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Best car loans of 2020
Compare top lenders based on which is best for certain credit types, online shopping and more.
When you’re looking to buy a new car, knowing the various loan types available and who or what they’re best for can go a long way toward improving your bottom line. Compare these top auto lenders to see what type of rates you might be eligible for.
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.
How did we choose these products?
To find the best car loans, we first confirmed each lender’s legitimacy, business practices and website security. We also looked at borrower reviews with the Better Business Bureau and Trustpilot.
We then analyzed and weighed the loan terms, APRs, borrowing amounts, funding speed, down-payment requirements and application process of each lender. Because more providers are offering longer terms, we also considered term length when rating these loans.
8 best auto loans
- Best for high-priced cars: Wells Fargo
- Best for competitive rates: Consumers Credit Union
- Best for same-day funding with low rates: LightStream
- Best for comparing multiple offers: LendingTree
- Best for an online car purchase: Carvana
- Best for bad credit: car.Loan.com
- Best for older used cars: MyAutoLoan.com
- Best for financing after a financial setback: Auto Credit Express
| Lender | APR | Minimum amount | Best for… | |
|---|---|---|---|---|
| Wells Fargo | Varies | $5,000 | Buying a vehicle with a high price tag. | Read review |
| Consumers Credit Union | From 2.24% | Not stated | Getting a new car at a competitive rate — with or without a coapplicant. | Read review |
| LightStream | Competitive | $5,000 | Negotiating your rate with same-day funding. | |
| LendingTree | From 3.09% | Varies by lender | Comparing multiple car loan providers. | |
| Carvana | Not stated | Not stated | Buying and financing a used car online. | Read review |
| car.Loan.com | Varies by network lender | Varies by lender | Comparing car loans for borrowers with bad credit. | |
| MyAutoLoan.com | Varies by network lender | Varies by lender | Buying an older used car. | |
| Auto Credit Express | From 2.49% | $8,000 | Buying or leasing a car after a financial setback. |
What is the average rate for a car loan?
Car loans can come with rates as low as 2% in some cases. However, the rate you qualify for depends on several factors, including:
- Credit score. The best rates go to borrowers with the best credit score.
- Income. The higher your income, the more likely you are to get a good deal.
- Debt-to-income ratio. Having regular monthly expenses worth 20% or less than your income can also get you a better deal.
- Car type. New cars typically come with lower rates than used cars.
- Loan term. Often longer loan terms come with higher rates — especially at credit unions.
6 tips to get the best car loan
Here are a few pointers to nab a good deal on your next car loan:
- Consider a newer vehicle. New car loans come with lower interest rates because the lender is taking on less of a risk. Most new car loans usually allow you to secure a vehicle that’s less than two years old, although some may only be for cars that haven’t been previously owned.
- Apply within 45 days. When you apply for multiple car loans, keep your applications within a short period — typically no more than 45 days. Most credit bureaus will count it as one line on your credit report, saving you from lowering your score every time you fill out an application.
- Get preapproval. The easiest way to avoid an inquiry is to apply for preapproval. Many lenders are able to quote you an estimated rate without doing a hard credit check.
- Note all of your assets in your application. Some lenders offer lower interest rates if you have a large sum of money to fall back on. Even if you’re applying for a secured car loan, listing other assets may help you get 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. Comparing offers from different car loan providers can help you find the lowest rate available to you. If you don’t want to do this yourself, you can consider using a car finance broker or online connection service.
3 types of car loans to consider
Low interest
Compare low interest car loan options and keep payments down.
Secured
Use your vehicle as security and benefit from lower rates.
Bad credit
Compare lenders that specifically assist people with poor credit.
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 money saved up to use as a down payment. A larger down payment also means you have to borrow less, which not only reduces your monthly payment but how much you’ll pay in interest.
For instance, say you’re looking to borrow $15,000 for a new vehicle. The lender you’ve chosen to go with 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.
Compare more car loan options
Updated January 29th, 2020
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Bottom line
The truth? There’s no single best car loan 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. It’s up to you to compare your car loan options and find the lender that best fits your needs.
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