Finding a great new car, truck, or van can be an exciting time. Comparing features, going on test drives, and taking in that new-car smell help you visualize life in a new car. However, when it comes time to pay for that car, things can get a lot less fun. Many buyers are so ready to drive their new car home that they sign the first loan that they can get their hands on.
While a move like this may get you behind the wheel quickly, it could set you back financially. In fact, if you don’t find the right loan, you could overpay by thousands of dollars over the life of the loan. Whether you’re buying a brand new ride, something new to you, or refinancing an existing loan, it's essential to find the best terms possible. The following lenders and brokers offer low rates or other benefits. (Data collected and reviewed as of 3/1/2020.)
The 7 Best Auto Loan Rates of 2021
Best Overall Rates : Consumers Credit Union
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 instead of paying a few top bankers' enormous salaries.
Interest rates: As low as 2.69%
Credit requirements: 640 credit score minimum
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. However, CCU requires you to pay a fee of $5 and keep at least that much in a savings account. In return, you can get auto loan rates as low as 2.69%. These loans include fixed rates, mechanical repair coverage, and a simple interest method that allows you to pay less over the length of the loan.
The potential downside to CCU loans is that not everyone will get approval. You should have a credit score of at least 640, and CCU requires 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
Having less-than-perfect credit shouldn’t keep you from getting the car you need. While you shouldn’t expect the low rates that those with great credit have, 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. If you have a great car and you want a better loan to match, you can use Oportun's refinancing options.
Loan amounts: From $5,000 to $35,000
Credit requirements: 500 credit score minimum with $2,000 monthly income
The minimum credit score for this lender is 500, which is significantly lower than many others. You also should have an income of at least $2,000 per month to apply. Loan amounts can range from $5,000 to $35,000, so you can get the car you want. Best of all, Oportun does not require a hard credit check with your application. 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
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.
Application: Get pre-qualified online
No hard pull to get pre-qualified: Pre-qualification does not impact your credit score; however, following up with a full credit application requires a hard pull.
Best for Refinancing : OpenRoad Lending
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 an hour of applying, you can receive your decision with complete details about the loan.
Interest rates: As low as 1.99%
Application requirements: $1,500 monthly income
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 that they are satisfied with their loans. Before applying, you should know that it is a hard credit pull, so this service is only for people who are serious about refinancing. The higher each of these numbers is, the better your rates will be. OpenRoad Lending offers rates as low as 1.99%.
Best for Tech Junkies : Carvana
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 an auto 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.
Process: Shop rates online with no hard pull on your credit
Credit requirements: No minimum credit score; minimum annual income of $4,000
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 who is 18 years old, has no active bankruptcies, and makes at least $4,000 per year is eligible. Carvana finds offers from several sources without a hard pull on your credit. This allows you to shop rates without hurting your score and rest easy knowing that you got the best possible deal Carvana could source. Plus, without pushy salespeople, you can ensure that you get 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 to avoid a hard inquiry on your credit while you shop.
Best for Shopping Around : LendingTree
If you are tossing around the idea of getting a new car but 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 details such as your desired loan type, down payment, financial status, and the vehicle you want. Then Lending Tree will match you with lenders.
Service: Matches consumers with lenders
Application: No hard pull on credit until applying with a lender
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. Lending Tree can also help with a loan payment calculator, free credit score finder, and other tools.
Best for Shopping Around for Refinancing : Lending Club
Although Lending Club 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, Lending Club 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.
Interest rates: 3.99% to 24.99%
Application requirements: U.S. citizen, permanent resident, or valid long-term visa who is 18 years of age or older with a verifiable bank account
Once you decide on an offer, you can finish the official application. The process is entirely online and easy. Although Lending Club is a broker, you won't pay an origination fee for your loan. Finally, sit back and enjoy a smaller monthly payment. Rates start at 3.99%. Whether you're sure you want to refinance or just seeing what's out there, Lending Club is a great option.
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 length of the loan.
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.
How We Chose the Best Auto Loan Rates
We selected these best auto loan rates based on their actual rates, fees, application process, credit requirements, and more.