Best Auto Loans: Top Companies & Rates (2023)

Finding the best auto loans can be tricky. There’s a sea of providers out there, and the difference between a good interest rate and a bad interest rate can add up to thousands of dollars after all is said and done.

Our team compared 25 of the most popular lenders across five categories: industry standing, availability, loan details, rates, and customer service. Our goal is to help car shoppers navigate the auto finance landscape and choose reputable lenders that offer terms in their best interests. We consider starting APR, application fees, prepayment penalties, discounts, and availability of prequalifications and/or preapprovals. Our team also surveyed 2,000 auto loan customers to find out what’s important during the shopping process and beyond.

In this article, we’ll point you to a number of reputable auto lenders to help you decide where to apply. We’ll also provide tips on how to get the best auto loans, a calculator to help you find what you can afford, and information on what types of auto loans are out there.

If this is your first time getting an auto loan, there are a few things to be aware of.

Types Of Car Loans

In general, auto financing can be divided into two categories: purchase loans and refinance loans. The loan type that works best for you depends on your personal financial situation.

New And Used Purchase Auto Loans

A purchase loan is a loan taken out in order to purchase a new or used vehicle. Some lenders may work through dealerships to provide purchase loans, and others may offer to provide loans for private purchases as well.

Refinance Auto Loans

A refinancing loan is a second loan taken out to pay off an existing auto loan. Drivers may choose to refinance if the new loan offers a lower interest rate, meaning that they will pay a lower overall cost. People whose credit score or income has recently changed may be interested in a refinancing loan. Or, if you feel that your original loan has particularly bad terms, refinancing your loan with a better lender may save you money.

Lease Buyouts

Lease agreements include a purchase price based on the car’s residual value. If you want to keep your leased car after the agreement expires, you can get a loan to buy it. Lease buyouts make sense if the residual value is less than the market value of the same model and year. In this case, you save money compared to buying the same model on the open market.

Private Party Loans

This type of loan allows you to purchase a car from a private party. Typically, you’ll find a car you like then give the details to a lender. If approved, the lender can give you a check made out to the seller or deposit money in your bank account. You may have to provide more information like the car’s registration, title, and bill of sale.

Lender Requirements

Most lenders have requirements for your financial situation as well as for the vehicle you want to buy. For your financial situation, a lender may require you to have a certain credit score or monthly income. For your car, a lender may set a maximum number of years and miles.

Fees

Depending on the lender, you may encounter fees like origination fees, dealership fees, or prepayment penalties.

• Origination fee: This type of fee is common on loans for average- or poor-credit borrowers. It may be a flat fee, like $300, or a percentage of the loan amount. This fee is rolled into the total loan and you pay it back over time.
• Dealership fees: Car dealerships that work with lenders may charge fees for updating the registration with the DMV, documentation fees, sales tax, and more. These fees are also rolled into the cost of your car loan. (You can decide to pay sales tax separately if you have the cash, too.)
• Prepayment penalty: This fee is designed to discourage you from paying the loan off early and saving on interest. It adds to the final payoff amount if you want to pay the loan off mid-term. Not all lenders impose prepayment penalties, and you should seek loans without this penalty.

Auto Loan Prequalification Vs. Preapproval

Prequalifications and preapprovals can be helpful when you’re shopping around for an auto loan, but they’re not the same thing.

Prequalification is an estimate of whether you qualify for the loan. It does not affect your credit. It can also include an estimated APR and the terms that are available, like 48- or 60-month terms and monthly payments. However, this is all just an estimate and can change once you complete a full application. Prequalification is a useful way to see if a lender is likely to approve you for a loan without hurting your credit.

Preapproval requires a full application and does affect your credit. If you’re approved, you’ll see the exact APR and terms available to you. Preapproval can be useful because you can tell a dealership you have financing and can sometimes negotiate a better price for a vehicle. You can also use the APR from your preapproval to negotiate a lower APR with your dealer if you want to use dealer financing instead.

Is Getting Multiple Credit Checks Bad?

Getting multiple credit checks as you shop for a vehicle and loan isn’t necessarily a bad thing. If you get multiple checks for the same type of loan within a two-week period, the credit bureaus will count the multiple inquiries together as one. But if you get multiple inquiries outside of this time frame, you’ll get dinged multiple times.

How To Apply For An Auto Loan

Many lenders allow borrowers to apply for an auto loan through an online application. In some cases, borrowers can receive same-day financing.

Auto Loan Requirements

Typically, to apply for an auto loan you will need to supply the following information:

• Personal details such as name, address, and age
• Social Security number
• Gross annual income information
• Vehicle information such as vehicle identification number (VIN), age, and mileage

You may also be required to show or submit a copy of the following documents:

• Driver’s license
• Pay stubs
• References

When you apply for a loan, some companies may offer you the opportunity to have a co-signer, another person who will assume responsibility should you fail to make your loan payments. A co-signer may be required for people with exceptionally poor credit.

APR Vs. Interest Rate

APR stands for annual percentage rate, which is slightly different than an interest rate. The interest rate is the cost of the loan expressed as a percentage of the loan amount. The annual percentage rate includes the interest rate plus any fees that are included in the loan.

Let’s say you took out a $10,000 loan with a 5 percent interest rate. However, the loan also had a $200 origination fee. Your APR would be slightly higher than 5 percent because it includes the $200 fee in the financed amount. Other fees that may be included in the APR are dealership fees and processing fees. If you are unsure why the APR is higher than your interest rate, ask the lender to explain what the APR includes.

Finding the best auto loans provider also depends on which type of car loan you need: a new car loan, used car loan, or a refinancing loan. The table below shows some information about a few of the best auto loan providers for a variety of borrower types. Some of the companies listed administer loans directly to customers, while others are brokers that match customers with loans. Both can be good places to start when looking for the best auto loans.

Best Places For Car Loans

*The lowest APRs are for all of a lender’s offerings, including new and used purchase loans as well as refinance loans.
However, there is no one best auto loan provider for everyone. While most people looking for loans will want to find a provider offering the lowest APR the interest rate you receive depends on your credit history as well as a number of other factors. Different financial institutions may also offer different minimum and maximum loan amounts.

Based on the available information, we believe the best auto loan companies are as follows:

• #1: MyAutoloan
• #2: Consumers Credit Union
• #3: AutoPay
• #4: PenFed Credit Union
• #5: iLending
• #6: Auto Approve

In the sections below we will go into detail about each company’s history with borrowers, pros and cons, and customer reviews so you can find the best car loan for you.

#1: MyAutoloan

Company type: Online loan aggregator

Lowest APR: 2.49%

Minimum credit score: 575

Offers prequalification: Yes

Offers preapproval: Yes

Loan Types

• New purchase loans
• Used purchase loans
• Refinance loans
• Private party loans
• Lease buyouts

Why We Picked It

MyAutoloan has a good reputation and offers affordable rates and a variety of loan types. MyAutoloan has been in business since 2003 and has an A+ rating from the BBB. The company is an online loan aggregator, which means it works with a wide selection of lenders across the country. Lenders include finance companies, credit unions, banks, dealers, and other affiliates.

You can see up to four offers after you apply. Once you get approved for an offer, you’ll receive funding within 24 hours. To get a new or used car at a dealership, you can bring your certificate of financing from myAutoloan to the dealer and know exactly what you can buy.

MyAutoloan Pros And Cons

#2: Consumers Credit Union

Company type: Credit union

Lowest APR: 5.24%

Minimum credit score: 640 

Offers prequalification: Yes

Offers preapproval: Yes

Loan Types

• New purchase loans
• Used purchase loans
• Refinance loans

Why We Picked It

Consumers Credit Union offers good rates to those with good credit, and it also offers gap insurance and mechanical breakdown coverage. The cost of these add-ons can be rolled into the auto loan. Consumers Credit Union also offers a car buying service powered by TrueCar. You can save a bit of money if you use the service.

To get a Consumers Credit Union auto loan, you need to become a member. But it’s easy to do. Just pay a $5 fee and then keep $5 in your Consumers Credit Union savings account from then on to maintain your membership.

Consumers Credit Union Pros And Cons

#3: AutoPay

Company type: Online loan aggregator

Lowest APR: 2.99%

Minimum credit score: 575

Offers prequalification: Yes

Offers preapproval: No

Loan Types

• New purchase loans
• Used purchase loans
• Refinance loans
• Cash-out refinancing
• Private-party auto loans
• Lease buyouts

Why We Picked It

AutoPay is a modern one-stop shop for auto loans of all types. The company works with a wide range of lenders to provide solutions for people of any credit background. You can prequalify online to see your options without hurting your credit. And if you choose a loan, payments don’t start for 45 days. Besides auto loans, AutoPay also offers vehicle service contracts and gap insurance.
AutoPay Pros And Cons

#4: PenFed Credit Union

Company type: Credit union

Lowest APR: 4.59%

Minimum credit score: 610

Offers prequalification: Yes

Offers preapproval: Yes

Loan Types

• New auto loans
• Used auto loans
• Refinancing

Why We Picked It

PenFed Credit Union offers low APRs to buyers with great credit and also offers a car buying service that can help buyers save even more. PenFed Credit Union was initially started to serve military members and their families, but its services have since been made available to the general public. While not accredited by the BBB, PenFed Credit union has an A+ BBB score.

The credit requirements for a PenFed Credit Union car loan are higher than many other lenders, but it offers some of the lowest interest rates in the industry. PenFed also offers a car buying service, so you can shop for a vehicle and complete a loan application in one place.

PenFed does have a moderate customer review reputation online, though most complaints filed through the BBB regard PenFed home loans. Also, given the size of PenFed, the number of customer complaints is relatively low.

PenFed Credit Union Pros And Cons

#5: iLending

Company type: Online loan aggregator

Lowest APR: Not listed

Minimum credit score: 560

Offers prequalification: Yes 

Offers preapproval: No

Loan Types

iLending only offers car loan refinancing.

Why We Picked It

iLending is a lender marketplace specifically for refinancing auto loans. iLending partners with reputable credit unions and lenders across the country to provide refinance opportunities to a wide range of car owners. If you work with the company, you’ll have a loan consultant on your side to walk you through every step of the process.

iLending has been around since 2006 and has an A+ rating with accreditation from the BBB. The company also has a high customer rating on the BBB of 4.8 stars. Most positive reviews say the process is quick and the loan specialists are helpful.

iLending Pros And Cons

#6: Auto Approve

Company type: Online loan aggregator

Lowest APR: 2.94%

Minimum credit score: 600

Offers prequalification: Yes

Offers preapproval: No

Loan Types

Auto Approve offers refinancing and lease buyouts.

Why We Picked It

Auto Approve only offers car loan refinancing, not purchase loans. However, it does this well. While drivers with poor credit may not be eligible for an Auto Approve loan, those who are eligible may find interest rates as low as 2.94 percent.

Auto Approve holds BBB accreditation, an A rating, and a nearly 4.4 out of 5.0-star customer review score based on over 400 reviews. As even a one-percent interest rate reduction could save you hundreds of dollars, there’s no reason not to see what refinancing offers you can find with Auto Approve.

Auto Approve Pros And Cons

When shopping for the best auto loans, you’ll get access to the lowest rates if you have a good credit score and financial history. The more money you have, the cheaper interest rate you will be offered. Customers with high credit scores, many assets (such as a house), and a high gross annual income will qualify for better rates.

If you are trying to improve your credit score, be sure to do the following:

• Pay your bills on time
• Pay off credit card bills in full each month
• Don’t take out many large loans
• Check your credit report and dispute any inaccuracies
• Pay down as much existing debt as possible

Building your credit score can take years, and many people may need an auto loan sooner than they can rebuild low credit. In the short term, you can find good loan terms by comparing offers from multiple lenders and by having someone with strong credit cosign your loan.

Auto Loan Interest Rates By Credit Score

Auto loan interest rates go up and down all the time. So, the best auto loans might have different rates during one period than another. Below, you can see average auto loan rates for new and used cars by credit score that apply in the third quarter of 2022. This information comes from Experian’s State of the Automotive Finance Market (Q3 of 2022).

Of course, there is more to an interest rate than your credit score. You can find a lower rate if you are able to make a larger down payment, for example. This reduces the loan-to-value ratio and helps you find more competitive rates. Using an auto loan calculator can help you estimate your monthly payment and total loan ahead of time.

To start comparing the best auto loans, visit AutoApprove.com and find out what you can afford with our auto loan calculator.

Auto Loan Calculator

Based on our research, the best car loans are provided by myAutoloan, Consumers Credit Union, and AutoPay, but the car loan that is best for you depends on your financial situation. You can find the best car loans at many different providers such as banks, credit unions, and online lenders. There are also various different ways to get the lowest rates so you can get the best auto loan possible. You should shop around and compare options to get the best deal for your needs.

You can start comparing car loan companies and their rates below:

Best Auto Loan: FAQ

Below are a few frequently asked questions about the best auto loans: