Best Auto Loans for 2020

If you are in the market to buy a new car, you’ll have to figure out how to pay for it. Not only should you look for a fair price on a new or used car, but you should also look for a good interest rate on your auto loan if you need one.

The strength of the economy combined with increased competition from online and non-traditional auto lenders has made it easier to get approved for an affordable auto loan. But because there are so many options on the market today, consumers need to shop around and compare offers from more than one lender to find the best deal.

To help you get started on your search, check out our picks for the best auto loans from online lenders; best traditional auto loans; and best credit union auto loans. We based our picks on the weighted average of multiple data categories to help you find the most reputable companies with the best rates.

In this guide:

• Compare Auto Loan Companies
• Best Online Auto Loans
• Best Traditional Auto Loans
• Best Credit Union Auto Loans
• What to Look for in an Auto Loan
• How to Get the Best Auto Loan Rates

Compare Auto Loans for 2020

Best Online Auto Loans for 2020

1. CarsDirect
2. LightStream
3. AutoPay
4. Ally
5. J.J. Best Banc & Co.

1) CarsDirect

Note: CarsDirect isn’t a lender itself but connects consumers with lenders after they fill out a simple application

CarsDirect doesn’t impose any minimum credit score requirement, so it may be a good option for drivers seeking a bad credit auto loan. Of course, you’ll qualify for better rates if you can have a strong credit history, and there are other requirements borrowers must meet, including a minimum income requirement.

Here’s what you need to know about CarsDirect loans:

• Minimum income of $500 to $2,000 per week, depending on the auto loan lender CarsDirect pairs you with
• Repayment terms ranging from 24 to 84 months
• No minimum or maximum loan amount limitations
• Car loan rates vary depending on the credit history, down payment, and amount financed

Pros

• Good option for those with older or less expensive vehicles
• Finds dealer financing options
• Financing for those with less than perfect credit
• Online tools available at no cost

Cons

• Buyers must deal directly with the car dealership to secure financing
• Can expect to receive calls from other lenders

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2) LightStream

As a division of SunTrust Bank, LightStream is a reputable lender offering auto financing to qualified borrowers. LightStream auto loans do not require a minimum annual income but there are other credit criteria borrowers must meet, such as average to good credit. Here are some of the key things you need to know if you’re considering a loan from LightStream:

• Minimum credit score of 660
• Repayment terms ranging from 24 to 84 months, depending on the year of the vehicle and amount financed
• Minimum loan amount of $5,000
• Maximum loan amount of $100,000
• Interest rates ranging from 3.99% to 11.44% with automatic payments established

Pros

• No fees for applying for or accepting an auto loan
• No restrictions on the age or type of car
• Same-day approvals possible

Cons

• Borrowers with bad credit may not qualify
• A hard pull is required to check your credit

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3) AutoPay

AutoPay is a newer addition to the online auto financing market. The finance company offers an array of car loans for borrowers with a range of income and credit qualifications. AutoPay auto loans come with the following terms:

• Minimum credit score of 600
• Minimum annual income of $24,000
• Repayment terms ranging from 24 to 84 months, depending on the year of the vehicle and amount of the loan
• Minimum loan amount of $2,500
• Maximum loan amount of $100,000
• Interest rates ranging from 1.99% to 15.99% depending on credit score and income

Pros

• Borrowers can compare rates from different lenders
• No Social Security number is required
• No application fees or prepayment penalties
• Pre-qualification in minutes
• Loan offers available for up to 30 days

Cons

• Minimum credit score and income required
• Higher loan terms can lead to paying more interest
• Interest rates may be higher than comparable lenders

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4) Ally

Ally is an online bank that offers a wide array of financial products including auto loans. You can use an Ally auto loan to buy a vehicle, or you can lease a vehicle with Ally SmartLease® if you’re interested in driving a new car more frequently. Both personal and business vehicles can be financed with Ally, but you need to meet certain qualifications. Here’s what you need to know about terms and conditions of Ally auto loans:

• Minimum credit score of 620
• Repayment terms of as long as 12 to 84 months
• Minimum loan amount of $1,000
• Maximum loan amount of $100,000
• Interest rates ranging from 0% to 18%

Pros

• Ally offers different programs including typical car loans; leases; buyer’s choice loans that allow you to make car payments for 48-months and then continue making payments or sell the car to Ally; or balloon advantage loans that provide smaller monthly payments but require a lump sum payment at the end of your loan term.
• Ally’s mobile app makes account management easy

Cons

• You have to go through a dealership to get an Ally auto loan
• You might not be able to buy a vehicle that’s more than 10 years old or that has more than 120,000 miles on it

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5) JJ Best Banc & Co

JJ Best Banc & Co. is a top choice for those looking for classic cars or collector vehicles. The borrowing limit is far above what you can obtain from most auto loan lenders and you can pre-qualify online for a loan in just two minutes by providing some basic information about your income and financial situation. When you’re looking to finance an exotic, vintage, or classic vehicle, JJ Best Banc & Co is one of the few lenders that will make that happen.

• Your total debt balance, including auto loan debt, can’t exceed 45% of your monthly income
• You need to make a 10% to 30% downpayment
• Repayment terms range from 60 to 84 months, but you can pay it off early if you want a shorter term
• Minimum loan amount of $6,000
• Maximum loan amount of $750,000
• Interest rates start at 1.87%

Pros

• Secure financing even for exotic cars. You can borrow for most classic cars made between 1900 and today.

Cons

• Most loans provide financing for only 80% to 90% of the loan amount.

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Best Traditional Auto Loans

1. Wells Fargo
2. Capital One
3. U.S. Bank
4. Bank of America

1) Wells Fargo

Wells Fargo is a global financial institution that offers affordable car loans to qualified borrowers. There is no minimum income requirement, but there are other credit criteria borrowers must meet to be eligible. Here’s what you need to know if you’re considering a Wells Fargo auto loan:

• Minimum credit score of 650
• Repayment terms ranging from 12 to 72 months
• Minimum loan amount of $5,000
• Maximum loan amount of $300,000
• Interest rates range from 3.9% to 19.51%

Pros

• Quick application process and fast approval
• Pre-approvals available
• Competitive rates for highly qualified borrowers
• Financing for private party and lease purchases

Cons

• Origination fee of $99
• 48-month maximum term for older vehicles
• APR isn’t available until an application is submitted

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2) Capital One

Capital One is a major auto lender, and it makes the loan approval process easy. You can pre-qualify for financing online without a hard credit inquiry, and you’ll have flexibility in your loan repayment terms. Unfortunately, you can only borrow if you buy from a participating dealership, so you are restricted in where your vehicle can come from. However, Capital One has more than 12,000 participating dealers it works with, so most borrowers should be able to find a suitable vehicle at a participating dealership.

>> Full Review: Capital One Auto Loans Review

•  Minimum monthly income of $1,500 to $1,800
• Repayment terms ranging from 24 to 84 months
• Minimum loan amount of $4,000
• Maximum loan amount of $50,000
• Interest rates ranging from 3.99% to 19.98%

Pros

• You can pre-qualify online with no credit inquiry
• There’s no application fee required to apply
• There’s no minimum credit score requirement

Cons

• You have to complete your application at a participating dealer, which means getting a hard inquiry on your credit report

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3) US Bank

US Bank was first founded in 1863 and it now offers auto loans in 49 out of 50 states across the United States. It offers a competitive APR, flexibility in loan terms, and it makes loans available even to borrowers without perfect credit. However, U.S. Bank may charge loan origination fees, and you can only borrow for up to 72 months while some lenders allow for longer loan amounts.

• Minimum credit score of 650 (estimate)
• Repayment terms ranging from 12 to 72 months
• Minimum loan amount of $3,000
• Maximum loan amount of $100,000
• Interest rates ranging from 4.59% and up

Pros

• Quick loan approval and your loan can be funded within just 7 days of the time your loan is approved
• The loan minimum is below what many lenders require
• The starting APR for US Bank Auto Loans is below the starting APR for many competitors

Cons

• Borrowers may be charged up to a 1% loan origination fee

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4) Bank of America

As one of the nation’s largest financial institutions, Bank of America is well-known for its lending products, including auto loans. Borrowers do not have to meet a minimum income requirement, but there are other credit requirements that must be met in order to be eligible for a new Bank of America auto loan. Here’s what you need to know before you apply:

• Minimum credit score of 580
• Repayment terms ranging from 12 to 60 months
• Minimum loan amount of $5,000
• Maximum loan amount of $100,000
• Interest rates start as low as 3.39%

Pros

• Low rates available
• No fees or prepayment penalties
• Quick and easy online application, plus more than 5,000 branch locations
• Loan discounts available for certain customers

Cons

• No online pre-approval available
• Borrowers won’t know the APR until the loan application is submitted
• Down payment may be required
• No financing for independent dealer purchases

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Best Credit Union Auto Loans

1. UNIFY Financial
2. State Employees
3. Navy Federal

1) UNIFY Financial

Unify Financial is a credit union, so you must be a member to qualify—as with all credit unions. You can apply online to become a UNIFY member but will need to provide your Social Security or tax ID number, proof of identification, and you’ll need to fund your account when you open it. UNIFY members are entitled to many perks, including lower rates on auto loans.

• You don’t need excellent credit, but stable credit history and a verifiable source of income are required
• Repayment terms ranging from 24 to 96 months
• No minimum or maximum loan amounts

Pros

• Finance up to 100% of the vehicle cost
• Loan terms can last as long as 8 years
• There’s no prepayment fees or annual fees
• You can qualify for a .25% rate reduction with autopay from a UNIFY Share account

Cons

• Only credit union members are eligible
• Some customers report poor customer service at UNIFY branches

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2) State Employees

Like UNIFY, State Employees Credit Union requires membership to be eligible for a vehicle loan. Membership is very limited: you must be an employee of North Carolina; a federal employee working in conjunction with departments in North Carolina; a board of education member; a county employee; an employee of an association formed for the benefit of North Carolina employees; retired from an eligible position; or related to a member. 

• No minimum credit score
• No minimum annual income
• Repayment terms ranging from 36 to 96 months
• Interest rates ranging from 3.75% to 6.25%

Pros

• Affordable interest rates
• Borrow up to 110% of the value of a used vehicle (to pay for tags, plates and other expenses) or 100% of the MSRP of a new vehicle

Cons

• Very limited eligibility for credit union membership and you must be a member to apply for a loan
• Lending is limited to residents of North Carolina, South Carolina, Georgia, Tennessee, and Virginia

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3) Navy Federal

As the largest credit union in the world, Navy Federal Credit Union is well-known for its member-first services. The financial institution offers a variety of auto financing options for well-qualified borrowers, with the following requirements and terms:

• Minimum credit score of 700
• No minimum annual income
• Repayment terms up to 96 months, depending on the year of the vehicle and the amount financed
• No minimum or maximum loan amount
• Interest rates range from 2.99% to 17.99%

Pros

• Some of the lowest possible interest rates on the market
• Easy online application
• Interest rate discount available for certain members

Cons

• Borrowers must first be members of the Navy Federal Credit Union
• Difficult to qualify for the best possible interest rates

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How We Chose the Best Auto Loans

To find the best auto loans, our Editorial Team analyzed the product’s APR, loan terms, BBB rating, minimum and maximum borrowing limits, states available, application/origination fees, and discounts. The weight of each of these varied depending on whether the product was offered from a traditional bank, online lender, or credit union.

Learn more about our ratings and methodology here.

What to Look for in an Auto Loan

Before applying for an auto loan, it is important to know what you should pay attention to when selecting the right lender for your auto financing needs.

First and foremost, be cognizant of the interest rate offered by your lender of choice. The interest rate dictates how much you will pay over the life of the loan in addition to the original amount financed. A higher interest rate means you pay more for your auto loan.

In addition to the interest rate, you should also look at qualification requirements, including minimum income, minimum credit score, and vehicle requirements.

Borrowers should also review the strength of the financial institution offering auto financing, along with the term length of the loan and payment options. Each of these factors plays a role in how well the car loan used to purchase a new or used vehicle fits into your financial life.

How to Get the Best Auto Loan Rates

There are several steps you can take to ensure you get the right car loan with the best rate for your next vehicle purchase.

• Shop the loan, then the car. Obtain financing or a pre-approval from an auto lender before heading to the dealership so you can focus on negotiating on the vehicle purchase itself.
• Know your credit. Your credit history and score will dictate how much you pay in interest over the life of your auto loan. Check your credit report beforehand to make sure you are in the best financial position to get an affordable car loan.
• Look for an interest rate discount. Some financial institutions offer interest rate discounts on auto loans. These may be available for having a qualified account or establishing automatic payments once the loan is approved.
• Select a shorter loan term. Shorter repayment terms may help you save on the total interest paid over the life of the loan, and it may allow for a lower interest rate offered. However, a shorter repayment term also means a higher monthly payment, so be sure to check your budget first.
• Avoid variable auto loan rates. Some lenders may offer a variable interest rate loan, in which the interest rate changes over time as broad interest rates move up or down. A fixed interest rate loan may be a better option if you want predictability with your payments and the total cost of borrowing.
• Consider a down payment. Putting down a few hundred to several thousand dollars when purchasing a car can help reduce the total amount you finance and pay interest on.
• Check out dealer financing. Some dealerships will offer exclusive financing offers on certain vehicles. This can provide a much lower interest rate than some banks or credit unions offer, but be sure to compare the rates you’re offered with a few other options to make sure the deal you’re getting is as good as it seems.
• Work with select dealerships. Some auto dealers have preferred relationships with specific lenders. This can make it easier to qualify for a new auto loan with an affordable rate.

Bottom Line: Find the Auto Loan That’s Best for You

There are car loan options for borrowers with just about any credit history, income, and vehicle financing needs. However, finding the right one can be a challenge if you don’t know where to start. Be sure to shop around and consider all of your auto loan options before making your decision.