Best For Credit Union: Navy Federal Credit Union
- New, Used, Refinance as low as 3.29%
- Loan range: $250 to $500,000
- Loan length: 12 to 96 months
- Available in all 50 states
Read Insider’s full review of Navy Federal Credit Union.
One of the biggest attractions of a Navy Federal auto loan is the credit union’s low interest rates. Navy Federal also features an online Car Buying Center, where the company walks you through the process of financing, buying, researching, and insuring your next car.
How Do I Apply For An Auto Loan Online
Applying online for a new auto loan is fast and easy, and it can give you the peace of mind you need before you head to a car dealer to shop.
To start, choose the lender or online lending network that you wish to work with. Either option will provide a quick loan request form that only takes a few minutes to complete and can provide a loan decision in a matter of seconds.
The loan request will require some basic identifying information that includes:
- Your income information
- The type of vehicle you wish to purchase
What happens once you submit this information will depend on the type of lender youre working with. If you choose an independent lender, such as Capital One Auto Finance, youll receive a loan decision within one minute.
If youre preapproved, youll get an idea of your loan amount, loan payment, and how long you have to access the loan . You can then start shopping for your next vehicle.
This option works best if you have at least good credit. If you have a low credit score, consider working with an online auto lending network. If you apply through a network, youll either receive a preapproval or get contacted by a dealer in your area who will set up an appointment to go over your financing and vehicle options.
These lenders are trained in special financing options for bad credit and can often find a bad credit auto loan for you. If you qualify, you can typically begin browsing the lot for your vehicle and drive off in a new car within a matter of hours.
How To Shop For Car Loans With Bad Credit
Even though you may have bad credit, there is an abundance of lending sources for you to choose from. Part of that is because the vehicle acts as collateral and secures the loan, which helps reduce the risk the lender takes on. However, if you repeatedly fail to make on-time monthly car payments or default, the lender can repossess the car.
Here are three ways to start looking for a car loan.
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What Credit Score Do Car Dealerships Use
Theres no way to tell for certain which credit score an auto lender will use. Thats because there are many different versions of your credit score that lenders can access.
The most common credit score used is your FICO score. But you have dozens of FICO scores issued under your name. FICO releases a new algorithm for calculating your credit score every so often, and lenders have to pay for access to a specific scoring model. They can pay to access the latest scoring model, but they typically save money by sticking with their current version for several years before paying for a new scoring model.
That means that one car dealership may use the FICO 8 score whereas another may still use FICO 4. Thankfully, theres rarely a large difference between scores, but it does make it difficult to understand which score you should focus on improving before applying for a loan.
Instead of focusing on a specific scoring model, consider pulling your free annual credit report before applying for a loan. Although this report wont show your actual credit score , it will show all of the items that are used to calculate your credit score.
That means youll see all of the negative and positive data that are reported to credit bureaus on your behalf. If you have recent missed payments, defaults, charge-off accounts, or collections, you may want to wait until those items are replaced with positive data on your credit report before you apply for a loan.
Best For Refinance: Autopay
- As low as 1.99%
- Minimum loan amount: $2,500
AUTOPAY offers several different refinance options, competitive rates, and has flexible credit requirements. Borrowers can easily compare offers from different lenders on AUTOPAY’s site and choose the best deal.
Considers all credit profiles
Excellent credit required for the best rates
While AUTOPAY’s rates start at 1.99%, only those with excellent credit will qualify. According to AUTOPAY, they can, on average, cut your rate in half on a refinance.
AUTOPAY offers more refinance options than many lenders. In addition to traditional auto refinancing, borrowers can choose cash-back refinancing and lease payoff refinancing.
AUTOPAY is a marketplace that makes it easy to shop around for the best deal. It caters to individuals who are rebuilding credit or improving their credit.
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Best Credit Union For Auto Loans: Consumers Credit Union
Consumers Credit Union
- As low as 2.49%
- Minimum loan amount: None
No minimum or maximum loan amount
Offers new, used, and refinance loans
Offers transparent rates and terms
Lowest rates require excellent credit
Membership in credit union is required
Consumers Credit Union offers auto loan rates to its members as low as 2.49% for new car loans up to 60 months. Like other credit unions, it requires membership, but it’s easy to join. You can become a member by paying a one-time $5 membership fee. There are no geographic or employer requirements.
CCU doesn’t have a minimum or maximum loan amount. Your loan is approved based on your credit score, credit report, and vehicle information. There’s also no minimum loan termyou submit a request based on what you need.
Generally, borrowers with excellent credit will qualify for the lowest rates from Consumers Credit Union. But even members who have less than excellent credit have access to discounts. There’s a 0.5% discount available for those who autopay from a CCU account. The discount falls to 0.25% for those who make automatic payments from an outside financial institution.
Best Bank For Auto Loans: Bank Of America
Bank of America
- As low as 3.59%
- Minimum loan amount: $7,500
Bank of America auto loans come with the backing of a major financial institution. Low rates and a big selection of loan options make it a major competitor in the auto loan landscape. In J.D. Power’s 2021 Consumer Financing Satisfaction Study, which deals with auto loans, Bank of America ranked 5th out of 12 in its segment and scored equal to the average.
Offers new, used, and refinance auto loans
Transparent rates and terms online
Well-known financial institution
Restrictions on which vehicles it will finance
High minimum loan amount
Bank of America is a large financial institution offering a number of auto loan options, including new, used, refinance, lease buyout, and private party loans.
For the most creditworthy borrowers, APRs start at 3.59% for new vehicles. Used vehicle loans start at 3.79% APR, while refinances start at 4.79% APR. Customers of the bank who are Preferred Rewards members can get up to a 0.5% discount on their rate.
BofA provides a no-fee online application that it claims can offer a decision within 60 seconds. You can choose from a 48-, 60-, or 72-month term online, but there are additional options ranging from 12 to 75 months if you complete the application process at a branch or over the phone.
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Best Auto Loans For Excellent Credit
There is a reason why financial gurus and experts tell us to maintain good credit scores. At the top of the list, a credit report highlighting no financial issues and boasting excellent scores makes it easy for the person to acquire loans – be it mortgages or auto financing. If you enjoy excellent credit and looking to buy a new car, you can easily find the best auto finance rates for yourself.
However, the availability of too many options can also spoil you for choices. If you don’t want to go through every car financing offer on the block, continue reading this post. We have researched, shortlisted, and reviewed some of the best auto loans for excellent credit available in the market right now.
Keep An Eye On A Loan’s Total Cost
When comparing auto loans, the figure to focus on is the annual percentage rate . A lower rate can produce significant long-term savings. For example, a three-year $15,000 loan with a 5 percent APR would save you almost $500 overall compared with the same loan at 7 percent.
Another key consideration is the length of a loan, which can significantly affect both your monthly payment and the total cost of your financing. A shorter term means higher monthly payments, but less money will be paid overall. Try to keep the length of the loan as short as you can afford.
A three-year loan costs far less overall than a five-year loan. For example, if you borrow $15,000 at a 6.5 percent APR for 36 months, your monthly payment will be $460 and the total interest will be $1,550. The same auto loan stretched out to 60 months would lower the monthly payment to $293more than $160 lessbut nearly doubles the interest you’ll pay to $2,610, an increase of $1,060. And that doesn’t even take into account that longer loans often come with higher interest rates.
Shorter loans reduce the amount of time you can be under water. For example, with a three-year loan, you could build thousands of dollars of equity in the vehicle by the end of the first year.
You can avoid being upside down by making a significant down payment. We recommend that you have a trade-in or down payment of at least 15 percent of the total cost when financing the purchase of a new car.
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Whats The Best Place To Get A Car Loan The Answer Varies Based On Each Borrowers Needs Preferences And Credit History The Good News Is There Are A Variety Of Options Out There To Consider
Before you sign a contract and drive off the lot, take some time to understand the pros and cons of different auto loan options, including banks, credit unions, online lenders and dealerships. Doing your research on different lenders could help you find the best possible loan offer for you. After all, who doesnt want a better deal?
Which Lender Is The Most Trustworthy
We’ve reviewed each institution’s Better Business Bureau score to help you make the best decision possible when choosing an auto loan. The BBB measures businesses based on factors like truthfulness in advertising, honesty about business practices, and responsiveness to consumer complaints. Here is each company’s score:
A majority of our top picks are rated A or higher by the BBB, with the exception of Clearlane by Ally. Keep in mind that a high BBB score does not guarantee a good relationship with a lender, and that you should keep doing research and talking to others who have used the company to get the most helpful information you can.
The BBB currently rates Clearlane by Ally a D- because of 53 complaints filed against the business, including one unresolved complaint. Due to the lenders’ BBB scores, you might prefer to use a different auto loan company on our list.
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Getting An Auto Loan With Bad Credit Here’s What You Need To Know
If you’re shopping for a car loan with bad credit, you could benefit a lot by doing your research and shopping around when looking for an auto loan. Avoid any “buy here, pay here” financing, as these loans often come with exorbitant interest rates and high monthly payments, which could cause you to default on your payments.
A local credit union might be a good place to start if you have a bad credit score sometimes lenders like these can be more forgiving and offer lower interest rates than big banks.
What Affects Auto Loan Interest Rates
The rates above are average APRs based on information reported to the NCUA. You may find different rates based on a number of factors, including:
- : A low score will require a higher interest rate, and vice versa. Credit score is perhaps the single most important factor that auto lenders use to determine rates.
- Loan term: Shorter terms typically have lower interest rates. Consider making higher monthly payments to get a shorter-term loan with a lower overall cost.
- : Lenders look at your entire credit report, so two people with the exact same score can find different rates based on how their score is calculated.
- Income: Lenders can have minimum income requirements for borrowers to qualify and also to secure the best auto loan rates.
- Down payment: A higher down payment not only reduces the total amount of the loan, but it shows that you are committed to purchasing the vehicle, and this can also reduce your interest rate.
- Interview process: If you impress a loan officer with professionalism and supporting documentation in discussing your financial situation, you may have a better chance of getting the best auto loan rates for your situation.
- Negotiation: If you get multiple prequalification offers, you can use those when negotiating interest rates from lenders.
- Autopay: Many lenders offer discounts for making automatic payments from your checking account. Credit unions can also offer a discount if you pay for the loan with an account at that same credit union.
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How To Pick An Auto Lender
Even if youre in a rush to purchase a car, dont automatically accept the first loan offer you receive. Instead, take some time to sit down and thoughtfully weigh all of your options.
After all, this is a decision that will impact your finances for the next several years. So theres no need to go so fast that you end up missing out on a great auto loan. Here are a few tips to get you started with the loan process.
Alliant Credit Union Auto Loans: Best Auto Loans Company For Low Apr
Alliant Credit Union might need you to become a member before taking out an auto loan, but this minor inconvenience can lead to some of the best rates on the market. The APR can be as low as 2.74% on a new car and 2.99% on a used car, while an additional 0.5% discount is up for grabs if you use its car buying service.
The costs you could face are all laid bare, and the approval process is really fast too you could have a new car in less than a day. There’s also round-the-clock customer support to help you on your way. The shortage of positive customer reviews might prove a slight concern, but if it’s a low-cost auto loan that you want, Alliant won’t disappoint.
- Read our Alliant Credit Union review
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Auto Loans For People With No Credit History
In a perfect world, all borrowers would have a positive credit history that proves they are responsible borrowers. However, lenders know this isnt the case.
You may have no credit history because youre young and inexperienced with credit. Maybe youre a recent immigrant or simply have never used traditional credit accounts. Whatever your reason for not having credit may be, these auto loans for no credit history can give you the financing you need to buy a car.
MyAutoloan.com made its debut in 2003 to help consumers take control of the research, finance, and buy processes for auto and motorcycle. You can apply to this financing marketplace for free and get matched with up to four auto loan offers in minutes.
While most of the lenders it partners with will offer financing for new and used cars, there are some financing restrictions. These restrictions apply to conversion vans, high-end sports cars, salvaged title vehicles, or vehicles that have been repossessed or auctioned.
How To Get The Best Auto Loan Rates
There are a few different ways to save money and find the best auto loan rates. Below, well outline some simple ways to reduce your interest rate for a new car, a used vehicle, or a lease buyout.
Remember that you may pay a higher APR if youre looking to purchase a used car or if youre hoping to buy a vehicle from a private party. And before you go searching for the best auto loans, make sure that repayment is possible based on your current financial situation.
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Beware Of Buy Here Pay Here Financing
Some dealerships specialize in financing auto loans for people with no credit. When you dont have time to go through a traditional lender or dont have the money for a large down payment, financing through a buy here, pay here dealer may seem like the best option.
However, buy here, pay here financing is not always as rosy as it sounds and should be avoided when possible. Dealers know that your financing options are limited when you have no credit or bad credit, and they charge higher interest rates and car prices as a result. Some dealers even install tracking devices that may disable the vehicle if you miss a payment. Not every buy here, pay here dealer reports timely payments to the credit bureaus, so this form of credit may not help you build your credit history.