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Auto Loan Finder
Find the best financing for your dream wheels and your budget.
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When you’ve got your eye on a car, it’s easy to leave the financing for later. But understanding how it works can get you on the road faster — and help you save.
Our top pick: car.Loan.com Car Loans
- Easy online application
- Fast response time
- Bad credit, no credit OK
Our top pick: car.Loan.com Car Loans
- Min. Credit Score Required: 300
- Requirements: Must be a US citizen with a current US address and employed full-time or have guaranteed fixed income.
Three more top car loan options
Best for competitive rates and flexible terms
- Starting APR: Competitive
- Excellent credit required
- Loan amounts: $5,000 to $100,000
Best for guidance through the borrowing process
- Starting APR: 1.85%
- Good to excellent credit required
- Loan amount varies by lender
Best for quick, hassle-free financing
- Starting APR: 2.56%
- Fair credit accepted
- No loan amount restrictions
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Updated September 15th, 2019
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Car loan basics
Six common types of car loans
Most lenders offer a combination of the following types of lending:
- New car loans. Fixed-term loans from a lender or dealership are used to cover the cost of your new car.
- Used car loans. These loans factor in your previously owned car’s mileage and age when determining your rate and term.
- Private-party car loans. Term loans from lenders that allow you to buy a car from a private seller — rather than a dealership.
- Lease buyouts. Financing for to pay for the balloon payment at the end of your lease so that you can own it outright.
- Auto refinancing. Trade in your existing car loan to reduce your monthly payments or pay it off more quickly.
- Buy-here-pay-here loans. Avoid a credit check by financing a car directly through a dealership — often at high rates.
Higher interest rates on used car loans
Used cars might be cheaper, but loans tend to come with higher interest rates. That’s because car loans are secured by the value of the vehicle you’re buying. Since used cars are worth less, your collateral isn’t as valuable. This makes lenders see you as more of a risk than a new car buyer, whose collateral is simply worth more.
Lenders tend to give borrowers with more valuable collateral lower interest rates because they stand to gain something more valuable if the borrower can’t pay back their loan.
How much do car loans cost?
When it comes to how much you’ll pay for your car loan, it ultimately comes down to three main factors:
- Interest rate. A percentage of your loan balance charged by your bank or lender and added to the principal amount you owe.
- Fees. Fixed charges tacked on to the cost of your car loan that you pay back along with the rest of your loan. Your loan’s APR is its costs and fees expressed as an percentage.
- Loan term. The amount of time your loan contract gives you to pay off your loan. A short loan term generally results in higher monthly payments but a lower total loan cost. A long loan term means you’ll ultimately pay in interest.
APR is critical to how much you’ll pay for your car loan, true. But finding a loan term that isn’t too long or too short also affects your overall costs.
Don’t forget the down payment, taxes and rebates
After your APR and term, you’ll want to pay attention to how much you’ll have to pay up front and in taxes — and ask about any rebates you might be eligible for.
Down payment. How much you’re expected to put down affects the immediate cost of your car loan. Expect to pay 10% to 20% of the cost of your vehicle up front.
Sales tax. Each state requires different sales tax, typically available on your local DMV site. Make sure to factor in sales taxes when estimating the cost of your car.
Rebates. If you’re financing with a dealer, ask about any cash back discounts to avoid leaving money on the table. Three main types include cash rebates, low-interest dealership financing and special leases. Government rebates for low-emission or hybrid vehicles are also available in many states.
The truth about 0% financing
Some dealerships offer interest-free financing, but they’re not always easy to get and not necessarily the best there out there.
It’s a marketing tool. Generally 0% financing is a marketing tool that manufacturers use to bring in customers.
Not everyone is eligible. You need to meet tough credit and income standards to qualify — only around 10% of applicants actually qualify for the 0% rate.
Higher monthly repayments. But it might not be worth it even if you do make it past the credit check. These loans tend to be shorter — often no more than 36 months — translating into high monthly repayments.
Less room to negotiate. This type of financing tends to come with a fixed price and you often can’t qualify for a cash-back rebate.
Your deal might be canceled. You might have to pay full interest if you miss just one payment.
Where can I get a car loan?
Back in the day, your financing options were limited to dealerships and affiliated lenders.
Now you have more options beyond traditional financial institutions, including online upstarts competing for your business.
- Banks. Chances are that your bank offers auto financing or a personal loan you can use to purchase a new car. It’s a relatively hands-off experience, and only applicants with good credit typically qualify.
- Credit unions. Credit unions often offer financing with lower rates and more lenient credit requirements. But you need to join to qualify, which can add time to the process.
- Online lenders. Online loan companies can offer faster funding for people with damaged credit or new to auto financing. Some can also help you find a car at a dealership.
- Online matching services. Matching services could be an ideal option if you have bad credit, since many offer loans with low or no credit requirements — though it won’t be cheap.
- Dealerships. You can always try to get financing directly from your dealer, though you might need to become a master negotiator to dodge typical dealership tactics.
How can I find the best car loan for me?
Before you compare lenders, calculate how much you can afford to pay for a down payment, monthly repayments, any fees and your loan’s overall cost. Look up your state’s taxes and fees associated with purchasing a car, and add them to the cost of each car you consider. Use these as guidelines to figure out your target loan amount and term to find the best option for you.
To get the best car loan, ask yourself these 10 questions:
Click on each question to expand more information about what to look for.
You’ll find that some of this information isn’t readily available online for loan matching services and dealerships. In those cases, it’s worth taking a look at reviews, forums or calling a customer service line to get a ballpark answer.
5 tips to get the best deal on your car loan
- Order your credit report. Before applying, carefully review your credit reports for any mistakes or long-closed accounts that can hurt your score. Clear these up before you apply — a better score usually results in lower rates.
- Compare lenders and dealerships.The only way to find the best deal for someone in your specific situation is to shop around and compare what’s out there.
- Negotiate your price.You can almost always get a better deal on a car if you don’t accept the initial price a dealership offers.
- Don’t fall for the long-term loan.A 72-month car loan term is the most popular in the US — and it’s also one of the most expensive. Calculate how much you can realistically pay per month and stick to it.
- Read everything you sign. Dealerships sometimes sneak in unnecessary fees or even leave room for renegotiating a higher interest rate.
Buying a car at a dealership? Watch out for extra costs
- Vehicle preparation fee. Dealerships charge this fee to cover the cost of getting your car ready for delivery. You might not have to pay it, unless they’re going beyond a standard car wash.
- Documentation fee. Most dealers charge this fee to cover the cost of processing the paperwork that comes with your new car. Depending on your home state, you might pay a flat $100 fee or a price set by the dealership, which you can negotiate.
- Unnecessary accessories and extended warranties. Didn’t ask for that sound system or paint sealant? See an extra-long warranty in your contract? Unless you actually want it, tell your dealer that won’t pay for it.
Just some of the top car loan providers we review
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4 red flags when looking for financing
Lenders or dealerships advertising any of these three “perks” should ring the alarm bells — or at least prompt deeper research.
- There’s no credit check. Dealerships often don’t run a credit check for buy-here-pay-here loans, but these loans can cost more than one from a reputable lender. Direct lenders advertising no credit check, however, could be a scam.
- It lets you take your car home before approval. This could be the sign of a “spot delivery scam,” where a dealer calls a few days later to announce that financing fell through and you now need to renegotiate your loan at a much higher price.
- It lies about your credit score. Some dealerships con borrowers into paying higher interest by telling them their credit score is worse than it actually is. Yet another reason to check your credit report before comparing lenders.
- It offers 0% financing. You may not pay an APR on your car loan, but you typically aren’t able to negotiate your price or take advantage of rebates. Loan terms also tend to be shorter, sometimes unaffordably so.
Applying for a car loan
How do I know if I’m ready to apply?
You’re ready to apply for a car loan if you:
- Know how much you can afford for a down payment and monthly repayments.
- Know your state’s required taxes and fees.
- Know your credit score.
- Have a few vehicles in mind.
- Have thoroughly compared lenders.
- Are sure you meet your lender’s eligibility requirements — including car insurance.
I’m ready to apply. What do I need to do?
The car loan application process can vary wildly depending on the type of financing you choose. Getting financing from a dealership doesn’t involve most of the steps outlined below, for example — instead, you start at the dealership.
What documents might I need to apply?
Most lenders ask to see at least three documents when you apply for a car loan:
- Your driver’s license. Your lender might ask to see your license or require your license number. Either way, have it on hand.
- Your insurance card. Some lenders require you to have specific car insurance before applying for a loan.
- Employment verification. You might be asked to submit tax returns or recent pay stubs to prove you make enough to afford your car loan.
Worried about how shopping for a car loan might affect your credit score? Don’t be. Credit scoring systems usually count multiple auto loan inquiries within a certain timeframe — typically two weeks — as one.
I got my car loan. What happens next?
So, you’ve finalized the deal that got you behind the driver’s seat. Now it’s time to start paying off your car loan. If it’s an option with your lender, set up autopay to save time (and memory space) you would spend making manual repayments each month.
Keep track of your personal account and loan balance to make sure everything goes smoothly — sometimes even automated systems make mistakes. Contact customer service if you notice anything off.
Didn’t get the loan? Find out why your application was rejected.
Prepaying your car loan: What you need to know
With most loans you can save on interest by paying off your loan early. This isn’t always the case with car loans, however. Some lenders charge with prepayment penalties while others give loans with pre-computed interest rate using what is known as the “rule of 78s” formula. These loans front load interest so that borrowers pay around two thirds of their loan’s interest in the first few months.
In both of these cases, you don’t stand to save much by paying off your loan early. You can still lower your debt-to-income ratio, however, which can help you qualify for other forms of financing.
Even if there isn’t a prepayment penalty and your loan comes wth simple interest, be sure to call your lender to ask if there’s a special process for prepayment. Also ask if it goes toward the principal — not interest. Otherwise your prepayment might not make much of a difference.
Frequently asked questions
Click on the accordions below to find answers to common car loan questions.
Before you apply
When you apply
After you apply
Ask an Expert
I am paying on school loans and keep getting denied. What should I do?
Hi Kay,
Thank you for getting in touch with finder.
It is very important that you find out why you are being denied. Next get a copy of your credit report. Carefully review your credit history annually to stay on top of making sure that lenders are seeing only the most accurate picture of your financial health.
Each time you apply for a loan, the lender will conduct what’s called a “hard pull” on your credit score, potentially affecting your score for a year. If you continuously apply and are denied for loans, you could further lower your overall credit score.
If you want to read more on how you can handle after a loan denial, please check out this link.
I hope this helps.
Have a great day!
Cheers,
Jeni
Are prepayment penalties legal in NC on 48 month used car loans? Is rule of 78s legal? Is there a legal ceiling on the interest rate?
Hi AI,
Thank you for your inquiry.
Regarding this matter, you may need to check the legal information here.
I hope this information has helped.
Cheers,
Harold
I need a loan for a car.
Hi Elizabeth,
Thank you for your inquiry.
You would need apply directly with the lender or a broker. It would be nice if you can make sure that you meet the eligibility requirements so you may have the chance of getting an approval. Please note that eligibility requirements may differ depending on the lender.
I hope this information has helped.
Cheers,
Harold
Can I get a loan. I am in desperate need of transportation
Hi Joseph,
finder.com is for informational purposes and is not a lender or a broker. Compare your options in the table above and when you’re ready to choose a provider, click “go to site” to be taken to their application. You will apply directly with the lender or broker you choose, so make sure that you meet the eligibility requirements and that it’s the best loan for you.
Best,
Adrienne