Posted on October 30, 2022
- Best overall, best for lease buyouts: Bank of America
- Best for excellent credit: LightStream
- Best for used car loans: US Bank
- Best for new cars: PNC Bank
- Which lender is the most trustworthy?
- How we determined the best car loans
- Auto loan credit score requirements
- How do I choose the best auto loan for me?
- Frequently asked questions
- Top Offers From Our Partners
Insider’s experts choose the best products and services to help make smart decisions with your money (here’s how). In some cases, we receive a commission from our our partners, however, our opinions are our own. Terms apply to offers listed on this page.
Best auto loans
Editor’s rating
APR
New: Starts at 4.99%, Used: Starts at 5.09%, Refinance/Lease Buyout: Starts at 5.79%
Editor’s rating
Great for borrowers with excellent credit
APR
New/Used/Refinance: 5.99% to 10.74%, Lease Buyout: 6.49% to 11.24%
Editor’s rating
Great for borrowers with bad credit
APR
New: Starting at 2.99%, Used/Refinance/Lease Buyout: Unspecified
Starting at $4,000, maximum not disclosed
Editor’s rating
APR
Refinance/Lease Buyout: 3.74% to 7.49%
Editor’s rating
APR
New as low as 7.01%, Refinancing as low as 7.19%
Editor’s rating
APR
New, Used, Refinance as low as 4.54%
Editor’s rating
APR
From dealer: Starts at 5.24%, From private party: Starts at 7.39%, Lease buyout: Starts at 5.24%, Starts at 5.39%
When it comes to car shopping, finding the right loan can be just as important as finding the right car.
It’s not as easy as simply showing up to the dealership. To get the lowest interest rate, you’ll want to shop around for an auto loan to see what kind of financing is available to you. Dealerships often mark up the interest rates on loan offers from lenders, and that can leave you paying more for the same car.
As you start shopping, keep in mind that your local small bank or credit union could also be a great place to get a loan — these institutions often offer lower car loan interest rates than big banks, but are usually limited to a relatively small geographic area.
Here are a few places to help you start your search for a variety of situations.
Best overall, best for lease buyouts: Bank of America
Bank of America Auto Loan
APR
New: Starts at 4.99%, Used: Starts at 5.09%, Refinance/Lease Buyout: Starts at 5.79%
Bank of America Auto Loan
APR
New: Starts at 4.99%, Used: Starts at 5.09%, Refinance/Lease Buyout: Starts at 5.79%
On Bank of America’s website
Details
APR
New: Starts at 4.99%, Used: Starts at 5.09%, Refinance/Lease Buyout: Starts at 5.79%
Pros & Cons
Highly competitive APR
High maximum loan amount
No origination fees or prepayment penalties
Available to borrowers in all 50 states
High minimum loan amount
Rate discounts require you to be a Bank of America member
Highlights
Additional Reading
Bank of America has excellent rates for auto loans currently. Rates for a new car purchase start as low as 2.09% APR, and a used car could be as low as 2.29% APR. Bank of America offers rate discounts for current customers, up to 0.5%.
If you’re interested in buying the car you’re currently leasing but need a loan to do so, Bank of America offers a loan for that. Bank of America offers a variety of auto loans, and like the others, its interest rates are competitive in 2021. Lease buyouts can have higher interest rates than a new or used car loan, but Bank of America’s lease buyout APRs start lower than the rates other lenders offer.
Best for excellent credit: LightStream
APR
New/Used/Refinance: 5.99% to 10.74%, Lease Buyout: 6.49% to 11.24%
APR
New/Used/Refinance: 5.99% to 10.74%, Lease Buyout: 6.49% to 11.24%
Details
APR
New/Used/Refinance: 5.99% to 10.74%, Lease Buyout: 6.49% to 11.24%
Pros & Cons
Great APR range
No fees
Same-day funding available
Several types of auto loans to choose from
High minimum credit score needed
Need a hard credit check
Highlights
If you have a good or excellent credit score, you might want to consider LightStream in addition to Bank of America. A part of SunTrust Bank, Lightstream focuses on auto loans to customers with good or better credit.
Because it focuses on a narrow subset of customers, its rates don’t go too high — For a 36-month loan for a new car purchase between $10,000 and $24,999, interest rates range from 2.49% to 6.79%. However, borrowers with lower credit scores may find better rates elsewhere.
APR
New: Starting at 2.99%, Used/Refinance/Lease Buyout: Unspecified
APR
New: Starting at 2.99%, Used/Refinance/Lease Buyout: Unspecified
Details
APR
New: Starting at 2.99%, Used/Refinance/Lease Buyout: Unspecified
Pros & Cons
Low minimum loan amount
Competitive APR
Application to prequalify takes several minutes
Need to make your loan through a licensed dealer
Full information on fees and interest rate range not disclosed until you apply
Not available to borrowers in Alaska or Hawaii
Highlights
Additional Reading
Capital One offers easy and reputable auto loans for borrowers with credit scores of 500 or higher. Capital One offers loans as small as $7,500 for used vehicles.
Clearlane by Ally Bank Auto Loan
APR
Refinance/Lease Buyout: 3.74% to 7.49%
Clearlane by Ally Bank Auto Loan
APR
Refinance/Lease Buyout: 3.74% to 7.49%
On Clearlane by Ally Bank’s website
Details
APR
Refinance/Lease Buyout: 3.74% to 7.49%
Pros & Cons
Soft credit check to prequalify
Co-borrowers allowed
Guaranteed Asset Protection (GAP)
Restrictive loan amount range
Higher APR than competitors
Only loan refinancing and lease buyouts available
Available in 48 states
Slow funding process
Highlights
Online bank Ally doesn’t offer financing to purchase a car. But, if you’re looking to refinance the car you already have, its auto lending division Clearlane offers some competitive rates. As long as your vehicle meet the standards (less than 100,000 miles, and fewer than 10 years old), this lender could offer a competitive rate as low as 3.99% according to NerdWallet. Clearlane also offers auto lease buyouts.
Best for used car loans: US Bank
APR
New as low as 7.01%, Refinancing as low as 7.19
APR
New as low as 7.01%, Refinancing as low as 7.19%
APR
New as low as 7.01%, Refinancing as low as 7.19%
Pros & Cons
A check mark. It indicates a confirmation of your intended interaction.
Competitive rates, particularly on used cars and refinancing
A check mark. It indicates a confirmation of your intended interaction.
Variety of term lengths available
A check mark. It indicates a confirmation of your intended interaction.
US Bank relationship rate discount
Can’t buyout your lease
High minimum loan amount
Fee for paying off your loan early
Highlights
US Bank’s top rates are comparable to other competitors’ rates, particularly on used cars and auto loan refinancing.
The bank will allow you to get your financing preapproved without having your car picked out. Once you decide on a car, you can finalize your loan terms. The lender doesn’t specify a minimum credit score to get a loan or a timeframe for when you’ll receive your money.
Navy Federal Credit Union Auto Loans
APR
New, Used, Refinance as low as 4.54%
Navy Federal Credit Union Auto Loans
APR
New, Used, Refinance as low as 4.54%
On Navy Federal’s website
Details
APR
New, Used, Refinance as low as 4.54%
Pros & Cons
A check mark. It indicates a confirmation of your intended interaction.
Top-notch interest rate
A check mark. It indicates a confirmation of your intended interaction.
No prepayment penalties or origination fees
A check mark. It indicates a confirmation of your intended interaction.
Many term lengths available
A check mark. It indicates a confirmation of your intended interaction.
Wide range of loan amounts
A check mark. It indicates a confirmation of your intended interaction.
Around the clock customer service
A check mark. It indicates a confirmation of your intended interaction.
Mobile app
Membership required to qualify for a loan
Late fee
Online funding not available
Highlights
One of the biggest attractions of a Navy Federal auto loan is the credit union’s low interest rates. Navy Federal also features an online Car Buying Center, where the company walks you through the process of financing, buying, researching, and insuring your next car.
Best for new cars: PNC Bank
APR
From dealer: Starts at 5.24%, From private party: Starts at 7.39%, Lease buyout: Starts at 5.24%, Starts at 5.39%
APR
From dealer: Starts at 5.24%, From private party: Starts at 7.39%, Lease buyout: Starts at 5.24%, Starts at 5.39%
Details
APR
From dealer: Starts at 5.24%, From private party: Starts at 7.39%, Lease buyout: Starts at 5.24%, Starts at 5.39%
Pros & Cons
Low minimum APR for new cars
Accessible physical branch locations
Automated payment discount
High minimum loan amount
Can’t use funds for a car more than eight years old
Highlights
PNC offers great rates for borrowers who have good credit. The bank offers financing for cars model year 2014 or newer — if you want to buy an older car, you won’t be able to get a loan through PNC.
Borrowers with a poorer credit history may find it hard to qualify at all or might be saddled with high interest rates.
Which lender is the most trustworthy?
We’ve reviewed each institution’s Better Business Bureau score to help you make the best decision possible when choosing an auto loan. The BBB measures businesses based on factors like truthfulness in advertising, honesty about business practices, and responsiveness to consumer complaints. Here is each company’s score:
A majority of our top picks are rated A or higher by the BBB, with the exception of Clearlane by Ally. Keep in mind that a high BBB score does not guarantee a good relationship with a lender, and that you should keep doing research and talking to others who have used the company to get the most helpful information you can.
The BBB currently rates Clearlane by Ally a D- because of 53 complaints filed against the business, including one unresolved complaint. Due to the lenders’ BBB scores, you might prefer to use a different auto loan company on our list.
How we determined the best car loans
These lenders were chosen based on interest rate (APR) for various credit scores, whether you’re buying new or used, and loans for a specific need like refinancing or lease buyouts. Insider gathered data from NerdWallet, MagnifyMoney, and Credit Karma, and from the lenders themselves. This list only considers loans that were available in most of the US, and does not include captive lenders — lenders owned by auto companies.
Auto loan credit score requirements
Of all the lenders on our list, only Lightstream and Capital One disclose their minimum credit score requirements. Lightstream’s is 660 and Capital One has a floor of 500 (though you won’t qualify for great rates from Capital One with those scores).
The credit score you’ll need to qualify for a loan will depend on the particular lender, though you’ll likely qualify for a better rate with a higher score.
You can find your credit report for free on annualcreditreport.com from any of the three major credit bureaus weekly through the end of 2022. While this report won’t give you your credit score, it will show you information about your credit and payment history, which lenders use to decide whether to give you a loan. Reviewing your credit report can help you know what you need to improve.
You can get your score at no cost on your credit card statement or online account. You can also pay for it from a credit reporting agency.
Credit scores range between 300 and 850. Here’s how scores break down, according to FICO:
- Very poor: 300 to 579
- Fair: 580 to 669
- Good: 670 to 739
- Very good: 740 to 799
- Exceptional: 800 to 850
Checking your rates with most companies will not impact your credit score because a majority of lenders will only generate a soft credit inquiry when showing you personalized rates. However, if you choose to accept a loan, lenders will likely conduct a hard credit inquiry, which may negatively affect your credit score. A hard inquiry offers a lender a comprehensive look at your credit history.
How do I choose the best auto loan for me?
To find the best auto loan for your personal situation, look at several key factors. Many borrowers prioritize the lowest interest rate, but also consider any fees, the minimum credit score needed, and the accessibility of the lender’s customer service.
You also need to take into account what type of cars the dealer will finance, how much money they will finance, and the loan term length.
Guides like this one will help you compare multiple lenders in the same place to weigh their pros and cons. Make sure to also read individual reviews of any lenders you’re considering.
Frequently asked questions
Car dealerships are allowed to mark up interest rates on auto loans that they offer, and generally, they do. The interest rate a salesperson offers often includes a cut for the dealership, resulting in a higher interest rate for you. While you might qualify for an interest rate of 6% from a bank, you might see 6.5% or even 7% from a dealership, for example.
If you’re willing to put some work in, you may be able to save by shopping around on your own. The best way to avoid this issue is to get pre-approved by a few banks or lenders as you start car shopping, and take those pre-approvals to the dealership with you. Then, you’ll have a few estimates on what your cost to borrow could be, and can comparison shop for the lowest APR.
The longer the loan term, the lower the monthly payment. But, paying for longer than 60 months (five years) on your auto loan could leave you owing more than your car is worth.
Cars depreciate quickly, and if you’re paying for more than five years on an auto loan, your loan could end up in this situation, also called being “upside-down.” As auto loans increase in length, auto loan delinquencies tend to increase, too.
If you’re shopping for a car loan with bad credit, you could benefit a lot by doing your research and shopping around when looking for an auto loan. Avoid any “buy here, pay here” financing, as these loans often come with exorbitant interest rates and high monthly payments, which could cause you to default on your payments.
A local credit union might be a good place to start if you have a bad credit score — sometimes lenders like these can be more forgiving and offer lower interest rates than big banks.