Best Auto Loan Rates of 2020

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Points of Interest

Before locking in that auto loan, you need to make sure you’ve explored your options. This is the best way to secure a loan that fits your needs and the only way to make sure you’re not leaving any money on the table.

You’ve found the perfect car or truck. It probably took you some research and a few tests 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’ worths 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. Also, consider using an auto loan repayment calculator to get a preview of how much your new car will end up costing you. 

Capital One 

Current APR: as low as 3.59%

Minimum Loan: $4,000

Features: Auto Navigator can help streamline the buying process. 

Carvana

Current APR: as low as 3.90%

Minimum Loan: no minimum

Features: Lax credit qualifications 

Consumer Credit Union

Current APR: as low as 2.69%

Minimum Loan: $250

Features: Widespread availability in all 50 states

LightStream

Current APR: as low as 3.49%

Minimum Loan: $5,000

Features: Minimum credit score of 660 required, but co-signers allowed 

OneMain

Current APR: as low as 18%

Minimum Loan: $1,500

Features: 24-hour funding 

U.S Bank 

Current APR: as low as 4.56%

Minimum Loan: $3,000

Features: no down payment required 

Capital One 

Superlative: Best for an easy preapproval process

Capital One makes car shopping easy. You can apply online for loan preapproval using the Auto Navigator program. You can also use this feature to shop for cars without leaving your couch. This can save you a lot of time compared to shopping for cars at a dealership, especially if you already have a specific make and model in mind. Pre-approvals through Capital One are soft credit 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

Superlative:  Smooth online shopping experience

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. However, co-signers are not allowed, which means you can’t bank on a friend or relative to help you get approved if you’re denied for a loan on your own. Another thing to keep in mind is that Carvana’s car loans only finance the cars on its website. If you want to buy a car sold elsewhere, you will need to shop elsewhere for your loan. 

Consumers Credit Union

Superlative: A smart option for low-credit borrowers

Credit unions are some of the best places 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. In return, you can get an auto loan rate as low as 2.69%. 

You’ll need at least a 640 credit score to get approved with Consumers Credit Union, but it offers the lowest APR of all the options on this list, so if you’re interested in securing the lowest possible rate, you might want to consider jumping through the hoops to join CCU. 

LightStream

Superlative: Best for borrowers with excellent credit

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. Also, these loans come with no prepayment penalty, so you can repay them early without worrying about taking a hit for it. 

OneMain Financial

Superlative: A good option for new borrowers

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, by far the highest interest rate of any option on this list. However, you can get funded the same day if you’re all set to close the deal on your next car. 

U.S. Bank

Superlative: Best for private party purchases

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. Aside from new and used car loans and refinance car loans, it’s one of the few banks that offers financing for used cars purchased from private sellers. However, while most lenders offer better rates when financing new cars, U.S Bank offers the same rates for both new and used cars. 

LenderCurrent APRMinimum LoanFeatures
Capital Oneas low as 3.59%$4,000Auto Navigator can help streamline the buying process.
Carvanaas low as 3.90%No minimumLax credit qualifications 
Consumer Credit Unionas low as 2.69%$250Widespread availability in all 50 states
LightStreamas low as 3.49%$1,500Minimum credit score of 660 required, but co-signers allowed
OneMainas low as 18%$1,50024-hour funding
U.S Bankas low as 4.56%$3,000No down payment required

What APR should I expect with my credit score?

Every lender is different and will have its own precise methodology to determine your rates. That being said, your credit score is still a pretty good indicator of how much lenders will charge you to borrow money. Needless to say, if you have a bad credit score, the rates you qualify for won’t be so great. However, there are some lenders who offer good rates for consumers with bad credit, so don’t lose hope if you fall into this category. 

The top tier of borrowers will get the best rates, but your credit score doesn’t have to be north of 800 to fall into this category. Auto lenders use different scoring models than FICO, and it’s hard to predict exactly which one you will be evaluated by. 

Lenders break borrowers up into brackets. For example, they may offer all borrowers whose scores fall between 740-800 one rate, while offering borrowers who fall between 700-739 another rate. 

In this case, it won’t make much difference if your score is 740 or 780. However, if your score is 739, you fall into a lower bracket and would end up paying a higher APR, even though you’d only be 1 point away from the next bracket. 

The final word

A low APR is a major selling point for many consumers when shopping for auto loans. We all want to save as much money as possible, but when rate shopping, you should still be aware of fees and conditions that can transform what seemed like a good deal into a financial nightmare. Fees are a normal part of any transaction, but if the fees start cutting into your savings, this may be a sign you need to find another loan. If you’re forced to settle for an unfavorable APR, try improving your credit score and refinancing your auto loan to secure a lower rate. 

Bents Dulcio

Personal Finance Contributor

Bents Dulcio is a personal finance writer based out of Orlando, Florida. His work has been featured in Debt.org, InCharge.org and elsewhere.