Find the Best Auto Loans in 2023

Your Best Buy Guide for a New or Used Car Loans in 2023

Published September 22, 2020 by Benjie Sambas. Last Updated June 29, 2020.

Agreeing on rates with car dealership.

Buying a car is a major financial investment. The average car price increases every year, making new units less affordable to the common buyer. The auto industry justifies rising price tags to keep up with the growing costs of labor, materials, and manufacturing. And with the economic shock of COVID-19, prices for new and used cars increased further because of suspended production and high consumer demand.

To afford the expensive cost, most consumers turn to auto loans. Financing allows car buyers to pay in monthly installments, usually within a 2 to 7-year term. Most auto financing also comes in fixed-rate loans. But before you sign a car deal, shop around for low rates. Securing a low rate helps you save on interest charges over the life of your loan. Likewise, it's important to find a good lender that can offer the best terms.

Our guide discusses the best lenders that provide the most favorable auto loan rates in 2020. We also included the pros and cons for each lender, as well as the type of auto loans they are usually used for. We chose the best auto loan rates based on the actual rates, application process, accessibility, credit requirements, and other benefits.

Best Auto Loan Rates by Lender

Lender Review New Car Current APR Terms Loan Amount
PenFed Credit Union 1.39% (w/ car buying service) 36 – 72 months $500 – $100,000
Bank of America 2.69% 12 – 75 months Starts at $7,500
Consumers Credit Union 2.69% 0 – 60 months
No minimum loan term
No minimum loan amount
Capital One 2.99% 24 – 84 months Starts at $4,000
LightStream 3.49% (w/ AutoPay) 24 – 84 months $5,000 – $100,000
myAutoLoan 3.49% 24 – 72 months Starts at $8,000
Caravana 3.9% 12 – 72 months Starts at $4,000

Low rates are offered to borrowers with the highest credit scores

Auto Loan Rates by Credit Score

Credit Score Average APR New Car Average APR Used Car
Super Prime, 781-850 3.65% 4.29%
Prime, 661-780 4.68% 6.04%
Nonprime, 601-660 7.65% 11.26%
Subprime, 501-600 11.92% 17.74%
Deep Subprime, 300-500 14.39% 11.92%

From Experian 2020 Q1 State of the Automotive Finance Market

Best Lenders and Auto Loan Rates 2020

PenFed Credit Union

Best lender with the lowest rates

Lender PenFed Credit Union
Starting APR: New car – 1.39% APR
Used car – 2.24% APR
Refinance – 2.14% APR, for 2020/2019 models
As of July 8, 2020
Min. annual income: Unspecified
Min. credit score: 610 and higher is preferred
Loan amount: $500 – $100,000
Term lengths: 36 – 72 months
Fees: To gain membership, make a one-time donation to
the National Military Family or offer $15 to Voices for America's Troops
Accessibility: Offered in all 50 states

Pentagon Federal Credit Union, also known as PenFed, is the second largest credit union in the country. It's a military credit union open to current and former service members, including their family members. However, you can become a member by giving a one-time donation to the National Military Family Association or by donating $15 to Voices of America's Troops.

For borrowers with excellent credit scores, PenFed's car buying service starts at 1.39 percent APR for 36 months, while their used car buying service starts at 2.24 percent APR. If you don't use their car buying service, new car loan rates start at 2.14 percent APR, while used car loan rates start at 2.99 percent APR. These starting rates are still lower than other banks. If you're refinancing a new auto loan (for models 2020 or 2019) with a 36-month term, rates start at 2.14 percent APR. Meanwhile, refinancing a used car loan (for models 2018 and earlier) starts at 2.99 percent APR.

Though they do not specify an annual income, PenFed usually prefers borrowers with a credit score of 610 and above. However, take note that a lower credit score does not qualify you for the lowest rates. The minimum loan amount is $500, which extends to a maximum of $100,000. As for payment terms, all PenFed loans have a minimum term of 36 months. You may also obtain terms at 60 months and 72 months.

On the other hand, the minimum loan amount only applies to the shortest term. For instance, the minimum loan amount for a 36-month term new car loan is $500. Meanwhile, the minimum loan amount for a 60-month term new car loan is $10,000.

Extra Benefits

Again, you get rate discounts if you take advantage of their car buying service. Moreover, you can finance up to 110 percent of your vehicle's purchase price. However, remember that a loan more costly than the car's value puts you at risk of an upside down car loan. So be careful when taking this option.

PenFed also offers Payment Saver Loans which come with reduced monthly payments. Rates start at 3.99 percent APR for a new car payment saver, while rates start at 4.54 percent APR for a used car payment saver. However, this option requires a balloon payment at the end of the term. It might not work for borrowers who cannot afford the large amount when the term ends.

Pros Cons
Offers one of the lowest rates for auto loans You must become a member to apply for the loan
You can finance up to 110% of your car's value Requires a high minimum amount for longer payment terms
Receive debt protection in case of financial hardship You must have an excellent credit rating to secure the lowest rates

Bank of America

Best large bank lender

Lender Bank of America
Starting APR: New car – 2.69% APR
Used car – 2.99% APR
Refinance – 3.59% APR
As of September 21, 2020
Min. annual income: Unspecified
Min. credit score: Unspecified
Loan amount: Starts at $7,500 ($8,000 for Minnesota)
Term lengths: 12 – 75 months
Fees: None
Accessibility: Offered in all 50 states

Bank of America is a large and reputable financial institution that offers a variety of auto loan options. They provide a range of auto loan options, such as dealer purchases, refinancing, lease buyouts, and private party loans (when you decide to buy a car from another individual).

For applicants with prime credit scores, rates start as low as 2.69% APR for new cars and 2.99% APR for used vehicles. Their refinancing rate starts at 3.59% APR. Online applications are free on their site, which they claim provide fast financing decision within minutes. They do not specify a minimum annual income or minimum credit score to qualify. However, maintaining a good credit rating will help you obtain lower rates.  

If you apply for a car loan on their site, you can choose loan terms such as 48 months, 60 months, and 72 months. However, you can ask for other term options if you call them over the phone or go to their office. Moreover, take note of vehicle restrictions before you apply. They do not finance cars of a specific age, mileage, and value. Bank of America auto loans are available nationwide.

Extra Benefits

You are eligible for a rate discount of 0.5 percent if you're a Bank of America Preferred Rewards member. To qualify, you must have three-month average combined balances of at least $100,000. These should be in authorized accounts with Bank of America and Merrill. And to be eligible for a 0.25 percent rate discount, you must have three-month average combined balances of $20,000.
Pros Cons
Offers a variety of auto loan options Requires a high minimum loan amount
A large bank and reputable institution Terms are only limited to 48, 60, and 72 months if you apply on the website
Updates rates and terms on their site Does not finance cars older than 10 years
Accessible in all 50 states Does not finance cars with 125,000 miles or more
Gives rate discounts to Preferred Rewards members Does not finance cars valued at less than $6,000
No fee for online applications Does not finance commercial vehicles
Online applications can provide a decision within a minute Does not finance RVs, motorcycles, boats, & aircraft

Consumers Credit Union

Top credit union for flexible terms and loan amounts, with easy membership

Lender Consumers Credit Union (CCU)
Starting APR: 2.69% APR
Min. annual income: Unspecified
Min. credit score: 640
Loan amount: Unspecified
Term lengths: Requires no minimum loan term
Usually 60 – 84 months
Fees: $5 membership fee
Accessibility: Offered in all 50 states

Most credit unions have certain membership qualifications. This includes conditions like having affiliations with the military, being a former student of a school, or residing in a specific state. But with Consumers Credit Union (CCU), you can join by paying a $5 membership fee. Then, you just have to maintain the $5 in your account to keep your membership active.

The CCU offers auto loan rates as low as 2.69 percent APR for borrowers with outstanding credit scores. There's also no required minimum loan amount or loan term, which means they offer flexible terms. You submit your auto loan application based on what you need. Borrowers can choose loan terms as long as 60 months, 72 months, and 84 months.

On the downside, this credit union requires a credit score of 640 to qualify for an auto loan. They also impose a hard credit check with each application, which may impact your credit score. Unlike other lenders, CCU does not work with borrowers with poor credit standing. They have strict standards to ensure borrowers do not default on their loan. Consumers Credit Union is federally insured by the National Credit Union Administration (NCUA). It's open to qualified borrowers 18 years old and above throughout the U.S.

Extra Benefits

Members with less-than-perfect credit scores also have access to rate discounts. If you arrange automatic payments on your Consumers Credit Union account, you're eligible for a 0.5 percent rate discount. However, if you arrange automatic payment with another financial institution, the discount is reduced to 0.25 percent. Moreover, you're entitled to 24-hour emergency services and mechanical repair coverage on your vehicle.
Pros Cons
It's easy to join, only pay a $5 membership fee You must become a member to apply for the loan
Offers 100% financing for qualified borrowers Borrowers with credit scores below 640 cannot qualify
Does not impose a minimum or maximum loan amounts Only borrowers with excellent credit get the lowest rates
Requires no minimum loan term Requires a hard credit check with each loan application

Capital One

Top big bank lender, also accepts borrowers with poor credit

Lender Capital One
Starting APR: 2.99% APR
Min. annual income: $18,000 – $21,600
Min. credit score: 500
Loan amount: Starts at $4,000
Term lengths: 24 – 84 months
Fees: May charge late fees
Accessibility: Offered in 48 states except Hawaii & Alaska
Limited to participating dealerships

Capital One is a large and reputable financial institution known for a wide range of banking products and credit cards. They also offer loans for new and used cars, as well as refinancing for current auto loans.

To qualify, borrowers must be 18 years old and above with a minimum monthly income of $1,500 to $1,800 (depending on credit qualifications). This means your annual income should range between $18,000 to $21,600. If you have existing Capital One accounts, it must be in good standing, which is not past due, over the limit, or delinquent.

People with poor scores may be eligible for a Capital One auto loan. The minimum credit score is 500 and they also finance new and used cars starting at $4,000 up to $50,000. It's an attractive deal for anyone looking for an affordable vehicle. To take advantage of this, you must purchase from Capital One's authorized dealers. They have over 12,000 participating dealers throughout the country. Just take note of their car mileage and age restrictions for used vehicles.

For the best rates, the most credit-worthy borrowers can obtain rates as low as 2.99 percent APR. The repayment terms range between 24 months to 84 months. Capital One auto loans are available in all states except for Alaska and Hawaii.

Extra Benefits

After you send your pre-qualifying application, you can see personalized loan rates. Capital One's Auto Navigator allows you to find a car in your area while shopping for rates. It's another great option to check multiple offers before deciding on a deal. You can compare payments and save personalized terms on the cars you prefer. Just take note: The prices listed on the participating dealer sites are asking prices, which means you can still negotiate for a lower amount.
Pros Cons
Accepts borrowers with credits scores as low as 500 You must purchase a car from an authorized Capital One dealership
Low minimum loan amount compared to other lenders Minimum annual income is between $18,000 – $21,600
Allows you to shop for rates while looking for a car in your area Does not finance used cars older than 10 or 12 years, depending on the state
You can use their pre-qualified offer as a baseline to compare and choose a deal Does not finance used cars with a mileage over 120,000 miles


LightStream logo.

Best in online auto financing and loans for classic cars

Lender LightStream
Starting APR: 3.49% APR to 9.49% APR
As of September 21, 2020
Min. annual income: Unspecified
Min. credit score: 660
Loan amount: $5,000 – $100,000
Term lengths: 24 – 84 months
Fees: None
Accessibility: Offered in all 50 states

LightStream is a lending branch of SunTrust Bank which caters to online auto loan borrowers. Once you receive approval, LightStream can send money through direct deposit on the same day. This lender offers many types of loan options, including dealer purchases, lease buyouts, and refinancing. They also finance classic vehicles, making them the ideal lender if you're financing an older car. It's a great option suited for borrowers with good to exceptional credit.

To qualify for a LightStream auto loan, the minimum credit score is 660. If you have an outstanding credit score, rates are as low as 3.49 percent APR with AutoPay. The highest rate for auto loans is 9.49 percent APR. The loan amount ranges between $5,000 to $100,000, with loan terms as long as 24 months to 84 months. To be more specific, their loan term options include the following:

  • 24 – 36 months
  • 37 – 48 months
  • 49 – 60 months
  • 61 – 72 months
  • 73 – 84 months

Extra Benefits

LightStream offers 0.5 percent discount when your rate is quoted with AutoPay. They also provide unsecured car loans to borrowers with outstanding credit rating. If you're shopping for rates and a different lender approves your unsecured auto loan, LightStream's Rate Beat Program will knock their rate by 0.1 percentage point. They also offer rates as low as 4.99 percent APR for private party loans if you sign up for AutoPay.
Pros Cons
No restrictions on car mileage, make, & model
Great for old vehicles
Only accepts online applications
Borrowers with excellent credit can obtain unsecured loans You must sign up for AutoPay to take advantage of the 0.5% discount
Offers full online processing, you can receive funds on the same day Low rates are only for applicants with good to excellent credit rating
Get 0.5% discount with AutoPay Not for borrowers with low credit score or poor credit history
Offers the Rate Beat Program for unsecured loans Longer terms with larger loan amounts have less competitive rates
Accessible in all 50 states The Rate Beat Program does not apply to secured auto loans


Best for shopping for multiple auto loans

Lender myAutoLoan
Starting APR: New car – 3.49% APR
Used car – 3.74% APR
Refinance – 2.39% APR
As of September 22, 2020
Min. annual income: $21,000
Min. credit score: 575
Loan amount: Minimum of $8,000 for purchase
Minimum of $5,000 for refinance
Term lengths: 24 – 72 months
Fees: None
Accessibility: Offered in 48 states except Hawaii & Alaska

myAutoLoan allows you to conveniently compare car loan offers from multiple lenders. Though they are not lenders themselves, it's a platform that matches you with lenders offering the right type of financing. They partner with lenders to provide purchase loans for new and used cars, refinancing, lease buyouts, and private party loans.

To be eligible, you must be 18 years old and your income should at least be $21,000 annually. Borrowers with excellent credit scores can secure rates as low as 3.49 percent APR for new cars and 3.74 percent APR for used vehicles. Refinancing can also be as low as 2.39% APR. For applicants with low credit rating, you can still qualify if your credit score is 575.

While the amount you can borrow depends on your credit history, the minimum loan amount for car purchases is $8,000. Meanwhile, it's $5,000 for refinancing. The loan amount can be up to $100,000. Loan terms vary per lender, but they typically offer terms between 24 months and 72 months. myAutoLoan is available in most U.S. states except for Alaska and Hawaii.

Extra Benefits

Once you fill out the pre-qualification form, you'll receive up to four quotes from different lenders. They can get back to you in a matter of minutes, or within 24 hours after you submit your application. The process helps make shopping for auto loans less time consuming. You can carefully review multiple rates and terms, then decide which auto lender can give you the best deal. It saves time and the application does not trigger a hard inquiry on your credit.

After you submit your application, you have 30 days from the date to choose a loan offer. If this period passes and you did not select a lender, all loan approvals will be deleted from your account. Likewise, you must submit a new application to obtain new offers.

Pros Cons
Shop deals with multiple lenders at once Requires a high minimum loan amount
No need to visit different lenders to file multiple applications A lower credit score means you'll get a higher rate
Get quotes within 24 hours from 4 different lenders Does not finance conversion vans and luxury sports cars
Accepts borrowers with a low credit score of 575 Does not finance used cars that were repossessed, salvaged, or auctioned
You can apply once every 30 days for each type of financing (buy, refinance, lease buyout, etc.) Used cars have a mileage and age limit as specified by the lender


Best online auto loans for used vehicles

Lender Carvana
Starting APR: 3.9% APR
Min. annual income: $4,000
Min. credit score: Unspecified
Loan amount: Starts at $4,000
Term lengths: 12 – 72 months
Fees: Varies per loan
Accessibility: Offered in 48 states except Hawaii & Alaska

Shop online for a loan while looking for a used vehicle with Carvana—a used car lender that offers direct financing completely online. They allow you to choose a unit and have it delivered to your home. Likewise, you have the option to pick up the vehicle at designated locations called Carvana Vending Machines. If you want to trade in your old car, Carvana will give you an offer and pick up the vehicle from your home.

This lender does not impose a minimum credit score to secure a loan. It means you can apply even with a low credit rating. To qualify, borrowers must be 18 years old and above with an annual income of at least be $4,000 (with no active bankruptcies).

On the other hand, the most credit-worthy borrowers can obtain competitive rates as low as 3.9 percent. The minimum loan amount is $4,000, and the payment terms come in 12 months up to 72 months. They provide used car financing throughout the country except for Alaska and Hawaii.

Extra Benefits

Carvana offers an online pre-qualifying application for auto loans. Once you accomplish it, you can see actual rates and monthly payments based on your personal information within 2 minutes. You will also have access to an extensive inventory of used cars in the country. Pre-qualifying does not trigger a hard inquiry on your credit, so it does not affect your credit score.

After pre-qualifying, you have 45 days to purchase a used vehicle from Carvana. Once this period lapses, you must resubmit your application to request for new terms.

Pros Cons
No minimum credit score requirement Financing is only available for used cars
Borrowers with damaged credit history can apply Carvana only finances used vehicles on their website
Offers online pre-qualification within 2 minutes Only high credit score borrowers get the lowest rates
You can return the car within 7 days if you're not sure about it Pre-qualifying terms expire after 45 days – You must resubmit an application for new terms

Securing the Best Auto Loan Rate

Calculator with car application form.

Borrowers have better chances of scoring a low rate once they improve their credit rating. Before you buy a car, make sure to pay your bills on time and keep your debt-to-income ratio low. It's also important to maintain a good employment history without long work gaps. This makes lenders feel more secure knowing you have a stable source of income. Lenders are also more confident about offering a low rate if you have a clean credit history and high credit score.

Next, make sure to shop around for multiple rates. Comparing different rates will give you a better idea of what fits into your budget. Market rates also change over time, so don't take too long to make up your mind. The sooner you lock the lowest rate you can find, the better.

Like negotiating the price of a car, auto loan rates can also be negotiated. Discuss this with your lender to get the best possible deal. Again, it's much easier to negotiate down a rate if you have good financial standing. Moreover, you'll secure a better interest rate if you make a larger down payment on the car. This also decreases your monthly payments and saves on interest charges.

About the Author

Benjie has been a bookwork for decades. He believes that writing is a form of expression, and that connecting with readers means you’ve expressed yourself correctly. Writing mostly on tech and social media topics, he continues to win over readers across other areas, too – both to inform and engage. His works have appeared in news publications like Christian Today & on business sites like

When taking a break from writing, you’ll most likely come across Benjie in a quiet corner of a room browsing an eBook by Robert Kiyosaki or Napoleon Hill, or reading the latest from Tom Clancy or WEB Griffin. In his spare time he enjoys urban trekking & photography.

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