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Compare $20,000 car loans

Which option to choose for competitive rates, fast turnaround and more.

Editor's choice: Carvana

Carvana logo
  • Most credit types welcome
  • 45-day preapproval
  • Seven-day guarantee
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Name Product Filter Values Minimum credit score APR Loan term Requirements
PenFed Auto Loans
Varies
Starting at 1.79%
Up to 10 years
Active membership with PenFed
Low APR car loans from a well-known credit union.
Carvana
No minimum credit score
3.9% to 27.9%
Varies
18+ years old, annual income of $4,000+, no active bankruptcies
Get pre-qualified for used car financing and receive competitive, personalized rates.
car.Loan.com Car Loans
300
Varies by network lender
Varies by lender
Must be a US citizen with a current US address and employed full-time or have guaranteed fixed income.
Apply with a simple online application to get paired with a local auto lender. No credit and bad credit accepted.
CarsDirect auto loans
No minimum credit score
Varies by network lender
Varies by network lender
Must provide proof of income, proof of residence, and proof of insurance.
Save time and effort with this lending service specializing in beginner-friendly or subprime car loan.
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What are my $20,000 car loan options?

You have plenty of new and used models to choose from, as well as a few financing options to consider. While secured car loans from a third-party lender might come with the most competitive rates, leasing or financing directly through a dealer can likely get you behind the wheel faster. Here’s how your different financing options stack up:

  • Secured car loans. Banks, credit unions and online lenders all offer secured car loans backed by the car you’re purchasing. These usually come with the most competitive rates, though it can take time to compare lenders and fill out prequalification forms. Rates for secured car loans typically range from around 3.5% to 19% APR depending on your credit score and personal financial situation.
  • Unsecured personal loans. Don’t want to use your car as collateral? An unsecured personal loan from an online lender, bank or credit union may be a better fit. You could borrow $20,000 with a personal loan. However, these typically come with higher rates — usually between 5% and 36% APR.
  • Dealership financing. Financing through a dealership is usually the easiest and fastest option, but it also tends to come with higher interest rates. This is because the dealer usually tacks on extra interest and fees to act as the middleman between you and the lender.
  • Car leases. Not sure you’re ready to buy? Like driving the latest model? Leasing through a dealer might be for you. Essentially, you rent the car for a set period of time — usually two or three years. Once your contract is up, you have the option to continue the lease, upgrade to a new car or purchase the vehicle outright. However, leases typically come with mileage restrictions — and it can get expensive if you go over them.

How to compare $20,000 car loans

When comparing your car loan offers, keep these factors in mind to ensure you get the best deal:

  • Interest rate. Interest makes up the bulk of your car loan expense, so you’ll want to find the lowest rate out there. Most lenders let you choose between fixed and variable rates. Fixed rates stay the same throughout the life of the loan and can be easier to budget for. Meanwhile, variable rates fluctuate due to changes in the lending market and can go lower — or higher — than fixed rates.
  • Loan term. Traditional car loans come with terms from three to seven years. In general, the shorter the term, the lower the interest rate. However, this will also lead to higher monthly repayments. Use our car loan calculator to find the shortest term with repayments you can comfortably afford each month.
  • Fees. Watch out for lenders that charge high application, origination or documentation fees. You could also be on the hook for prepayment penalties if you pay off your loan before your term is up.

Should I buy a new or used car?

There’s always going to be a debate over which is better: new versus used cars. For many, there’s a certain peace of mind that comes with owning a brand-new car, like having a warranty, knowing there’s no possibility of previous damage and that enticing new-car smell. However, new cars decrease in value at a steep 40% after the first three years of ownership due to depreciation.

With a used car, you’re usually able to benefit from a lower sticker price. But it might not have the latest bells and whistles that the latest model has. And while there’s a risk of not getting what you paid for, this is less likely if you go through a certified preowned dealer rather than a private seller.

Top cars under $20,000

While $20,000 won’t snag you a new Benz, it can get you a pretty nice car — new or used. Here are some of the top cars in your price range currently on the market:

New cars

  • 2019 Honda Civic
  • 2018 Mazda 3
  • 2018 Ford Focus
  • 2019 Hyundai Elantra
  • 2019 Kia Forte

Used cars

  • 2015 Audi A3
  • 2017 Jeep Compass Sport
  • 2016 Ford Escape
  • 2014 Volkswagen Jetta
  • 2016 Subaru Crosstrek

*Prices as of November 2018.

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4 questions to ask before applying for a $20,000 car loan

Not sure a $20,000 car loan is right for you? Ask yourself these questions to help you decide:

  • How much will it cost me overall? Although it might seem like you only owe $20,000, this isn’t entirely true. Once you factor in dealer fees, taxes, title and registration fees — on top of your loan’s interest and fees — the cost can quickly add up. Make sure you can comfortably afford repayments before borrowing $20,000.
  • Can I make extra payments without getting charged? Suppose you come into some extra cash that you want to put toward your car loan. Does your lender charge prepayment penalties? If so, is it worth paying the fee to avoid extra interest building up?
  • Is my job stable? If you’re worried about layoffs or considering switching careers, you might want to hold off on taking out a car loan until you’re on more solid financial ground.
  • Can I afford to maintain a vehicle? In terms of a car’s running costs, you’ll want to make sure you can afford to pay for fuel, insurance premiums and general vehicle maintenance before committing to a car loan.

Bottom line

If you have decent credit and want to get a loan as quickly and easily as possible, financing through a dealer might be your best bet. However, you might be able to score a more competitive deal by comparing your car loan options from banks and online lenders yourself.

Learn more about how they work and compare lenders with our guide to car loans.

Frequently asked questions

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