We would all be so lucky if we could buy a new car without having to take out a car loan. But since most of us aren’t, then a car loan it is. However, it’s not as easy as just going to the first lender you see or going with the one offered by the dealer. You don’t want to pay more than you should or get steeped in debt. By taking the time to get the best deal, you can be sure that you won’t be biting me more than you can chew. Of course, finding the best rate is easier said than done. You’ll need to take the time to shop around, compare rates, and compare lender-specific benefits. If you don’t have the time to do so, don’t worry. We’ve got your back. Based on our extensive research, the 10 Best Auto Loans are:
*Please note that while we do everything in our power to provide accurate information with recommendations that we came up with during our research, this article does not constitute financial advice. As of now we do not earn any commission from you clicking and purchasing anything from any of these companies, however we do plan to add that feature.
Top 5 Auto Loans Of 2020 Reviewed
1. MyAutoloan
Best Auto Loan Broker MyAutoLoan is not exactly a lender. It is a loan aggregator, soliciting offers from different lenders which is why it can promise to provide you with all major loan types including the few types that are rarely offered by others – lease buyouts, refinancing an existing loan, and private party loan. For the same reason, you can get up to four offers at once. This is perfect for people who don’t have the time to fill out too many applications and for those with average credit scores. Most notably, with an excellent credit score, you can get an APR as low as 1.99%.
| APR | Loan Term | Loan Amount | Hard Pull Credit Check | Minimum Requirements |
| Purchase loans: 1.99% – 24.9%
Refinance loans: 1.84% – 29.4% |
24 to 84 months | $7,500 – $100,000 | Yes |
Credit score: 500 Income: $1,800/month |
Aside from being able to instantly compare offers in one site, MyAutoLoan also has a number of handy tools that can help you in your decision-making. You can use the Interest Rate Estimator to find out what you might get based on your zip code, loan type, and credit information. You can use the Payment Amount Calculator to find out how much you need to pay monthly based on a specific loan amount. The site also provides you with links to other resources such as where to find new or used car values, where to find a manufacturer’s recall notice, and how to conduct a VIN check.
Other features that you might want to note about MyAutoLoan is that it has no application fee, a very detailed FAQ, detailed guides on financing and getting better credit, an auto loan glossary, and a blog.
However, you need to have a minimum income of $1,800 to qualify for a loan. There are also vehicle requirements. The maximum vehicle mileage is 100,000 for private party loan offer types and 125,000 for all other loan offer types. The maximum vehicle age is 10 years old. Also, because MyAutoLoan will be providing your information to various lenders, be prepared to become inundated by calls from lenders and dealers.
2. LightStream
Best Auto Loan For Good Credit If you have good to excellent credit (at least a credit score of 660), one of the best options for you is LightStream. This lender is an arm of SunTrust Bank and allows you to process your entire loan application online. And it promises to beat the competitors’ rates by 0.10% if it meets certain requirements.
| APR | Loan Term | Loan Amount | Hard Pull Credit Check | Minimum Credit Score |
| New car purchase: 3.09% to 7.94%
Used car purchase: 3.34% to 7.94% Private party purchase: 4.14% to 9.54% Refinance: 3.09% to 8.94% Lease Buyout: 3.39% to 10.04% (all with autopay discount) |
24, 36, 48, 60, 72 and 84 months | $5,000 – $100,000 | Yes | 660 |
Another great thing about LightStream is that it has no restrictions on vehicle age or mileage which means you can use the loan for both new and used cars. Plus, you can avail of their loans in all 50 states. Just keep in mind that this lender only allows online applications – email, fax, and phone applications will not be accepted. But because everything is online (even customer service is done all online), LightStream ensures that all customers are satisfied with their service. If not, you get $100 back.
Other things to note about LightStream is that it provides secured and unsecured loans. It doesn’t charge application, prepayment, or late payment fees. Co-signers are allowed. And processing is very quick. Once all the completed documents are submitted (2:30 pm ET), you can expect to receive the funds in your account within one business day.
However, it will use a “hard inquiry” upfront which means that your credit score will get dinged. Applying to LightStream is not ideal for rate-shopping. You’d best be serious about accepting the loan when you get the offer. Also, LightStream may not have any restrictions on the customer’s minimum monthly income but it will base part of its rate on your income and assets. Another thing to note is that if you don’t enroll in AutoPay, the APR listed will increase 0.50%.
3. Capital One
Best Auto Loan For Bad Credit If you have less-than-stellar credit, Capital One should be one of your options. A lot of borrowers with fair and bad credit can get decent APRs from this Fortune 500 company. That is, provided you have a minimum monthly income of $1,500 or $1,800, depending on your credit qualifications.
| APR | Loan Term | Loan Amount | Hard Pull Credit Check | Minimum Credit Score |
| New purchase: 3.24% to 8.20% (depending on the credit score)
Used purchase: 4.14% to 11.20% (depending on the credit score) |
36, 48, 60 and 72 months | $4,000 – $40,000 | No | 500 |
Aside from being willing to work with those that have a credit score as low as 500, this lender utilizes a tool that allows you to pre-qualify for a loan without your credit score getting dinged – the Auto Navigator®. Not only that, this tool also enables you to find cars from over 12,000 participating dealers. And you’ll get to see calculations on monthly payments and APR based on the information you provided.
You can even save the cars that fit your preferences so that you can access them easily as you make your decision. The Auto Navigator also allows you to adjust some of the terms so you can fit your monthly budget such as price, down payment amount, and loan term. With your personalized information in hand, you can present the dealer exactly what you’re looking for and start your negotiations there. You can make changes as you discuss things over and use the tool to make sure that you’re good with any of the adjustments you’ve made.
The Auto Navigator isn’t the only tool that you can use. Capital One also features a Car Payment Calculator that allows you to calculate the monthly payment you’ll be making based on the loan amount, APR, and terms you have. This is an especially insightful tool if you are able to get information on the average rates offered by various lenders without having to submit an application and get a hard pull on your credit. And there’s also the Learning Center which is chock full of articles ranging from finding the best car incentives and rebates to how to negotiate a deal.
However, Capital One does have vehicle requirements. Mileage must not be more than 120,000 and the vehicle cannot be older than a 2007 model (in certain states, the model must be 2008 or newer). You also cannot use the loan to purchase Oldsmobile, Daewoo, Saab, Suzuki or Isuzu vehicles.
Also, loan types are limited to new and used cars. If you want to buy out your lease or get a loan for a car sold by a private party, this is not the lender for you. Because the maximum loan amount is just $40,000, you might not get enough to cover the car you want. Plus, the dealer may charge you additional fees, including document fees, dealer preparation fees, and delivery charges.
4. LendingTree
LendingTree works much like MyAutoLoan. It has a network of trusted lenders that it will connect you to once you complete their form. The beauty of such a service, as we’ve already mentioned, is the fact that you don’t have to shop around multiple sites and submit multiple applications when you can do all of that in this one-stop shop.
| APR | Loan Term | Loan Amount | Hard Pull Credit Check | Minimum Credit Score |
| Varies based on lender; As low as 1.85% | 12 to 84 months | Varies based on lender | Yes | None |
Aside from letting you apply for new and used car loans, LendingTree also has tools that you can use to help you figure out what car you can afford, how much your monthly payments will be, and if refinancing is in your best interest. With the Auto Loan Calculator, you even get to see the amortization breakdown (how much goes to interest and to the principal each year) and compare loan terms.
Because LendingTree is just a broker and not the actual lender, you won’t know about the vehicle restrictions until you get in touch with the lender. Also, your contact information will be distributed within its network so be prepared to deal with cold calls and spam email. Take note that the auto loan you get here cannot be used to purchase a car from a private party. You will need to apply for a personal loan if that is what you’re planning to do. One last thing to note is that not all the offers will be good or competitive. You may still need to do some legwork on your own.
5. Auto Credit Express
Best Auto Loan After Bankruptcy Auto Credit Express’ motto is Rebuilding America’s Credit. And it does so by helping those with poor credit to get the right financing by matching them with lenders and dealerships who are willing to give these individuals a change. This includes special-finance dealers. Whether you have a history of bad credit, no credit, bankruptcy, or repossession, you can be sure you’ll find a fair deal to help you buy that new or used car. And before you think that this lender is a scam, you’ll be happy to know that it has an A+ rating with the Better Business Bureau.
| APR | Loan Term | Loan Amount | Hard Pull Credit Check | Minimum Credit Score |
| 3.99% – 29.99% | 36, 48, 60 and 72 months | No restrictions | Yes | none |
There are also other things that you might like about Auto Credit Express. First, it doesn’t have any vehicle requirements. You can get any old car you want. Second, you may be able to qualify for a $0 or low down payment even with your bad credit. You just need to be able to meet some qualifications such as having a minimum pre-tax monthly income of $1500.
Aside from providing you access to decent auto loan offers, Auto Credit Express also provides you tools and resources to help you estimate your loan amount and monthly payment as well as to check your credit reports, how to fix it, and other bad credit loan options that you didn’t know were available to you.
However, you need to make sure that you opt out of receiving additional offers from other vendors as well as from getting an offer for a credit monitoring service. It’s not easily noticed which is why a lot of customers who loved the service still complained about the amount of spam they received from other lenders. Also, you won’t be able to get a loan here for purchasing a car from a private seller.
How to Choose the Best Auto Loan Provider: The Ultimate Buying Guide
One of the biggest mistakes made by car buyers is to look for financing after they’ve made their choice on the vehicle…. something that happens in the dealer’s financing office. Which means that you end up with a much higher rate and probably thousands of dollars poorer. To save yourself from making such a costly mistake, you’ll need to make sure that you already have a loan offer on hand before you even head out to the dealership and look at cars. So, the question is, how do you find the best auto loan? Well, this guide should tell you how to do it.
What is an Auto Loan?
Before you even try to figure out how to apply and who to send your application to, you first need to understand how car loans work. Auto loans are generally simple interest loans. You get the cash you need to pay the dealer or private party (whoever is the seller) for the car. You pay back the money to the lender plus interest over a period of time. The money that you owe is called your loan principal, loan amount, or financed balance. The interest is actually the cost of borrowing money.
The amount of interest will be based on the interest rate which is a percentage of the loan principal. Interest rates are usually referred to as the annual percentage rate (APR). With some lenders, the APR also includes any lender fees such as origination fees). The loan term is the period of time that you’ll have to pay back the loan amount plus the interest. Typically, loan terms are 36 to 72 months. Also, payments are usually made monthly.
What is Your Credit Score?
When applying for an auto loan or any loan for that matter, the most important factor that will determine your approval AND interest rate will be your credit score. Your credit score shows lenders your creditworthiness. It gives them a better idea of how likely you will be able to pay off the entire loan as promised. Your credit report, on the other hand, will give them a clearer picture of your finances and financial responsibility.
Like, how much debt you have, how much debt you have available based on your credit card limits, how long you have been using credit, how timely you are with your payments, etc. More importantly, your credit report will show them your debt-to-income ratio – how much you owe versus how much you earn. If you owe more than you earn, chances are that you’ll get a very high-interest rate or even get turned down. All these factors may also affect how long the loan term will be and the amount they’ll be willing to give you.
The last thing you want to happen is to apply for a loan and find out that you’ve been approved for a very high APR or, worse, rejected. First of all, any leader worth their salt will be checking your credit which can result in a ding on your credit, depending on the type of credit check that is performed. You don’t want to lower your score for anything, right? Which means, it’s best if you know beforehand what that score is so you can prepare (we’ll get on this topic later).
Fortunately, everyone is entitled to a free credit report from all three major credit bureaus – Equifax, Experian, and TransUnion. Make sure you get yours so you already know what you’re working with. myFico actually has a Loan Savings Calculator that will show you what the typical interest rate will be based on your credit score, how much your monthly payment will be, and how much total interest you’ll end up paying. You can even see how different scores will affect the rate and amount of interest.
Knowing your credit score can also ensure you never submit an application to a lender that will more than likely decline your application. Some lenders such as MyAutoloan can offer loans to consumers with a credit score as low as 500. Others like LightStream will only consider those with good to excellent credit.
How Much Can You Afford?
Before shopping around for the best deals, you have to make sure that you know exactly how much loan you can afford to take on. Don’t let the car of your dreams influence your decision. Let your budget do the talking. The Federal Trade Commission’s “Make a Budget” worksheet can help you create a realistic budget as well as determine the loan amount and monthly payment that you can take on without defaulting.
A good rule of thumb to follow is to use no more than 20% of your disposable income (income you can use after paying off all existing debts and living expenses). Make sure that this 20% also includes your insurance and cost of fuel.
Also, look at your budget to see if you can make a down payment. A down payment will lower the loan amount because it means that you’ll be borrowing less money. In addition, lenders give a more favorable rate if you provide a down payment because it shows your commitment to the purchase.
One other thing you should consider is how much time you want to give yourself in repaying the loan. Ideally, your loan term should be three to five years. The shorter you can make it, the better. If the car you want to buy will take you more than 5 years to pay based on the monthly payment you can afford, then the car you want is most likely too expensive for your budget.
Who are the Lenders?
Once you have your credit report and your budget, you can now get started on shopping around for the best rates. There are two types of lenders in this market – indirect lenders and direct lenders.
Indirect lenders are the dealerships. They offer you a loan along with the vehicle of your choice. However, they’re not actually the one financing the loan. They will match you with one of their lending partners and if one of them agrees, they will give the dealer the “buy rate.” Now, the buy rate is the base rate of the loan.
The dealer can add more to that base rate which means that the final interest rate provided to you will be higher than what the lender is charging. And the dealer is the one who gets the money from the extra interest that you pay. This is the reason why dealer-arranged financing tends to have higher interest rates compared to the ones offered by a direct lender.
Direct lenders, on the other hand, are the banks, credit unions, and online lenders. You can submit multiple inquiries with these lenders to see if you will be pre-approved for a loan and what rate they can offer. These lenders can also offer discounts on your interest rate. For example, some lenders offer a discount on your interest rate if you sign up for automatic payment or pay online.
Some banks will give you a discount if you already have an account with them or you’re buying a specific type of car. With a pre-approved loan offer that you are comfortable with, you are more able to focus on getting the best price for the car you want.
Do Your Homework
Before sending an application to any lender, check what the current auto loan rates are. You can contact banks and credit unions for their average rates. Some commercial sites enable you to see an estimate of the interest rates by zip code.
Some lenders like Capital One even have tools that will allow you to estimate your monthly payment based on the average interest rate in your area, your ideal loan amount, and loan term. You can even use the site to look at various cars and their prices from dealers near you.
Think about any add-on products and services that you might also want to buy. These include service contracts or extended warranties, credit insurance, GAP insurance, alarm systems, window tinting, and wheel protection. You can include these add-ons to your loan amount or consider buying them separately. Remember, if you do add them to your loan, you will end up paying more than their actual value due to the interest.
Take the time to research the car/s that you are interested in buying. What’s the average sticker price? Also, check if the car of your choice is not “restricted” with lenders. Some lenders will exclude certain makes and/or models of cars. Others will only work with certain dealerships. Some will not lend money to customers who want to buy a car from a private seller. And some will not have any restrictions at all such as LightStream.
Time for Shopping
Make sure to do all your shopping within a short time frame – from 14 days to 45 days – so that all the credit checks pulled by the lenders will be lumped together as one instead of individually. Remember, lenders will check your credit to see if you prequalify for a loan. While these are typically soft inquiries (no effect on your credit score), some like LightStream will pull a hard inquiry that can ding your score by 5 points.
Take note that this only occurs if you’re shopping around for the same loan type and terms because the system recognizes that as comparison shopping. If you shop around for the same loan type too far apart, the separate hits to your credit score will cost you big.
Remember, with a pre-approved loan in your hand, you’re technically considered a “cash buyer” by the dealer. This means you can negotiate the best deal on the price of the car instead of haggling over monthly payments.
Submitting Your Requirements
Once you’ve done your research, it’s time to get busy sending in applications. Most lenders will require you to submit the following information:
- Name
- SSN or ITIN
- Date of birth
- Current and previous address(es) and length of stay
- Current and previous employer(s) and length of employment
- Occupation
- Sources of income
- Total gross monthly income
- Financial information on current credit accounts, including other debts
Make sure to disclose whether you’re going to be using the vehicle for business or for ride-hailing services such as Uber. Some lenders restrict the use of the vehicle or will require you to get a different kind of loan. If the lender finds out that you provided false or incomplete information, this could lead to your loan getting canceled.
Start Your Comparisons
Once you get the loan offers to come in, it’s best if you create a worksheet or a table that allows you to easily compare one loan to another. Aside from looking at the APR, you need to check the additional fees charged by the lender such as the origination fee and prepayment penalties.
Make sure that your loan amount will have enough room to also pay taxes and title fees. Include the down payment you’re willing to pay, the monthly payment listed in the offer, and the loan term. Once you have all that, calculate the total cost of your purchase and list the sticker price of the vehicle. Listing all the information down will allow you to see how much more money you’ll be paying to get the car (interest) and if the total amount is still reasonable. Always look at how many of the factors are affecting your bottom line.
Take note that these preapproved rates and terms are final. These could still change once the loan becomes finalized. Also, you can negotiate some of the terms such as the length of the loan, the APR, and the fees.
If you do get the loan feature you want such as a lower APR, make sure that the other factors remain the same (i.e. same loan term and loan amount). Remember, you’re in the driver’s seat when you’re buying an auto loan. Competition is fierce among lenders that even those with bad credit can get a good deal. A little higher but still good.
Below is a sample table showing a comparison of the rates typically offered by our top 3 picks:
| MyAutoloan | LightStream | Capital One | |
| APR | Purchase loans: 1.99% – 24.9%
Refinance loans: 1.84% – 29.4% |
New car purchase: 3.09% to 7.94%
Used car purchase: 3.34% to 7.94% Private party purchase: 4.14% to 9.54% Refinance: 3.09% to 8.94% Lease Buyout: 3.39% to 10.04% (all with autopay discount) |
New purchase: 3.24% to 8.20% (depending on the credit score)
Used purchase: 4.14% to 11.20% (depending on the credit score) |
| Loan Amount | $7,500 – $100,000 | $5,000 – $100,000 | $4,000 – $40,000 |
| Loan Terms | 24 to 84 months | 24, 36, 48, 60, 72 and 84 months | 36, 48, 60 and 72 months |
| Fees | no application fee; lenders may have fees | None | None; dealers may have fees |
| Minimum Credit Score | 500 | 660 | 500 |
| State Restrictions | Not available in Alaska and Hawaii | None | Not available in Alaska and Hawaii |
| Vehicle requirements | Maximum vehicle mileage: 100,000 for private party loan offer types and 125,000 for all other loan offer types.
Maximum vehicle age: 10 years old |
None | Mileage must not be more than 120,000 and the vehicle cannot be older than a 2007 model (in some states, no older than 2008) |
| Hard Pull Credit Check | Yes | Yes | No |
| Minimum Monthly income | $1800 | None | $1500-$1800 depending on the credit score |
A few Important Things to Know About Monthly Payments
Some people might not be aware of this but the date of your payment can actually affect how much of it will go to the balance and how much to the interest. Paying earlier than your due date means more of your payment will be going to the balance and not the interest because the lender didn’t get to wait for as long as it expected to so the interest is less. Paying on time will mean paying off the amount of interest that you have listed on your contract. Paying later than the due date means more of your payment will be allocated to the interest rather than the balance.
The three main components of your loan – loan amount, APR, and loan term – can also affect your monthly payment. With a lower loan amount, you can save more money in the long run. That’s kinda obvious, right? The less you borrow, the less you owe. But it’s still a necessary reminder for some people so we’ll leave it there.
The next is the APR. A lower APR means you’ll be paying less interest which, in turn, means paying less each month. Let’s say you want a $25,000 car loan with a 4-year term. You get two offers: one is 3% APR while another is 2% APR. The lower rate will save you approximately $11 per month. Now, it may not seem like much but over the 4-year term, that will amount to $528 worth of savings.
What about the loan term? A longer loan term means a lower monthly payment which is great. But it also means that you’ll end up owing more because it takes more time for you to pay back the entire loan. This is because a longer loan term means higher interest. Not to mention that cars depreciate fast.
A longer loan term may mean that your loan balance may eventually be higher than the current value of your car. In fact, you may end up still paying for the car when it’s old enough to require serious repairs. The recommendation is to keep your loan term as short as you can afford, ranging from 3-5 years. To see how much you’ll end up paying in total based on the amount, APR, and term, you can use Bankrate’s Loan Calculator.
One thing you should always keep in mind that there’s no one-size-fits-all auto loan. There are different factors that a lender uses to determine the loan that they’ll offer. What’s important is that you make sure that you choose the deal where you save more money AND will be able to comfortably pay off each month. And once you do choose the best one, make sure to read your paperwork and verify that everything you agreed on is written there. Read the fine print. Ask questions. Once you’re totally satisfied, sign on the dotted line and breathe a sigh of relief. Now, get to work and start paying off your new loan!
