Tips to get your best deal on financing your next vehicle.
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5 best car loans of December 2018
| Lender | Best for… | |
|---|---|---|
Wells Fargo Auto Loans | Borrowers who want to borrow a significant amount for a new or used vehicle. | Read review |
Chase Auto Loans | Borrowers who want a low potential rate. | Read review |
U.S. Bank Auto Loans | Borrowers who may not have enough for a down payment. | Read review |
LendingTree | Borrowers who want a single application that can connect them with multiple car loan lenders. | |
USAA Auto Loans | Members of the military and their family. | Read review |
What’s the best car loan for me?
The truth? There is no single best car loan option out there. Not everyone looking for a car loan is buying the same car, earns the same income or is in the same financial situation. The best car loan really depends on what you need from your loan, what you’re eligible for and what work well with your budget and lifestyle.
7 questions to ask to find the best car loan available
In order to find the car loan you can qualify for, ask yourself the following question when comparing lenders:
- Am I eligible? Many lenders have credit and income requirements. Some also aren’t available in all states. Make sure you can qualify before you do anything else.
- Is my car eligible? Can you actually finance the car you want with this loan? Some lenders have restrictions on the age or type of vehicle. Confirm with you loan provider that you’ll be able to purchase the car you want before you apply.
- How much does the loan cost? Consider both the interest rate and fees that come with the loan. When looking at the interest rate, Compare similar loans to compare interest rates to find the one that’s most competitive.
- Are the payments flexible? Find out if you’ll be able to repay your car loan early without penalty or if you can make additional payments without being charged a fee. These features can save you money if you plan on paying the loan off ahead of time.
- What are the loan terms? Car loan terms are generally between one and seven years. The longer the loan term you choose, the less the monthly payments will be. However, the cost of interest is always substantially higher with longer loans.
- How much can I borrow? The loan amount the lender offers you depends on a couple of factors. Your credit history and financial situation will be important, but for a secured car loan, the amount will ultimately depend car’s cost.
- What is the type of loan? It can be a loan for a new or used car, a low-interest car loan or loans for those with poor credit. You can even finds loans that offer preapproval before decide on a loan. Since all situations are different, look into all your options to find out which loan will benefit you.
Best car loans by credit score
| Credit score | Best lender | Why you might like it | |
|---|---|---|---|
| Very good and excellent (740+) | Wells Fargo | Wells Fargo has loan terms of up to six years, and you may be able to qualify for financing up to $300,000 provided you have the income to support your loan. | Read review |
| Good (670-739) | LendingTree | LendingTree is a loan marketplace, not a direct lender. This gives you the opportunity to compare multiple loans so you can quickly find the lowest rates. | |
| Fair (580–669) | PNC Bank | Although the vehicle you purchase must be less than eight years old, you can still borrow up to $50,000 at competitive rates. | Read review |
| Poor (579 or lower) | car.Loan.com | You don’t need stellar credit to compare car loans. This a connection service that may be able to help you in your search of finding the best loan. | Read review |
Our top picks for used car loan providers
| Lender | Why you might like it | |
|---|---|---|
| LightStream | LightStream allows you to buy a used car from a dealer or a friend at competitive rates. | |
| Auto Credit Express | Auto Credit Express offers loans an leasing for anyone after facing a financial rough patch. Plus it has a military lending program. | |
| MyAutoLoan.com | MyAutoLoan.com allows you to use its loan to buy a car up to 10 years old. Most lenders have a maximum used car age of eight years. |
Best credit union car loans
| Lender | Why you might like it | |
|---|---|---|
| Alliant Credit Union | Alliant Credit Union offers car loans up $1,000,000 to for excellent credit borrowers looking for low rates. | Read review |
| Consumers Credit Union | Consumers Credit Union offers a car buying service to help you find a new car and financing when you don’t know where to start. | Read review |
| Navy Federal Credit Union | Navy Federal Credit Union offers rate discounts to current and retired military members and 24/7 customer support. | Read review |
Best lenders for auto refinancing
| Lender | Why you might like it | |
|---|---|---|
| LendingClub | Available to customers in 32 states, LendingClub is a good choice for people who have vehicles under 120,000 miles and who want to lower rates without paying extra fees — you’ll only need to pay a standard DMV transfer fee. | |
| MotoRefi | MotoRefi is a good choice if you need to extend your loan term. Provided you make at least $2,000 a month, you may be able to snag an extended loan term of up to six years. | Read review |
| OpenRoad | If you have between $10,000 and $100,000 left on your current car loan, OpenRoad is a trusted way to potentially reduce your monthly costs or lower your interest rate. | Read review |
Should I avoid financing at the dealership?
You likely won’t find the best car loan at a dealership because dealers outsource their loans to direct lenders. The interest rate a dealership receives from one of its partner lenders may be marked up by a few points in order to generate a profit.
Of course, this doesn’t mean you won’t be able to find a good loan at a dealership, but it’s best to visit with financing already established. This is not only a solid backup plan in case the dealer can’t offer you the best loan, but it also gives you an edge when negotiating. You never know — even with dealer markup, you may be able to find the best loan when you’re buying your next vehicle.
3 auto loan types to consider
5 tips to get the best car loan
- Consider a newer vehicle. New car loans come with lower interest rates than used car loans because the lender is taking on less of a risk. Most new car loans allow you to usually secure a vehicle that’s less than two years old.
- Quotes without credit inquiries. Too many inquiries can have a negative impact on your credit score — don’t inquire with too many lenders. If you’re applying for a car loan rate estimate, make sure no hard credit checks are listed on your file.
- Detail all of your assets and finances when applying. Some lenders offer lower interest rates if you have a large sum of money to fall back on. Even if you are applying for a secured car loan, listing other assets may give you access to a better rate.
- Borrow less than you’re buying the car for. Having a down payment or trade in can make you eligible for a lower rate if a lender sees you don’t need to borrow 100% of the purchase price of the vehicle.
- Compare your options before you apply. Making car loan comparisons will let you know which lender has the lowest rates available. If you don’t want to do this yourself, you can consider using the services of a car finance broker.
Will I get a better deal with a larger down payment?
In general, yes. Lenders may be more willing to offer favorable terms if you have some money saved to use as a down payment. A larger down payment means you borrow less, which then reduces your monthly payment as well as the money you’ll pay the lender back in interest.
For instance, you’re looking to borrow $15,000 for a new vehicle. The lender you’ve chosen to go with has offered you a 60-month term with a 7.45% APR. By calculating your monthly payments with different down payment amounts, you can see how much money you’ll save each month and overall.
| Down payment | Monthly payment | Interest paid |
|---|---|---|
| 0% ($0) | $300.21 | $3,012.78 |
| 10% ($1,500) | $270.19 | $2,711.50 |
| 20% ($3,000) | $240.17 | $2,410.22 |
In this example, by having $3,000 saved up, you end up spending about $600 less on your loan and reduce your monthly payments by $60. A sizable down payment can make the best loan even better by potentially saving you hundreds of dollars in interest over the life of your loan.
What do I need to apply
What you’ll need to provide depends on the lender and the type of loan you’ve chosen — here’s what you’ll need:
- Proof of your identity — either a passport or driver’s license
- Financial details including available credit, debt and assets
- Proof of your income
- If you have it, the make, model and year of the car
For a secured loan, you’ll also have to provide vehicle details including the vehicle identification number (VIN) and the dealership. Check exactly what you need with your lender before you submit your application.
Compare more auto loan options
Bottom line
Once you’ve found a loan that meets your needs, you’re ready to apply. Though eligibility requirements differ between lenders, you’ll most likely need to be older than 18 years old and a permanent US resident to qualify.
