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Car Loan Finder

Get financing for your dream wheels that fits your budget: Compare top lenders in 2024.

Compare auto loan and refinancing options

Our team reviewed over 100 banks and online lenders to help you find the best available deal. Compare options for financing new and used vehicles from dealerships and private sellers.

Name Product Filter Values Minimum credit score APR Loan term Requirements
LightStream Auto Loans
Good to excellent credit
Competitive
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.
CarGurus
CarGurus
Varies
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.
Carvana
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.
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How do car loans work?

A car loan is a type of financing used specifically to purchase a new or used car. After buying the car, you’ll make monthly payments of both principal and interest until the loan is fully paid off. Auto loans are usually secured loans — the car itself is used as collateral and can be repossessed if you don’t make payments.

How much you can borrow and what interest rate you get depends on the lender and your personal financial situation. The best way to ensure you’re getting the best deal available to you is to compare offers from multiple lenders before signing on to any car loan.

Auto loan rates

The average car loan rate is 5.15% APR, according to a 2020 Experian study. But the rate you get can vary depending on your credit. The average rate for people with a credit score above 780 is 3.24% APR. But those with a 500 score got an average rate of 13.97% APR.

Some dealerships offer 0% APR introductory rates to move cars off the lot. Usually, this lasts for about a year before the regular interest rate kicks in. But usually, you need a credit score of 670 or higher to qualify for these kinds of deals.

Other factors like the type of car you buy and loan term you select can influence your rate. Generally, new cars and short terms get the lowest rates. Used cars from private sellers tend to land the highest rates.

What’s a good interest rate on a new car loan?

Anything below 5% is considered a good interest rate on a new car loan. However, you won’t be able to qualify for a good rate on a car loan unless you have good to excellent credit.

What to know before you apply

Here’s the financial, lender and car loan information you should have on hand before you apply.

Your budget

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 lender you’re considering.

Not all lenders require a down payment. But experts recommend that you put down at least 10%.

Rates and fees

Compare the rates and fees available with multiple providers. Your loan’s APR is interest and fees expressed as a percentage and is the easiest number to compare.

But it’s useful to look at them separately since they can increase your loan balance or the upfront cost of your loan. Some lenders charge an origination fee of 1% to 5% of the loan amount.

Terms

In addition to APR, the length of your loan term also affects the overall cost. Your loan term is the amount of time you have to pay off your loan.

A short-term loan generally results in higher monthly payments but a lower total loan cost. A longer loan term gives you lower monthly payments, though you’ll ultimately pay more in interest.

Available rebates

If you’re financing with a dealer, ask about any cashback 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.

Preapproval

Many lenders allow you to lock in rates and terms for a car loan so you can use it to shop around at dealerships as a cash buyer. If this is available, ask how long your offer is good for. Typically a preapproval offer is good for 30 to 60 days.

Lender repayment policies

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.

Customer reviews

Quickly scan online forums and review sites to see what people say about each lender. Are interest rates high? Do people have trouble making repayments? If anything sounds sneaky, run.

Additional services

Some lenders hold your hand throughout the process of getting financing, and others don’t. Consider the help if you don’t know what you’re doing — but also ask: Is the lender genuinely helpful or just pushing you into partners’ laps. If information isn’t available online, it’s worth calling a customer service representative to get a ballpark answer.

4 red flags to watch out for

Lenders or dealerships advertising any of these four “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.

Where to 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 providers can offer faster funding for people with damaged credit or who are new to auto financing. Some can also help you find a car at a dealership.
  • Online connection services. Loan connection 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.

Benefits of online car loans

Online auto loans boast convenience — and most banks, dealerships and manufacturers offer online applications to speed up the process. You won’t need to know the vehicle you want ahead of time, and lenders frequently offer 30-day preapproval periods so you can shop around to find the right car.

  • Preapproval lasts 30 days or more
  • Online lenders may approve your loan the same day you apply
  • Banks, credit unions, private lenders and dealerships offer online applications
  • Quick quotes make it easier to shop around

With an online lender, you can often get better rates than at a bank or credit union, especially if you have good credit. Some online lenders will also work with borrowers with poor credit.

If you’re not sure where to start, online marketplaces help you compare offers from multiple lenders by filling out just one online form. But interest rates vary by lender, and you may pay extra fees.

Be sure to confirm your lender is legitimate as well. Most are, but you should still research the lender’s website security, business practices and borrower reviews to make sure it’s legit before applying.

How do I apply for a car loan?

The car loan application process can vary depending on the type of financing you choose. Starting the process online with a bank or online lender involves more steps, but you have the advantage of getting preapproved for the loan and taking that offer to multiple dealerships. Although starting at the dealership is quicker, you lose some negotiating power.

What happens during the application process

1. Get preapproved
2. Choose your loan
3. Submit documents
4. Read the contract
5. Purchase the car
6. Sign paperwork

Before you apply, check that you know these six pieces of information

  1. How much you can afford for a down payment
  2. How much you want to pay each month
  3. Your state’s required taxes and fees
  4. Your credit score
  5. Which vehicle you want to buy
  6. The lender’s eligibility requirements

Have these three documents handy

    1. Your driver’s license
    2. Your insurance card
    3. Employment verification — tax returns or recent pay stubs

How to apply for an online car loan

Every lender is different, but these are the basic steps you’ll need to follow when submitting a loan application:

      1. Browse the table above and find a lender that fits you.
      2. Choose the Go to Site link to be redirected to the lender’s website.
      3. Fill out the application with your personal and financial information.
      4. Submit your application.

Most lenders will be able to tell you if you’ve been approved within a few minutes. View the interest rate and potential fees before you sign the loan contract. This makes it easy to compare loans.

Once you’ve decided on a loan, sign the necessary documents and submit. You’re ready to step into a dealership with financing to back you up.

3 questions to ask before you get a new car loan

  • What’s the final cost? It’s essential that all the costs associated with the car loan are established with the loan provider. The obvious costs are the interest rates, but there are other costs, too — these may vary depending on the lender.
  • What type of loan makes sense? Fixed interest rates are common with car loan companies and won’t change throughout the loan period. It’s more uncertain choosing a variable interest rate, as the loan provider could adjust the interest rate at any time depending on the market.
  • Can I pay the loan in full early? Early payment fees should be negotiated with the loan provider just in case your situation changes throughout the loan period.

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. Some lenders even offer a discount on your interest rate for signing up for automatic repayments.

Keep track of your personal account and loan balance to make sure everything’s going smoothly — sometimes, even automated systems make mistakes. Contact customer service if you notice anything amiss.

Didn’t get the loan? Find out why your application was rejected.

Prepaying your car loan: What you need to know

With many loans, you can save on interest by paying off your balance early. This isn’t always the case with car loans, however. Some lenders charge prepayment penalties, while others give you a pre-computed interest rate using what is known as the Rule of 78 formula. These loans frontload 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 (DTI) ratio, however, which can help you qualify for other forms of financing.

Even if there isn’t a prepayment penalty and your loan comes with simple interest, be sure to call your lender to ask if there’s a special process for paying off your loan early. Also, ask if extra repayments go toward the principal — not interest. Otherwise, making extra repayments might not make much of a difference.

Car loan balloon payments

A car loan balloon payment is one large payment that’s due at the end of your loan, following smaller monthly payments. Some car loans come with balloon payments to lower your initial monthly costs without lengthening the loan term. Balloon payments are also common on auto leases.

Balloon payments can lower the monthly cost of your vehicle. But it won’t make your car loan any less expensive. And while some people might benefit, make sure you understand the risks — like going upside down or even having your car repossessed.

While balloon payments might seem like a way to make your car loan more affordable, it’s not always the case. Unless you have a lot of money coming in by the time the final payment is due, you might be faced with a bill for hundreds or thousands of dollars that can be difficult to meet.

Frequently asked questions

Answers to common questions about financing a new vehicle.

How easy is it to get a car loan?

How easy it is to qualify for a car loan depends on several factors. These include your creditworthiness, income and how much you can afford to pay for a down payment. If you have strong credit and enough disposable income to cover a down payment plus monthly repayments, getting approved isn’t difficult.

The state of the economy can also affect how easy it is to get a car loan. If the economy is poor and you work in an industry experiencing layoffs, lenders might be more cautious about offering you a car loan. On the flip side, if the economy is booming, lenders are typically less concerned about you losing your job and could be more willing to approve you with favorable rates.

How will shopping for a car loan affect my credit score?

Credit scoring systems usually count multiple auto loan inquiries within a set time frame — typically two weeks — as one. One inquiry may cause a small, temporary drop in your credit score. But it’s better than multiple inquiries.

Will I qualify for a car loan with low income?

It depends on if you’re able to prove you can pay. When you’re in this situation, you may still be able to qualify by using another asset as additional security for your loan. Or, ask your lender if you could use a cosigner.

What’s the loan-to-value (LTV) ratio on a car loan?

This is the value of your loan divided by the cash value of your car, expressed as a percentage. For example, if you got an $8,000 car loan for a $10,000 car, the LTV would be 80%.

The LTV tells you how much of the price tag your lender will cover and how much of a down payment you’re required to make. On a car loan with an 80% LTV, you’d have to make a 20% down payment.

What type of down payment do I need for a car loan?

It depends on the lender you’re applying with. Some car loan providers don’t require a down payment at all, while others will ask for anywhere from 10% to 20% of your car’s sticker price up front. Typically, your creditworthiness will determine how large of a down payment you have to make.

LEARN MORE: Compare car loan providers that don’t require a down payment

Read more on this topic

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8 Responses

    Default Gravatar
    KayApril 25, 2018

    I am paying on school loans and keep getting denied. What should I do?

      AvatarFinder
      JeniApril 26, 2018Finder

      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.

      You can learn more from our loan denial page. It provides 4 steps you can take after being denied a personal loan.

      I hope this helps.

      Have a great day!

      Cheers,
      Jeni

    Default Gravatar
    AlJune 16, 2017

    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?

      AvatarFinder
      HaroldJuly 2, 2017Finder

      Hi AI,

      Thank you for your inquiry.

      Please note that we are not legal experts. With this in mind, I highly recommend you speak to NC DOJ. They should be able to give you personalized advice and more specific answers.

      I hope this information has helped.

      Cheers,
      Harold

    Default Gravatar
    ElizabethMarch 14, 2017

    I need a loan for a car.

      AvatarFinder
      HaroldJuly 18, 2017Finder

      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

    Default Gravatar
    JosephFebruary 15, 2017

    Can I get a loan. I am in desperate need of transportation

      AvatarFinder
      AdrienneFebruary 15, 2017Finder

      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

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