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Best car loans of 2020
Consider these lenders when you finance your next ride.
Select from several lenders that offer a variety of loan options to cover you no matter what type of car you want to buy. Many accept a range of borrowers, so you can get funding no matter your credit score.
To find the best car loans, we checked the types of car loans, APR and total loan amount of each lender. We chose lenders that accept a wide variety of borrowers and offer lower maximum rates. We also confirmed each lender’s legitimacy, business practices and customer rating with the Better Business Bureau and Trustpilot.
We changed multiple categories and swapped lenders for our 2020 update. The lenders we chose are held to a high standard, and the categories we divide them into reflect what our readers look for in car loans.
LightStream is an online lender backed by Truist Bank. It has competitive rates, and unlike many lenders, offers same-day funding on car loans. But you'll need good to excellent credit to qualify. And there's no preapproval process, which means applying with LightStream will result in a hard pull of your credit — whether or not you're approved.
Carvana is an online lender and dealership without the dealership sales tactics. It offers a simple financing process for its used car inventory, and rates start decently low at 3.9% — although they can reach a high 27.9%. And while financing can only be used at Carvana, you have up to 45 days to choose your car. Combined with Carvana's seven-day return period, it's an easy way to avoid getting stuck with a car — and a loan — that doesn't suit your needs.
LendingTree simplifies the search process. With one form, you can see what car loans you could qualify for — no matter what type of vehicle you want to finance. The lenders in its network offer rates as low as 3.09% and competitive terms. But if you don't have good to excellent credit, you may not qualify for a loan.
Like LendingTree, myAutoLoan.com is a connection service that uses your information to help you find a lender. It accepts borrowers with low credit, and its network of lenders are transparent about their rates. However, you have to borrow at least $8,000. And because it sends your information to multiple lenders, you may receive marketing materials even after you get a loan.
LendingClub exclusively offers refinancing for car loans — at decently low rates. It accepts cars up to 10 years old or under 120,000 miles and could potentially help lower your rates or monthly payment. But it isn't available in every state, and the refinancing process may be slower than other lenders.
Bank of America is one of the top banks out there — and you'll be hard pressed to find a lender with lower starting rates. Its wide selection of loan options also makes it a good choice for almost any borrower. And while you're generally stuck buying from its network of dealerships, Bank of America will finance private-party loans if they meet some set requirements. Just be sure any vehicle you're looking at meets its long list of minimum requirements.
Extremely low starting APR
Multiple car loan options
Large maximum loan amount of $100,000
Limited dealership network
Must have BofA bank account to apply for private-party purchase
Alliant Credit Union often makes our various lists of best lenders, and its car loans are no exception. It may only offer three standard types of car loans — and you will have to open an account — but its rates are some of the lowest you'll find. Even borrowers with fair credit may qualify, although you won't get the lowest possible APR.
M&T Bank is one of the few banks that offers financing for RVs, boats, motorcycles and other leisure vehicles. It offers clear rates and terms, although the fees you might pay aren't easily found. And while you'll find a wide variety of vehicles covered, M&T Bank has a limited reach — it only has branches in eight states and Washington, DC.
Low starting rates for boat and RV loans
APR discount for current customers
Long loan terms available
Limited state availability
Not all fees are transparent
Loan amount
Starting at $2,000
APR
3.64% – 14.29%
Term
Starting at months
Interest Rate Type
Fixed
How can I get a good rate on a 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 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 preapproved. 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.
How is my interest rate determined?
Car loans can come with rates as low as 2%, but 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 debt 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.
Compare lenders that specifically assist people with poor credit.
Should I use manufacturer financing?
Manufacturer financing can be a good option if you have excellent credit and a strong credit history. This is because many manufacturers offer special deals on new and certified preowned (CPO) cars. These can include cash back, 0% financing and other discounts — all of which can drastically lower your monthly repayment.
But these deals are difficult for most borrowers to qualify for. If you want to get the best rate, take the time to see what other lenders will offer. Then you can compare it to the manufacturer — or dealership — financing option to ensure you’re picking the right loan.
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 reduces your monthly payment and 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.
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
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.
Frequently asked questions
Yes. Some lenders are able to work with borrowers who have a low income. However, the amount you’re approved for will vary depending on how much the lender thinks you have the ability to pay back.
It depends on how damaged your score is, but there are lenders that offer bad-credit car loans.
Unless you have an impeccable credit history, most lenders require a down payment. You can calculate the down payment you need or read our guide on car down payments to learn why having cash up front is so important.
Kellye Guinan is a writer and editor with Finder and has years of experience in academic writing and research. Between her passion for books and her love of language, she works on creating stories and volunteering her time on worthy causes. She lives in the woods and likes to find new bug friends in between reading just a little too much nonfiction.
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