Many or all companies we feature compensate us. Compensation and editorial research influence how products appear on a page. Auto Loans Best Auto Loans Updated Jul 18, 2024 14-min read Expert Approved Expert Approved This article has been reviewed by a Certified Financial Planner™ for accuracy. Written by Timothy Moore, CFEI® Written by Timothy Moore, CFEI® Expertise: Bank accounts, credit cards, taxes, insurance, personal loans Timothy Moore is a Certified Financial Education Instructor (CFEI®) specializing in bank accounts, student loans, taxes, and insurance. His passion is helping readers navigate life on a tight budget. Learn more about Timothy Moore, CFEI® Reviewed by Chloe Moore, CFP® Reviewed by Chloe Moore, CFP® Expertise: Equity compensation, home ownership, employee benefits, general finance Chloe Moore, CFP®, is the founder of Financial Staples, a virtual, fee-only financial planning firm based in Atlanta, GA, and serving clients nationwide. Her firm is dedicated to assisting tech employees in their 30s and 40s who are entrepreneurial-minded, philanthropic, and purpose-driven. Learn more about Chloe Moore, CFP® Buying a new or used vehicle is a major milestone and exciting life moment, but it can be too expensive to pay for in cash. That means you’ll need a car loan to cover the cost. Local banks, credit unions, online lenders, and certain dealerships offer auto loans. Here are our picks for the best auto loans. CompanyBest for…Rating (0-5) Best for comparison shopping 4.8 View Rates Best for no vehicle restrictions 4.7 View Rates Best for lifetime financing 4.6 View Rates Best for bad credit 4.1 View Rates Reviews of the best auto loans If you prefer to start your car shopping and loan shopping online, you can look at financing options from four of the best online auto loans featured below. Best for comparison shopping: MyAutoLoanBest for no vehicle restrictions: LightStreamBest for lifetime financing: CarputtyBest for bad credit: AutoPay MyAutoLoan Best for Comparison Shopping 4.8 /5 LendEDU Rating View Rates Why MyAutoLoan is one of the best MyAutoLoan is a comprehensive auto financing platform that connects borrowers with a network of lenders to help them find the best rates. The service is ideal for those who need assistance navigating the car-buying process. MyAutoLoan offers many loan options, including new and used car loans, refinancing, and even lease buyouts. Its personalized approach ensures customers can find a loan that fits their needs. Receive up to 4 offers in just minutesLoans for various credit profilesEasy online applicationCheck your rates without affecting your credit score Rates (APR)Starting at 7.24%Loan amountsStarting at $5,000Term lengths24 – 84 months Eligibility requirements Minimum credit score: 600Minimum income: $1,500 per monthAvailable in 48 states (excludes Alaska and Hawaii) LightStream Best for No Vehicle Restrictions 4.7 /5 LendEDU Rating View Rates Why LightStream is one of the best LightStream is an online lender offering competitive rates for auto loans. It specializes in loans with no fees and a simple online application process, making it easy for customers to secure financing for their next vehicle.LightStream offers flexible terms and allows customers to choose their own repayment schedule. Its Rate Beat Program promises to beat any qualifying rate from a competitor. No feesLow rates for excellent creditFast approval processFlexible terms Rates7.24% – 15.44%Loan amounts$5,000 – $100,000Term lengths24 – 84 months Eligibility requirements Minimum credit score: Good to excellentAvailable in all 50 states Carputty Best for Lifetime Financing 4.6 /5 LendEDU Rating View Rates Why Carputty is one of the best Carputty is the most unique company on this list because it offers a single financing solution for purchasing new vehicles and refinancing existing loans. Its line of credit can be used repeatedly for future automotive needs, such as buying another vehicle or covering repairs. Car owners gain access to its V3 Valuation™ tool, which tracks the value of their vehicle and informs them of the best time to buy or sell. The application can be completed online, and pre-approval is provided in minutes without affecting their credit score. Lines of credit up to $250,000Funds can be used to cover purchases and other expensesChecking your rate doesn’t affect your credit score Rates (APR)Starting at 7.25%Loan amounts$25,000 – $250,000Term lengthsVaries Eligibility requirements Minimum credit score: 680Available in all 50 states Autopay Best for Bad Credit 4.1 /5 LendEDU Rating View Rates Why Autopay is one of the best Autopay specializes in auto loan refinancing, helping customers reduce their monthly payments and save on interest. It offers a streamlined process and works with a variety of lenders to find the best rates for their clients. Autopay offers a range of loan options, including new and used car loans, and it prides itself on providing customer service and support throughout the loan process. Competitive refinancing ratesEasy online applicationWide range of loan optionsExcellent customer service Rates4.67% – 17.99%Loan amounts$2,500 – $100,000Term lengths24 – 84 months Eligibility requirements Minimum credit score: 600Minimum annual income: $24,000Available in all 50 states How does an auto loan work? An auto loan is an installment loan secured by the vehicle itself. The lender will give you a lump sum to cover the cost of the car, and you’ll make monthly payments, including interest, over time to pay it off. If you fall behind on your payments, the lender can repossess your car to protect itself against a loss. Most lenders typically use your FICO Auto Score (rather than a traditional credit score from FICO or VantageScore) to determine your creditworthiness. A few nuances make this credit score different, but you can generally use your traditional credit score to evaluate your chances of approval. If you’re approved for an auto loan, these are important elements to note: The loan amount: This is how much you’re borrowing from the lender. You can keep this cost down by making a larger down payment and trading in your current car.Annual percentage rate (APR): The APR is the effective interest rate on the loan. This is the main way the lender makes money when lending to you. (Lenders may also make money through fees, such as origination fees, late fees, and early payoff penalties.)The loan term: This is how long the auto loan lasts, often in 12-month increments. Car loans tend to range from 36 months (three years) to 72 months (six years), but some loans can be shorter or longer. The longer the loan, the more you’ll pay in interest. A down payment on a car is an excellent way to reduce your monthly payments and the risk of being upside down on your loan. It could also reduce your loan amount or allow you to borrow for a shorter term, which could result in a lower interest rate. Chloe Moore CFP® How to choose the best auto loan for you Choosing the best auto loan for you depends on your needs. Here are a few tips to ensure you find the right lender: Calculate the full cost of the loan: It can be tempting to only look at interest rates when comparing car loans, but you should also factor in other fees. Fees and term lengths can help you determine how much you’ll spend over the life of the loan.Pay attention to loan amounts: Some lenders may cap how much they’re willing to loan you. If it’s not enough to cover the car you want, you’ll need to keep looking.Prioritize other features too: When borrowing money, you usually want to pick the option that will cost you the least. However, other factors may be important in your decision-making, such as whether the lender has an easy-to-use online platform or a branch in your community you can visit if you have questions. How to apply for an auto loan Find a vehicle you love but need help affording it? Here’s how to apply for a car loan: 1. Check your credit score and budget Before taking out any kind of loan, whether a personal loan, home equity loan, or car loan, you should always check your credit score to determine your standing. If your credit score is too low, you may not be able to qualify for a car loan—at least at a manageable interest rate. Tip Bad-credit auto loans may be available, but these can be expensive. Only resort to these if you have no other options. You should also review your budget to understand how much you can afford to spend on a monthly car payment, including interest. And don’t forget: You’ll also need to budget for gas and car insurance and build an emergency fund to cover unexpected car repairs. 2. Shop around for multiple lenders Never go with the first auto lender you find. Review several lenders to compare rates, fees, and loan terms. Many car lenders may let you prequalify without affecting your credit score. 3. Get preapproved Once you find a few lenders you might want to go with, go through their official preapproval processes, in person or online. This will let you know what rate and loan amount each preferred lender will offer you. Keep in mind: A preapproval will result in a hard inquiry on your credit report. Why get preapproved? A preapproval letter is a powerful bargaining tool when you visit the dealership to purchase a car. It lets the dealership know you’re a serious buyer who has done their homework. Of course, you don’t need a preapproval letter at the dealership. You can also work with the dealership to get financing there, but you may not get the best auto loan available. Our expert’s take on zero-percent financing offers from dealerships Chloe Moore CFP® Zero-percent financing can be an excellent option for borrowers with excellent credit. This offer is not too good to be true. If you accept a zero-percent offer, you’ll likely miss out on other bonuses or incentives. Be sure to run the numbers to determine which option is the better deal. 4. Buy the car Once you’re preapproved, the fun can begin. Test-drive a few cars within your budget, and once you’ve found the vehicle you want, negotiate with the dealership or private seller. You can purchase the car using your loan if you reach agreeable terms. You’ll then need to set up an account with the lender to ensure you never miss a monthly payment. How to improve your approval odds for an auto loan Worried you might not get approved for a car loan? Here are a few actions you can take to improve your chances: Improve your credit score Your credit score is the biggest reason you might get rejected for an auto loan. If you have poor credit, try to improve your score before applying for a car loan. Making on-time bill payments, reducing your credit card utilization, and paying off debts such as student loans and personal loans can all help you boost your score. Request a smaller car loan Lenders may be more willing to approve your auto loan if you request a smaller one. You can do this in several ways: Shop for a more affordable car, such as a used vehicle or a lower trim level for a new car.Make a larger down payment so you don’t have to finance as much.Trade in your current vehicle and apply the trade-in value toward your down payment. Get a cosigner If a friend or family member with good credit is willing, they can act as a cosigner on your auto loan. Their stronger credit score can help you get approved—and at a lower interest rate—but keep in mind that their credit is on the line when they do this. If you miss a payment, their credit score will also take a hit. And if you can no longer pay for the car, the cosigner will need to step in and make payments for you. When asking a loved one to be a cosigner, you should always prioritize making those loan payments. Otherwise, you’re risking someone else’s finances—and your relationship with your friend or relative in the process. Tips to manage an auto loan Once you’ve bought your new car, make sure you stay on top of your monthly payments to protect your credit—and your new set of wheels. Here are several tips for keeping your auto loan in good standing: Set up automatic payments If your lender has an autopay function, set this up to ensure you never miss a monthly payment. Always keep enough money in the checking account to cover this payment. If you’re worried you’ll forget to fund the checking account, set a calendar reminder to transfer funds each month ahead of the payment date. Make principal-only payments You may be able to pay off your car loan sooner—and pay less in interest—by making additional, principal-only payments. Every extra dollar you put toward the principal will save you money in the long run. Read the fine print Some lenders may have early payoff penalties. Don’t pay off your loan early in full if the lender will charge you this fee. Besides, keeping the auto loan in your credit mix can be helpful for your credit. A diverse credit mix is one factor affecting your credit score. Pay attention to interest rates—and refinance when it makes sense If you bought a new car when interest rates were high (or when your credit score was lower), consider refinancing your car loan if things change. Getting a lower interest rate could save you hundreds, if not thousands, over the life of the auto loan. FAQ What are the advantages and disadvantages of opting for a longer-term car loan? Longer-term car loans can make monthly payments more affordable due to extended repayment periods. This can ease budget strains, especially if you need to balance other financial responsibilities. However, it often results in higher overall interest costs since you’re paying interest for longer. You might also end up owing more than the car is worth, particularly if the vehicle depreciates faster than anticipated. Consider your immediate budget and the total cost over the loan’s life span. How can I improve my credit score before applying to get the best auto loan rates? Improving your credit score before applying for an auto loan can lead to better rates. Start by checking your credit report for errors and disputing any inaccuracies. Pay down debts to lower your credit utilization ratio. Pay your bills on time; punctual payments have a massive impact on your credit score. Avoid opening new credit accounts right before applying for a loan to stabilize your credit history. What should I look for in the fine print of car loans to avoid unexpected fees or terms? When reviewing car loan fine print, check for prepayment penalties, which can inhibit your ability to pay off the loan early without incurring additional fees. Look at the interest rate type to ensure it’s fixed rather than variable, which can fluctuate. Examine any additional fees, such as documentation fees or early termination charges. Understand the total cost of the loan, including interest, fees, and monthly payments, to avoid surprises. Are any specific auto loan options or programs available for first-time car buyers? Yes, various lenders offer specialized auto loan programs for first-time car buyers. These programs may feature lower interest rates, more manageable down payments, or longer terms to ease the financial burden. Some programs include educational resources to help first-time buyers understand the financing process better. Some manufacturers offer incentives or special financing deals that cater to this demographic. Can I negotiate better terms or auto loan rates? Absolutely. Negotiating auto loan terms and rates can save you money. Research prevailing rates beforehand to understand what constitutes a fair offer. Discuss interest rates, loan terms, and any additional fees with the lender. Sometimes, showing a willingness to obtain financing from another lender can prompt better offers. Remember, everything from the loan rate to the loan term length is potentially negotiable. How can leasing a car compare to taking out an auto loan, and which situations might make leasing a better option? Leasing can be more cost-effective for those who prefer driving new cars every few years without committing to ownership. Lease agreements often have lower monthly payments than loan payments. However, leasing includes mileage limits and potential excessive wear and tear fees. Leasing may be better for those who don’t drive extensive distances, desire lower payments, or enjoy the latest car models. What is gap insurance, and do I need it? Gap insurance covers the difference between the car’s value and the amount you owe on your auto loan if the vehicle is totaled or stolen. If you owe more than the vehicle’s depreciated value, gap insurance can save you from paying out-of-pocket to cover that gap. It’s essential if you make a minimal down payment, take a long-term loan, or drive a vehicle that depreciates quickly. How we selected the best auto loans Since 2018, LendEDU has evaluated auto loan companies to help readers find the best auto loans. Our latest analysis reviewed 322 data points from 14 lenders and financial institutions, with 23 data points collected from each. This information is gathered from company websites, online applications, public disclosures, customer reviews, and direct communication with company representatives. These data points are organized into broader categories, which our editorial team weights and scores based on their relative importance to readers. These star ratings help us determine which companies are best for different situations. We don’t believe two companies can be the best for the same purpose, so we only show each best-for designation once. Higher star ratings are awarded to companies that create an excellent borrower experience and seamless transition from fund disbursement to vehicle purchase. This includes offering online eligibility checks, cost transparency, competitive interest rates with no fees, and unique benefits that support borrowers throughout repayment. List of auto loan companies we evaluated AutoPayBank of AmericaCapital OneCarputtyCarsDirectChaseLightStreamMyAutoLoanNavy Federal Credit UnionPNCRefiJetRoadLoansTreslUS Bank Recap of the best auto loans CompanyBest for…Rating (0-5) Best for comparison shopping 4.8 View Rates Best for no vehicle restrictions 4.7 View Rates Best for lifetime financing 4.6 View Rates Best for bad credit 4.1 View Rates