Best Auto Loan Rates

PenFed Credit Union wins the best rates for car loans

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An auto loan helps consumers buy or refinance their car without having to pay cash upfront. Instead, using a car loan, car buyers can borrow against their car and then pay off their loan over time through fixed monthly payments.

The best auto loan rates charge consumers the least amount of interest over time and are also available from lenders that offer quick and easy application processes and seamless online account maintenance tools.

Best Auto Loan Rates of November 2021

Best Overall : PenFed Credit Union


PenFed Credit Union

 PenFed Credit Union

  • APR range: As low as 0.99%
  • Minimum loan amount: $500
  • Repayment terms: 36 to 84 months
Why We Chose It

With rates as low as 0.99% for new cars and minimum loan amounts of $500, PenFed Credit Union wins our spot as the best overall.

Pros & Cons
Pros
  • Offers new, used, and refinance loans

  • Easy online application

  • Finance up to 125% on new and used cars

Cons
  • Must be a member of the credit union

  • Lowest rates only available through its car-buying service

Overview

Officially Pentagon Federal Credit Union, PenFed Credit Union was created to serve military members and their families. Now, anyone can become a member for $5.

PenFed Credit Union has partnered with national car-buying service TrueCar to offer its members low car loan rates on the market. Rates for new car loans are as low as 0.99% purchased through TrueCar and 1.79% for all other new cars, along with financing of up to 125% available. Used auto loan rates start as low as 1.99% for a 60-month term when you go through TrueCar.

PenFed’s lowest car rates are only available if you use their car buying service, which is limited to select dealerships. The credit union’s most flexible loan amounts are offered with short terms. For instance, a 36-month new car loan has a minimum $500 loan amount while loans of 73–84 months have a minimum of $20,000.  

Runner-Up, Best Overall : Consumers Credit Union


Consumers Credit Union

 Consumers Credit Union

  • APR range: As low as 2.24%
  • Minimum loan amount: None
  • Repayment terms: 0 to 84 months
Why We Chose It

Consumers Credit Union offers auto loans nationwide that finance 100% of your new or used vehicle, making it our choice as the runner-up for the best overall lender.

Pros & Cons
Pros
  • Offers new, used, and refinance loans

  • No minimum or maximum loan amount

  • Available in all 50 states

Cons
  • Must be a member of the credit union

  • Lowest rates available only for those who qualify

Overview

Consumers often like credit unions because they often have lower interest rates compared to banks. Everyone who has an account at a credit union is part owner, so institutions like Consumers Credit Union (CCU) can give their members incredible deals. Many credit unions have membership qualifications, such as being part of a military branch, an alumnus from a specific school, or a resident of a particular state.

CCU requires you to pay a $5 fee and keep at least that much in a savings account. In return, you can get auto loan rates as low as 2.24% on 2019 model cars or newer. These loans include fixed rates, mechanical repair coverage, and an interest method that lets you pay interest only on the unpaid amount of the loan.

The potential downside to CCU loans is that not everyone will be approved. You should have at least a decent credit score to qualify. As with any loan, CCU will do a hard credit check with each application, so it’s important to apply only if you’re serious about buying a car.

Best for Bad Credit : Oportun


Oportun

 Oportun

  • APR range: Capped at 35.99%
  • Minimum loan amount: $300
  • Repayment terms: Not Listed
Why We Chose It

Opportun is our choice as the best for bad credit since it offers personal loans with limited credit score requirements and an easy online application, and funds available within 24 hours.

Pros & Cons
Pros
  • Wide range of credit situations accepted

  • Easy online application with instant approval

  • Pre-qualify with a soft credit check

Cons
  • Only available in 35 states

  • High interest rates

Overview

Having less-than-perfect credit shouldn’t keep you from getting the car you need. While you shouldn’t expect the low rates those with great credit receive, you can avoid overpaying with Oportun. Through this online lender, you can get a loan for a car that you purchase from an auto dealer or a private party. Since ​buying through a private party can be cheaper, this can save you big bucks over dealerships.

Oportun will lend to people with limited or no credit history. You should have proof of income to apply. Loan amounts can range from $300 to $10,000, so you can get the car you want. Best of all, Oportun does not require a hard credit check when prequalifying and checking rates. So, looking around won’t hurt the score you’re trying to fix. The application takes only a few minutes, is completely online, and results in an instant decision. If you live in one of the states where Oportun is available, this is an excellent choice.

Best Big Bank Lender : Capital One


Capital One

 Capital One

  • APR range: Not Advertised
  • Minimum loan amount: $4,000
  • Repayment terms: Not Advertised
Why We Chose It

Capital One gives car shoppers the peace of mind of working with a major secure lender, placing it in the top spot as the best big bank lender.

Pros & Cons
Pros
  • Pre-qualify with a soft credit check

  • Big bank lender provides security

Cons
  • Must contact dealer directly to confirm vehicle is in stock

  • Loans only available through the lender’s network of dealers

Overview

Understandably, some people aren't as comfortable using lesser-known or niche lenders for something as crucial as an auto loan. If you want the backing of a major financial institution with a household name, Capital One may be your best bet. If you're in the market for a new or used car, you can submit a request to get pre-qualified for auto financing through the bank's Auto Navigator program. This early step does not affect your credit since it is a soft pull. 

The pre-qualification is then valid at more than 12,000 dealers throughout the nation, each of which you can find on Capital One's website. Just present the qualification note at a participating dealership and begin the full application process once you find the perfect ride.

Best for Refinancing : OpenRoad Lending


OpenRoad Lending

 OpenRoad Lending

  • APR range: Not Advertised
  • Minimum loan amount: $7,500
  • Repayment terms: Not Advertised
Why We Chose It

OpenRoad Lending specializes in auto refinancing that can save customers an average of more than $100 per month, making it our choice as the best for refinancing.

Pros & Cons
Pros
  • Easy online application

  • Specializes in refinancing

  • No application fees

Cons
  • No option to prequalify and check rates with a soft pull

  • Vehicle age and mileage restrictions

Overview

While getting a new set of wheels is exciting, there's something to be said for sticking with a reliable ride. However, if your credit improved, you paid off debt, or you got a raise since you first financed your auto loan, you may be paying too much. 

OpenRoad Lending allows eligible applicants to refinance existing loans and save an average of $100 per month on their car payments. The application process is simple and entirely online. Within as little as a few minutes of applying, you can receive your decision with complete details about the loan.

If you run into any trouble with your application, OpenRoad Lending's customer service team can help. Perhaps that's why 98% of customers say they're satisfied with their loans. Before applying, you should know that there is only the option to apply with hard credit pull. It is not possible to prequalify or check rates with a soft pull, so this service is only for people serious about refinancing. The higher your credit score, the lower your rate will be.

Best for Tech Junkies : Carvana


Carvana

Courtesy of Carvana

  • APR range: Not Advertised
  • Minimum loan amount: None
  • Repayment terms: 36 to 72 months
Why We Chose It

Carvana offers a completely online shopping experience, from financing to delivery with no minimum loan amounts, and is our choice as the best for tech junkies.

Pros & Cons
Pros
  • Prequalify with a soft credit check

  • No minimum credit score requirement

  • End-to-end online shopping experience

Cons
  • Financing for Carvana’s vehicles only

  • $4,000 minimum annual income required

  • Only used vehicles

Overview

It seems like every industry is cutting out go-betweens these days, and the car industry is no exception. If you would rather skip the dealership and the bank altogether, Carvana is the site for you. Without ever leaving your home, you can apply for a car loan, choose your car, and get it delivered. If you want to trade your old car in, you can do so while you're at it. Carvana will give you an offer and pick it up from your home.

Best of all, these loans aren't just easy to get; they are great deals for all kinds of borrowers. There is no minimum credit score, so anyone 18 years old, has no active bankruptcies, and makes at least $4,000 per year is eligible. 

Carvana offers custom loan terms based upon your situation and the vehicle you're buying. Each vehicle you might want to buy could have different loan terms from Carvana. You can see your loan terms by prequalifying with a soft pull that won't hurt your credit. Plus, without pushy salespeople, you can be sure that you can relax and choose the car you want.

If you're not sure how much of a loan you can afford, you can use Carvana's Auto Loan Calculator.

Best for Shopping Around : LendingTree


LendingTree

 LendingTree

  • APR range: As low as 0.99%
  • Minimum loan amount: Varies by lender
  • Repayment terms: Varies by lender
Why We Chose It

LendingTree makes it easy to compare rates from dozens of lenders and offers a variety of helpful financial calculators, placing it in our top spot as the best for comparing rates.

Pros & Cons
Pros
  • Compare auto loans from multiple lenders

  • Search by new, used, refinance, or lease-buyout options

  • Loan-payment and credit-score tools

Cons
  • Search process requires personal and financial details

Overview

If you are tossing around the idea of getting a new car but are not sure if it will fit in your budget, stop by LendingTree first. Without affecting your credit, you can shop from a variety of lenders. You can use this feature for refinancing, new cars, used cars, or lease buyouts. Just enter your desired loan type, down payment, financial status, and the vehicle you want. Then, LendingTree will match you with lenders.

You can compare the offers to find the best rates and terms for your life. If you decide to apply, the lender will require a full application. LendingTree can also help with a loan-payment calculator, free credit-score finder, and other tools. 

Best for Shopping Around for Refinancing : LendingClub


LendingClub

 LendingClub

  • APR range: 2.99% to 24.99%
  • Minimum loan amount: $4,000
  • Repayment terms: 24-84 months
Why We Chose It

Using a soft pull on your credit, LendingClub allows borrowers to compare refinancing options instantly.

Pros & Cons
Pros
  • Easily compare refinance rates online

  • Pre-qualify with a soft credit check

  • No origination fees or prepayment penalties

Cons
  • Not available in all states

  • Some vehicle restrictions

Overview

Although LendingClub made a name for itself with peer-to-peer personal loans, the online lender now offers auto-loan refinancing. If you're looking for ways to lower your monthly bills, LendingClub can help by showing you your refinancing options

First, complete the initial application and get instant offers. This step is a soft pull on your credit that won't change your score. Then you can compare the details of each proposal to see which best fits your needs. Whether you need to lower your interest rate, increase the length of your loan, or both, you can find the right lender.

Once you decide on an offer, you can finish the official application. The process is entirely online and easy, and you won't pay an origination fee for your loan. Sit back and enjoy a smaller monthly payment. Rates start at 2.99%. Whether you're sure you want to refinance or just seeing what's out there, LendingClub is a great option.

Final Verdict

The freedom of a new, used, or refinanced car shouldn’t be spoiled with long terms or monthly payments that break your bank. That’s why it’s important to shop around for the best rates and lenders.

A good place to start your search is with PenFed Credit Union. It offers some of the lowest rates and minimum loan amounts we’ve come across, a wide range of payment terms, and is available in all 50 states and Washington, D.C.

Compare the Best Auto Loan Rates

Lender Lowest Rate Loan Amount Terms
PenFed Credit Union Best Overall 0.99% $500 - $100,000 36 - 84 months
Consumers Credit Union Runner-Up, Best Overall 2.24% No minimum or maximum 0 - 84 months
Oportun Best for Bad Credit Not disclosed but max of 35.99% $300 - $10,000 Not disclosed
Capital One Best Big Bank Lender Not disclosed Minimum $4,000 Not disclosed
OpenRoad Lending Best for Refinancing Not disclosed $7,500 - $100,000 Not disclosed
Carvana Best for Tech Junkies Not disclosed No minimum or maximum 36 - 72 months
LendingTree Best for Comparing Rates 0.99% Varies by lender Varies by lender
Lending Club Best for Finding Refinance Options 2.99% Minimum $4,000 24 - 84 months

Frequently Asked Questions

What Is a Good Interest Rate on an Auto Loan?

Interest rates on auto loans depend on your creditworthiness, the vehicle being financed, the details of the loan, and market rates. Creditworthiness is a combination of your credit score, payment history, income, and if you’ve financed a vehicle before. Whether the car is new or used impacts the rate, as does the loan term, which is the loan length.

Current market rates also affect your auto loan rate. Typically, credit unions offer customers lower rates than other lenders. The market constantly fluctuates, but a rate less than 5% generally is considered good. 

Can You Negotiate Auto Loan Rates?

Just like the price of a car, auto loan rates often can be negotiated. Sometimes you can negotiate the rate with the dealer or directly with the lender. The better your overall financial picture, the more success you will have negotiating your rate. You also can negotiate loan terms. For example, maybe you don’t want to make a payment for the first 90 days, or you want to finance the vehicle for 60 months instead of 48. 

How Can I Get the Best Auto Loan Rate?

To get the best auto loan rate you should:

  • Shop around for rates and compare your credit union with what the dealer is offering.
  • Work on improving your credit score.
  • Pay your bills on time.
  • Have consistent employment with a low debt-to-income ratio.
  • Price shop cars; some vehicles that dealers want to get rid of will come with a special rate.

Methodology

We looked at over a dozen lenders to find the best auto loan rates. We considered the ease of application, impact on credit scores, terms, credit requirements, and more. Our research also showed that the lowest rates we found are often available only to borrowers with certain minimum credit scores. As a result, we recommend you shop around for the best rates with lenders that only run a soft credit pull to get an idea of the rates available to you.  

All of our top choices offer easy online applications, flexible repayment terms, low to no impact on credit scores, and the best rates available on the market today.

Article Sources

  1. PenFed. "Rates." Accessed Nov. 28, 2021.

  2. Consumers Credit Union. "Make Your Dream Car a Reality With a Low Interest Loan." Accessed Nov. 28, 2021.

  3. Oportun. "Credit for People Like You." Accessed Nov. 28, 2021.

  4. Capital One. "The Road to Financing That Fits You." Accessed Nov. 28, 2021.

  5. Capital One. "Explore Dealers." Accessed Nov. 28, 2021.

  6. OpenRoad Lending. "Auto Refinance Questions | FAQs." Accessed Nov. 28, 2021.

  7. OpenRoad Lending. "Disclosures, Terms and Conditions." Accessed Nov. 28, 2021.

  8. OpenRoad Lending. "Why OpenRoad Lending?" Accessed Nov. 28, 2021.

  9. Carvana. "Auto Loan Calculator." Accessed Nov. 28, 2021.

  10. Carvana. "Finance Online With Carvana." Accessed Nov. 28, 2021.

  11. LendingTree. "Best Auto Loans and Rates for 2021." Accessed Nov. 28, 2021.

  12. LendingClub. "Auto Loan Refinancing." Accessed Nov. 28, 2021.