Comparison of the best auto loan providers in the U.S.
AUTOPAY offers quick, convenient and low-interest auto loans and refinancing opportunities to drivers.
The Pentagon Federal Credit Union, better known as PenFed, is a federal nonprofit credit union that offers a wide range of financial services and benefits to its members, including auto loans and car insurance discounts.
Between banks, credit unions, online lenders, car manufacturers and dealerships, it’s hard to know where to finance your vehicle and who the best providers are. That’s why we’re here. Below, we’ll break down the best providers based on interest rates, loan terms, preapproval features, refinancing options and more.
Best Overall Auto Loans: AUTOPAY
Best Credit Union Auto Loans: PenFed Credit Union
Best Auto Loan Rates: LendingTree
Best Auto Loan Bank: Bank of America
Best Private Party Auto Loans: myAutoloan
|Auto loan provider||Annual percentage rate (APR) minimum||Loan terms in months||Loan amounts||Availability||Better Business Bureau (BBB) rating|
|AUTOPAY||1.99%||24-96||$2,500-$100,000||All 50 states and Washington, D.C.||A+|
|PenFed||3.44%||36-72||N/A||All 50 states, Washington, D.C., Guam, Puerto Rico, and Okinawa||A+|
|LendingTree||0.99%||12-96||Up to $4 million or max loan-to-value ratio of 125%||Every state except Iowa plus Washington, D.C.||A+|
|Bank of America||3.89%||N/A||$7,500 minimum ($8,000 in Minnesota)||Every state and Washington, D.C||A+|
|myAutoloan||1.90%||36-84||$8,000 minimum||Every state except Hawaii and Alaska plus Washington, D.C.||A+|
AUTOPAY has helped more than 700,000 customers obtain auto loans, find better premium rates for existing loans, benefit from cash-out refinances, improve their credit scores and more. The auto loan aggregator has been around for nearly two decades and has formed a network of trusted lenders to match your specific needs and financial situation. With low rates, a simple online process, a soft credit check preapproval process and other key benefits, AUTOPAY is our top auto loans pick.
AUTOPAY has refinanced hundreds of thousands of loans since it started in 2007, including cash-out refinancing loans. Cash-out refinancing is a way for you to pay off your existing loan, lower premiums and earn some cash in the process. When you qualify to cash-out refinance, you’re replacing your existing loan with a new one. When your lender pays off your old loan, you’ll be left with the difference in cash.
For example, if you owe $10,000 on an existing loan and your vehicle is worth $20,000, you could refinance your loan for $10,000 worth of equity. If you got a new loan for $20,000, your lender would pay you the $10,000 difference in cash. You could then spend that money to invest, pay off credit card debt or whatever else you needed it for.
Keep in mind that if you have a low credit score, you’re nearly done paying off the loan, or you’re driving a vehicle over 10 years old, your interest rates could increase. Be sure to speak with an AUTOPAY representative when considering options for cash-out refinancing.
AUTOPAY’s APR minimum (1.99 percent) is the third-lowest on our list and among the lowest in the industry. APR is often a better way to assess your costs than interest rates because it calculates your interest rates plus any additional fees, including:
It’s especially important to ensure you secure a low APR if you have a longer loan term. The longer your term, the more those interest rates will accrue over time.
AUTOPAY offers a myriad of benefits when you sign up for an auto loan, refinance your vehicle or buy out your lease. If you have low credit or find yourself in a tight financial situation, these benefits can help you in the following ways:
As a nonprofit credit union, PenFed is owned and controlled by its members, not its shareholders. That means its 2.8 million members know that profits earned by the credit union will go back to its members in the form of better rates, more saving opportunities and improved services.
PenFed was formed in 1935 and has grown to gain more than $36 million in assets, making it the second-largest credit union in the United States.1 Although PenFed has special offers to military members, like a 2 percent cash back purchase program, you don’t have to be a part of the military to become a member.
With PenFed, you can obtain or refinance an auto loan on both new and used vehicles, both of which come with their own unique rates, loan amounts and terms. Whether you want a more affordable plan with a used vehicle or the latest tech that comes with a new vehicle, PenFed will have you covered.
Here is what you can expect for a rate for a new car:
|Loan term in months||36||48||60||72||85|
|Approximate monthly loan payment||$609.77||$472.53||$389.23||$334.85||$300.40|
And here’s what a used car loan plan would look like:
|Loan term in months||36||48||60||72|
|Approximate monthly loan payment||$609.77||$472.53||$389.23||$334.85|
On top of great auto lane rates and loan repayment terms, PenFed members can take advantage of several discounts and benefits linked to their memberships. Some of these discounts and services include:
When you purchase a vehicle through TrueCar, PenFed’s car-buying service, you get exclusive discounted APRs and dollar bonuses based on what kind of car you purchased. Here’s what your discounts with a TrueCar purchase would look like:
|Car Type||APR||Loan term in months|
Here are the cash-back benefits you could earn based on the manufacturer:
|Manufacturer||Cash-back bonus maximum|
Similar to AUTOPAY, LendingTree is an online aggregator and marketplace where customers can match and compare auto loans from a variety of banks, lenders and other credit partners. If you aren’t sure what kind of financial institution you want to receive an auto loan from, LendingTree is a great hub to find a variety of loans, rates and contracts. It’s also the cheapest provider on our list. Its minimum APR (0.99 percent) is among the lowest rate in the country.
If you’re seeking the lowest rates for your auto loan, look no further. LendingTree’s partners have APRs as low as 0.99 percent, which is the lowest rate on our list and one of the lowest in the U.S. The APR on a new, financed vehicle was about 6 percent in the last quarter of 2022, so LendingTree’s cheapest rates are a considerable drop if you can qualify for the minimum APR.2
Rates will vary based on provider, the cost of your vehicle, your credit report, loan terms and other variables, so be sure to shop around and speak to a representative to find the best deals. Here are the five best auto loan providers on LendingTree’s directory (as of January 2023):
|Provider||Minimum APR||Loan term in months||Loan amount|
|Southeast Financial||1%||12-84||From $12,000|
|Consumers Credit||4.94%||Up to 84||Up to $150,000|
|Bank of America||5.29%||Up to 72||From $7,5003|
Because LendingTree is an auto loan aggregator, you can choose among several providers with a wide range of interest rates, loan terms, loan amounts, car types and more. You can benefit from the highest loan amounts (up to $4 million) and the widest loan term gap (12 to 84 months).
With longer loan terms and higher loan amounts, you can customize your auto loan to fit your financial needs. Here are a few ways you can take advantage of longer loan terms for your auto loan:
LendingTree is a good option for drivers with low credit scores. With LendingTree, you have a variety of ways of securing low-interest loans by adding a co-signer or making a large down payment. On top of that, LendingTree will perform a soft credit pull when you make a request for a loan, so you don’t have to worry about your request affecting your credit score.
You can reference Experian’s quarterly auto loan rate and credit score averages when shopping for your own loans:
|Credit score||New car average APR||Used car average APR|
Bank of America was first founded in 1904 as The Bank of Italy in San Francisco. One name change and a century later, Bank of America has grown into the second-largest bank in the U.S. and one of the most trusted financial institutions in the country.6 With Bank of America, you can enjoy a swift application process, low-to-medium average interest rates and the financial backing of one of the largest institutions in the country.
One simple way to decide on a provider for an auto loan is to check out the customer benefits with your bank. Bank of America offers interest rate discounts and membership opportunities for existing customers, making your auto loans cheaper and more appealing. Here’s how you can save and benefit from Bank of America as an existing customer with Preferred Rewards membership discounts:
|Tier||Account balance minimum||Interest rate discount|
Bank of America has a fast and convenient application process that can get you an auto loan and a vehicle in a matter of minutes. You don’t have to pay a fee to apply, and typically you’ll get a response on your loan within 60 seconds.
If Bank of America approves your application, it will send you an approval code that you can relay to a car dealer in Bank of America’s car dealership network. That dealer will have all of your information automatically and the necessary paperwork needed to streamline your car purchase.
Bank of America has thousands of authorized dealerships in its network, so you’ll have plenty of dealerships to choose from.
It’s important that you apply for a loan from a trusted organization with a strong financial rating. Banks with high credit ratings are more likely to borrow money at lower interest rates and less likely to default on their debt and investments. As a customer, this means you don’t have to worry about Bank of America meeting its financial obligations and can benefit from cheaper interest rates.
As early as November 2022, Moody’s awarded Bank of America with an Aaa Prime rating, which is the highest possible credit rating.7
If you’re looking to purchase a vehicle from a private party, as opposed to a dealer or manufacturer, you’re going to need a private party auto loan. Not all auto lenders give loans for private party car purchases, so it’s important to understand your options, as they are more limited. MyAutoloan offers your standard new and used car loans, lease buyouts, auto refinancing and private party loans. It has a simple and fast system that will allow you to compare four quotes in a matter of minutes.
MyAutoloan makes comparing loans easy with its quick, seamless and automated system. It has a fast and free application system that generates four quotes automatically to compare within minutes of submitting your application.
Here’s how it works:
Unsure if you can afford a private party loan or what your rates will be? Take advantage of myAutoloan’s free tools and charts:
Although the calculators don’t guarantee your APR, they’re a good way to get a ballpark estimation of what your costs might be.
Here’s how a private party loan compares to other types of auto loans in myAutoloan’s existing network of lenders:
|Term lengths in months||36 or less||37-60||61-72||73-84|
MyAutoloan doesn’t charge any application fees or hidden fees. Hidden fees include any costs not associated with the loan terms or APR. Some of the most common hidden fees you might find with a dealership or manufacturer include:
MyAutoloan mentions that some of its lenders may charge a fee, but all fees will be disclosed in your loan terms. Be sure to closely read the terms and conditions of your loan before accepting it, and you can always ask a representative to point out any hidden fees in your contract.
Auto loans, like mortgage loans and other types of loans, involve making a down payment on a car, borrowing enough money to pay off the rest of the car and paying back what you owe over a period of time (with interest). Lenders make a profit by charging customers application fees and accruing interest over time.
One of the most important aspects of an auto loan is your credit score. The lower your credit score, the higher your risk is as a lender and the higher your interest rates will be. Some lenders even require a credit score minimum for you to be eligible to apply. If you have low credit, it’s still possible to get an auto loan, but you may have to show:
Auto loans are also considered secured loans, which means you as the borrower provide the lender with some form of collateral. In the case of auto loans, the car itself is your collateral. If you default on your loan, your lender can repossess your vehicle.
Your credit score, income, loan term and other key factors all determine your loan rate, which we’ll break down more closely below.
There are two major auto loan types: direct financing and dealership financing. In this guide, we went through most of the direct financing institutions and organizations you can request a loan from, such as credit unions and banks. Let’s look at some of the key differences and pros and cons of each option.
|Payment||Pay dealership with a loan from a bank||Pay off the car in monthly installments to the dealership directly|
|Can you compare loans and shop around for the best rates?||Yes||No|
|Pros||Can choose between providers||More convenient and cheaper for those with good credit|
|Cons||You have to find your own lender||Hidden fees and additional costs|
When you work directly with a dealership, the dealer will act as the intermediary and connect you to a bank or another lending institution.
Convenient as you don’t have to find a lender yourself
Can’t shop around and compare loans for the best rates
Dealership may have application fees and hidden costs
If you sign up for a loan through a manufacturer, you may end up working with its in-house financing division, otherwise known as a captive finance company or subsidiary. Some automakers with captive finance divisions include Ford Credit and GM Financial, which can help you finance both new and used cars.
Often have great incentives, like 0 percent APR
May only be available to those with high credit scores
Buy here, pay here refers to an auto loan that is financed in-housed by a car dealer, so the lender and auto dealer are the same as opposed to a dealer finding connecting you with one of its lender partners.
As you’re buying your car, you can ask your dealer to see how large of a loan you’re eligible for. If you qualify for a loan, the lender will put a device on your car that will disable/locate your vehicle if you don’t pay your premiums on time.
Good for people who have subprime credit
Highest interest rates
With banks, you can get preapproved for multiple loans, compare rates and enjoy discounts and benefits if you’re an existing customer.
Low-interest rates with good credit
Backing of large financial institutions
Membership benefits like no-fee applications and interest rate discounts
Limited by the type of car ― some banks won’t finance old cars or cars with high mileage
Credit unions, like PenFed or the Navy Federal Credit Union, are nonprofit organizations and good alternatives to banks if you can qualify for membership.
Lower interest rates than banks (in general)
Good rates even if you have bad credit
Lower fees, for example, as of the end of 2022, the average credit union APR for a 48-month used car loan was 4.79 percent, compared to a 5.86 national average with banks.8
Regular banks have more services available
May not offer mobile apps/online services, which might make managing your auto loans more difficult9
Online lenders have a marketplace of auto loan providers for you to choose from and you can manage the process 100 percent online.
Easy to compare several rates
Lenders are more willing to work with people with subprime credit
Could get lower interest rates (compared to banks) if you have good credit
May have higher interest rates for subprime borrowers
Customer service could be inconsistent ― be sure to check BBB, Yelp and other third-party customer service rating websites
Average national rates are around 7 percent, although they can range from less than 1 to 36 percent.
Lenders will consider the following factors when determining your rates:
When choosing between auto loan types and providers, consider the following:
The first step in the application process is getting your preapproval. To get preapproved, you can start by choosing a lender to apply to. You can choose between:
During the initial preapproval phase, lenders will run a soft credit pull, which won’t affect your credit score (unlike a hard credit pull). Meanwhile, hard credit pulls can lower your credit score by a few points because they indicate you’re applying for new credit. One or two hard credit pulls won’t affect your credit score significantly, but too many in a short period of time could lead to higher rates.
After your soft credit pull, you’ll learn some basic information like the chance of approval and likely interest rates. You shouldn’t apply unless you get preapproved. Continuing to apply with a formal loan application can lead to a hard credit pull, which will hurt your credit score.
Try to get preapproved with multiple lenders to see your best loan terms. Keep in mind that not all lenders offer preapproval and, sometimes, you have a specific car in mind to apply for preapproval.
You have two options for your lump-sum payment: a down payment or a vehicle trade-in.
If you’re going with a down payment, you’ll pay cash to the dealer/lender to cover a portion of the car’s cost. The higher your down payment, the less likely you are to default and the lower your rates/premiums will be.
If you’re trading in a vehicle instead of a down payment, you can exchange any valuable car in exchange for credit towards the price of the car. Trade-ins only work if you’ve already paid off loans on the car that you’re trading in. If you have negative equity (owe more on the car than what the trade-in offer is), you’ll need to pay the difference to the lender when you buy your car.
Be sure to check out trusted resources like Kelly Blue Book or Edmunds Car Value to determine the value of your car for a trade-in. If you’re using an online value index, you’ll need to input your:
Car trade-ins are generally more convenient than finding a buyer on your own, but they probably won’t get you as much money as a private buyer.
Regardless of what kind of provider you end up applying to, you can use the following tips to lower your rates:
Refinancing your vehicle can help you decrease interest rates, get better terms, lower your monthly payments and improve your credit score. You can follow these steps if you’re looking to refinance your auto loan:
If you have the ability to, paying for a car upfront in cash is the cheapest option. You don’t have to worry about interest rates, APR or any hidden fees.
However, if you’re pulling cash out of an investment account, you will be losing its interest and dividends. You should only pull cash from an investment account if your car interest care is going to be higher than your investment return rate. In other words, if your auto loan interest rate will cost you more than you’re earning from your investment, it’s worth it to use the investment to pay for your car in full.
Using your home equity to pay for a vehicle is essentially another form of collateral. You can pay a single sum, home equity loan or home equity line of credit. Home equity loans can have lower interests, and a portion of your interest may be tax deductible if you itemize your deductions (capped at $100,000).
However, if you do default on your loan, you run the risk of losing your home.
Not all 401(k) plans can be used for car loans. If your plan does allow you to borrow cash for auto loans, then your lost earnings and repayment will come directly from your paycheck.
If you lose your job or the terms of your 401(k) change, you may have to repay your balance in full within 60 days. If you can’t pay off the loan, you could get taxed or charged withdrawal penalties. Additionally, you have to pay back the 401(k) loan with interest.
You can always use a credit card draft or cash advance to finance your vehicle. Credit card drafts work like personal checks, but they often come with very high-interest rates that could get higher with time, making them one of the worst ways to finance your car purchase.
Whether you should finance your car with a bank or dealership will depend on what you’re looking for and your individual circumstances.
Dealership loan pros and cons:
Bank loan pros and cons:
A 72-month car loan (six-year loan) is a good idea for people in the following situations:
When you start making on-time payments back for your loan, expect your credit score to start increasing within 60 to 120 days. Building a history of on-time payments and maintaining your loan for longer periods of time can increase your credit score.
According to Experian, the average monthly car payment for a new vehicle was $644 in 2021. Financial experts recommend spending no more than 10 to 15 percent of your monthly income on your car payment. So, if you make $4,000 a month, a reasonable car payment amount would be about $400.
Who We Are. PenFed. (2023).
Auto Loan Interest Rates Climb to Highest Level Since 2019 in Q3, According to Edmunds. Edmunds. (2022, Oct 3).
Best Auto Loan Rates in March 2023. LendingTree. (2023, Mar 1).
What Auto Loan Rate Can You Qualify for Based on Your Credit Score? Experian. (2022, Nov 25).
Rising car prices means more auto loan debt. Consumer Financial Protection Bureau. (2022, Feb 24).
Federal Reserve Statistical Release: Large Commercial Banks. Federal Reserve. (2022, Dec 31).
Rating Action: Moody’s assigns definitive rating to Bank of America’s Class A (2022-2) card ABS. Moody’s Investor Service. (2022, Nov 23).
Credit Union and Bank Rates 2022 Q4. National Credit Union Administration. (2022, Dec 30).
Pros and Cons of Credit Unions. 121 Financial Credit Union. (2019, Oct 31).
My Car’s Value. Kelley Blue Book. (2023).