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Compare low-interest rate car loans

Keep your repayments down with a low interest rate car loan.

You don't have to spend big to get financial help to buy a car. When you're choosing a loan, your best option is with the provider that gives you the lowest interest rate. It pays to compare lenders like banks, credit unions and private lenders, so keep reading to find out how to get the lowest interest rate loan for your new or used car.

Name Product Filter Values Minimum credit score APR Loan term Requirements
LightStream Auto Loans
Good to excellent credit
2 to 7 years
Must have a good to excellent credit profile, be a US citizen or a permanent resident with a valid green card, have a valid Social Security number, credit card verification requested upon loan approval and have a valid US address.
Quick car loans from $5,000 to $100,000 with competitive rates for borrowers with strong credit.
Varies depending on the lender
3 to 6 years
Varies depending on the lender
Go to site
CarsDirect auto loans
No minimum credit score
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.
No minimum credit score
3.9% to 27.9%
1 to 6 years
18+ years old, annual income of $4,000+, no active bankruptcies
Get pre-qualified for used car financing and receive competitive, personalized rates.

5 tips to get a low interest rate on a car loan

Low-Interest rates are usually reserved for those with good credit and regular income. Here are five ways you can get the lowest rates possible for your next car loan.

  1. Have a stable job. A bank is more likely to view you as a financially stable customer if you’ve held down the same job for several years — changing employers often can signal instability.
  2. Maintain a good credit history. You’re far more likely to get a good deal and a cheaper car loan with a good credit history. To do so, make on-time, full payments each month and pay attention to your credit utilization ratio.
  3. Offer deposit. Lots of lenders are willing to lend you the full amount to purchase a car. But if you can afford a cash deposit or have a car to trade-in, you’ll borrow less and get a lower interest rate.
  4. Shop around. Never accept the first low-interest car loan offer you see. Always take the time to shop around and compare what else is available. Be prepared to ask questions about loan terms, whether the rate is fixed or variable and if there are any prepayment penalties.
  5. Negotiate. If you’ve already done some research and you know what other lenders are offering, use this information as ammunition to strengthen your negotiations. Ask about discounts on your interest rate and if they’ll waive any fees to win your business.

What’s considered a low interest rate on a car loan?

Generally, the lowest interest rates you can find on a car loan are around 2% or 3%. However, any car loan with a rate under 5% is considered low-interest — and you’ll need good or excellent credit to qualify.

However, if you have less-than-stellar credit, the lowest rate you might be eligible could be upwards of 10%. Since car loans are usually secured, they typically come with lower rates than an unsecured personal loan.

Who actually qualifies for the lowest Rate?

Just because you see a low-interest rate advertised for a car loan with one particular lender, don’t automatically think that’s how much you’ll end up paying. Those ultra-cheap interest rates may only be available to you if you have excellent credit or if you are buying a certain type of car.

How much does a low interest rate car loan cost?

Low interest car loans come with a few costs, but each individual loan will differ depending on the lender you apply with.

Here’s are some fees to watch out for:

  • The origination fee. This is the cost to set up your car loan. Lenders usually add this fee into your loan amount to be paid off with the rest of your principal.
  • Other monthly fees. Some loans could have maintenance fees to keep your account open.
  • Early or additional repayment fees. If you repay your loan early or make additional payments you may be charged a fee to make up for the loss of interest on your loan.
  • Late payment fees. Set up autopay to avoid the fee for late or missed payments.

Consider your loan term

How much your car loan costs also depends on how long you take to pay it back — that means there’s more time for interest to add up

Let’s assume you want to borrow $20,000. Over a five-year term you might be quoted an 8% interest rate, but you’re offered a 7.5% rate if you accept a seven-year loan term. Let’s see how it would work out.

Low interest loan details8% interest rate7.5% interest rate
Loan amount
Loan term
5 years
7 years
Monthly payment
Total interest paid

If you choose the 7.5% interest rate your payments are almost $100 per month cheaper. This can be appealing because it’s obviously more budget-friendly. Unfortunately, even with the cheaper interest rate you end up paying more than $1,436 in additional interest charges.

One option is making additional payments and paying off your car loan sooner, but check to see if you’ll be charged an early repayment fee that wipes out any savings you thought you were getting.

Calculate your loan cost

Use our monthly repayment calculator to find out how much you’d end up paying per month and overall with a low-interest car loan.

What factors influence interest rates?

Buying a brand new car might get you a lower interest rate, but a new car might not be what you need — or can afford. Here are some factors that can influence the interest rate you pay, even for a car to get you from point A to point B.

  • Secured or unsecured loan. These loans are cheaper than unsecured loans becuase the car uses your car as security for the loan.
  • Fixed or variable interest rate. You’ll usually find that the variable rate offered is usually cheaper than the fixed rate because it might fluctuate throughout the loan term.
  • Age of the car. This determines the type of low interest car loan you’re eligible for. When it comes to used cars, some lenders won’t approve loans for cars with too many miles or are 10 to 20 years or older. Cars older than 20 years may need to be bought with a personal loan instead.
  • The loan term length. Calculate your monthly payments over a three-year, five-year and seven-year term to make sure you can keep up with payments. However, with longer terms, you’ll pay more in interest.
  • Employment status. If you have a stable employment history and you can show documentation to verify your income, you’ll typically qualify for a low interest rate car loan. However, if you’re self-employed and you can’t verify a source of income, you could pay a slightly higher rate.
  • Your credit history. If you have poor credit history, it’s likely you won’t qualify for those really low advertised rates. Your search for car loans may be limited to higher interest rates until you can improve your score.
  • If brokerage fees are charged. If you’re getting a car loan through a broker or car dealership, you might be expected to pay brokerage fees. Some brokers charge a percentage or a flat free ranging from $200 to $500.

Bottom line

The best loan for you will be the one offered with the lowest interest rate and minimal extra costs. Check what fees are being charged for your loan and ask them to be reduced. If you can’t get them reduced, shop around elsewhere for a more competitive deal and always compare your car loan options before you apply.

Frequently asked questions

Do I need a cosigner?

Not necessarily. If you qualify for the loan on your own, you won’t need one. However, having a cosigner could result in a lower interest rate.

How much can I afford to borrow with a car loan?

This varies by person, but a good rule of thumb is that your total amount of fixed expenses for the month, such as bills or rent, shouldn’t exceed 50% of your income. So, calculate you car loan payment and see if it can realistically fit in your budget.

I have a low credit score, can I still get a low interest rate car loan?

It’s possible but less likely. Your other options could be applying for a bad credit personal loan or reaching out to a private lender directly.


Written by

Matt Corke

Matt Corke is Finder’s head of publishing ventures. Prior to this he was head of publishing for Australia, New Zealand and emerging markets. Matt built his first website in 1999 and has been building computers since he was in his early teens. In that time, he has survived the dot-com crash and countless Google algorithm updates. See full profile

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