decide on your new vehicle. Now, all you need is the financing to pay for the vehicle. Will you be putting in as much effort into finding the best car loan as you did your new car?
You’re going to be on the hook for a few years’ worth of car loan payments so don’t sign up for the first car loan that comes your way. Do your research and compare companies to choose from the best car loan rates available, as it could save you thousands of dollars.
Compare Current Auto Loan Rates
When you’re buying a car, or refinancing a new car loan, it’s important to find the terms and rate that’s best for you. Here are some of the top lenders offering the best car loan rates:
|Lender||Current APR||Minimum Loan||Features|
|Capital One||Starting at 3.59%||$4,000||Soft credit pull and 12,000 dealerships nationwide|
|Carvana||Starting at 4.43%||No minimum||No minimum credit score as long as you make at least $10,000 per year|
|Consumers Credit Union||As low as 2.99%||$250||Join for $5 to get the best car loan rates|
|Lightstream||Starting at 3.99%||$5,000||Best rates for excellent credit|
|OneMain||18% – 35.99%||$1,500||Fast auto loans when you need same-day funds|
|U.S. Bank||4.59%||$10,000||Best for loans to buy a car from a private seller|
6 Top Auto Lenders
We’ve put together a selection of the top car loan providers that offer competitive interest rates and make the whole car loan comparison process easier. You can shop for the best interest rate using your computer or a smartphone, right from your armchair.
Car loan providers that offer pre-approvals will give you an accurate estimate of what interest rate you can expect to pay by checking your credit history via a soft pull, which won’t affect your credit score.
Capital One makes car shopping easy. You can apply online for loan preapproval using the Auto Navigator program. Preapprovals through Capital One are credit soft pulls that won’t affect your score. You can print out the preapproval letter and take it with you to more than 12,000 dealers when you go car shopping to lock in a vehicle — and a good rate.
Carvana is geared to be an online one-stop shop where you can buy a used car and finance it in one spot. Carvana is a great choice for buyers with poor credit. Carvana has no minimum credit score requirements and you can qualify for an auto loan if you make at least $10,000 annually and have no current bankruptcies.
Credit unions are the best place to get a low-interest car loan. But most require members to qualify by being part of a workers’ union, military or resident of a certain state. Luckily, you can join CCU by paying a $5 fee and keeping at least that amount in a savings account to get an auto loan rate as low as 2.99%. You’ll need at least a 640 credit score to get approved.
LightStream is SunTrust Bank’s vehicle loan branch. If you have very good credit, you’ll qualify for its low rates. This company will also beat other lenders’ offers by 0.10% if you present an offer from a competitor with the same loan terms. Lightstream will do a hard pull on your credit, so make sure you’re ready to lock in with the lender before it checks your credit. LightStream sells fast auto loans and can fund your auto loan as quickly as that same day.
OneMain is an option for borrowers with a low credit score looking for fast auto loans. This lender accepts loan co-signers and lower credit scores other banks may not qualify, but these perks come with a higher interest rate. You can get funded same-day if you’re ready to close the deal on your next car.
If you’re looking for a traditional bank that offers a great combination of vehicle loan options and competitive interest rates, you’ll like U.S. Bank. Besides new and used car loans and refinance car loans, it’s one of the few banks that offer financing for used cars purchased from private sellers.
What is a Car Loan?
A standard car loan is a fixed-rate personal loan to pay for your vehicle over an average period of two years to six years. Your monthly payments don’t change and you can usually pay the loan off faster without any prepayment penalties. Keep in mind that additional payments made to a car loan do not lower the monthly payments, but just shorten the life of the loan.
Car dealers, credit unions and banks offer new and used car loans as well as refinancing on car loans, so it’s best to shop around to get the best rate and terms. The three most important factors to look for are the interest rate, loan term and the amount of your monthly payment.
The factors above will vary depending on your credit score, credit history, how much you borrow and the size of your down payment. You can adjust the size of your monthly payment by opting for a longer or shorter loan term or paying a larger down payment. The longer your loan term and the larger the loan, the more interest you will pay.
Car Loans vs Refinance Car Loans
There are times when you might want to consider refinancing to adjust your monthly payment or interest rate. You can refinance your auto loan if you find a better deal or your credit score has improved. In most cases, refinancing is worth your time. It doesn’t cost money to refinance, but it can help out your financial situation in different ways. Here are some reasons why you might want to:
Interest Rates Decreased
If you find that interest rates have dropped significantly since you got your new car loan or you didn’t get the best deal because you went with the dealer offer without researching, refinancing your car loan at a lower rate may save you money. Saving as little as $20 per month on your monthly payment can add up to $1,000 in savings over four years.
Your credit score improved
If you’ve been paying your car payments on time for at least a year, your credit score may be higher than when you bought the car. And a better credit score could mean you can refinance with more favorable terms like a lower interest rate, saving you money on your monthly payments.
Changes in Your Financial Situation
If changes to your finances makes your car payment a burden on your budget, refinancing over a longer term or with a lower interest rate could lower your monthly payments to make your bills more manageable.