The best auto loan rates in 2024 and how to qualify

Methodology

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To determine the best lenders for auto loans, our editorial team designed a rubric to rate lenders across four categories: loan cost, loan details, accessibility and customer experience. Then, our data research experts collected nearly 800 data points and analyzed them to produce our five-star ratings.

• Number of companies reviewed: 28
• Number of data points analyzed: 784
• Number of features we considered: 28
• Number of primary data sources used: 31

Read our complete methodology to understand how we determined the best lenders for auto loans.

Show summary

• USAA

  : Best auto loan rates

• Digital Federal Credit Union

  : Best for rate discounts

• Alliant Credit Union

  : Best for fast funding

• Consumers Credit Union

  : Best for borrowers with bad credit

• LightStream

  : Best for unsecured auto loans

• Navy Federal Credit Union

  : Best for military families

• myAutoLoan

  : Best for shopping around

• Bank of America

  : Best for a big bank option

• Southeast Financial Credit Union

  : Best for short-term loans

• PenFed Credit Union

  : Best for using a car-buying service

USAA

Best auto loan rates

Starting APR, new cars

6.09%*

Starting APR, used cars

6.19%*

Repayment terms

1 to 7 years

5/5

Learn More

On Fiona’s Website

Digital Federal Credit Union

Best for rate discounts

Starting APR, new cars

6.74%*

Starting APR, used cars

6.74%*

Repayment terms

3 to 7 years

4.8/5

Learn More

On Fiona’s Website

Alliant Credit Union

Best for fast funding

Starting APR, new cars

6.75%*

Starting APR, used cars

7.62%*

Repayment terms

2 to 7 years

4.7/5

Learn More

On Fiona’s Website

Consumers Credit Union

Best for borrowers with bad credit

Starting APR, new cars

6.54%*

Starting APR, used cars

6.93%*

Repayment terms

1 to 7 years

4.6/5

Learn More

On Fiona’s Website

LightStream

Best for unsecured auto loans

Starting APR, new cars

7.49%*

Starting APR, used cars

7.49%

Repayment terms

2 to 7 years

4.6/5

Learn More

On Fiona’s Website

Navy Federal Credit Union

Best for military families

Starting APR, new cars

4.54%*

Starting APR, used cars

5.44%*

Repayment terms

1 to 8 years

4.5/5

Learn More

On Navy Federal Credit Union’s Website

myAutoLoan

Best for shopping around

Starting APR, new cars

6.99%*

Starting APR, used cars

7.24%*

Repayment terms

2 to 7 years

4.5/5

Learn More

On Fiona’s Website

Bank of America

Best for a big bank option

Starting APR, new cars

5.99%*

Starting APR, used cars

6.39%*

Repayment terms

4 to 6 years

4.5/5

Learn More

On Fiona’s Website

Southeast Financial Credit Union

Best for short-term loans

Starting APR, new cars

4.50%*

Starting APR, used cars

4.75%*

Repayment terms

1 to 7 years

4.4/5

Learn More

On Fiona’s Website

PenFed Credit Union

Best for using a car-buying service

Starting APR, new cars

4.74%*

Starting APR, used cars

6.19%*

Repayment terms

3 to 7 years

4.3/5

Learn More

On Fiona’s Website

How do auto loans work?

• Secured loans: Most auto loans are secured by the vehicle you’re financing. This means that if you default on your payments, the lender can repossess your vehicle to recoup their losses.
• Fixed interest rates: Auto loan rates stay the same for the life of the loan. This also means your monthly payments will be the same, providing predictability for your budget.
• Varying repayment terms: Terms typically range from one to eight years. Although a long loan term can result in a low monthly payment, you’ll pay more in accumulated interest over the life of the loan.
• Eligibility requirements: Auto loans are available to car buyers across the credit spectrum, and some lenders specialize in bad credit car loans. However, lower credit scores are typically associated with higher interest rates. When determining your eligibility, lenders also consider your income, debt, details about the car you’re financing and the size of your down payment.

Types of auto loans

• New car purchase: This type of loan allows you to buy a brand-new vehicle from a dealership. You can get these from an independent lender or at the dealership — borrowers with excellent credit may find ultra-low or 0% APR financing deals at the dealership.
• Used car purchase: This is designed for purchasing a used car from a dealership. Used car rates are often slightly higher than those for new cars, and lenders commonly place mileage and age restrictions on the cars they’re willing to finance.
• Refinance: This replaces your original loan with a new one, ideally at a lower interest rate or with more favorable terms. Like a used car loan, auto refinance loans often have vehicle requirements to consider.
• Cash-out refinance: This loan type works like regular refinancing but also allows you to turn some of your equity into cash. The cash-out amount is repaid as part of your new loan along with the balance of your first loan.
• First-time car buyer: Some lenders may offer first-time car buyer programs with less stringent credit requirements. These loans often have higher interest rates but can help you build your credit history.
• Private-party: Buying a car from an individual seller (rather than a dealership) requires a private-party loan, often with a higher interest rate. Not all used car lenders allow private-party purchases.
• Lease buyout: Most lease agreements have two options at their conclusion: return the car to end the lease or buy the car. If you decide you’d like to keep driving your car, this type of loan allows you to finance the purchase.

Related >> Types of auto loans to consider (whether you’re buying or refinancing)

6 steps to apply for an auto loan

It can certainly be convenient to get your car loan at the dealership, but you may find better rates and terms if you apply for an auto loan independently. Here are some steps to maximize your savings.

1. Check your credit

Your credit scores are an influential factor in determining your loan eligibility and the rates you’ll receive. While there are auto loans for bad credit, many lenders require credit scores of 600 or better. The higher your scores, the lower your interest rate is likely to be. Many banks and credit card issuers offer free access to your FICO Score, or you can buy it from FICO and third-party sites.

If your credit scores need work and your vehicle purchase isn’t urgent, consider working to improve your credit. Review your credit reports for errors and look for ways to increase your scores, like paying down debt or making timely payments. You can receive free weekly credit reports from all three credit bureaus (Equifax, Experian and TransUnion) by visiting AnnualCreditReport.com.

2. Determine your budget

Take a look at your income and expenses to evaluate how much you can afford to spend on your next car. Use an auto loan calculator (like this one from Calculator.net) to estimate your monthly payment based on factors like APR, loan term and down payment.

Keep in mind that your car loan payment is just one expense to consider. You’ll also want to budget for insurance premiums, fuel or electricity costs, maintenance and repairs. Generally, experts recommend that you spend no more than 10% of your monthly income on transportation-related expenses.

3. Shop around and get preapproved

Auto loan preapproval isn’t a guarantee, but it’s the closest thing to final approval from a lender. Getting preapproved with multiple lenders involves submitting multiple applications and providing documentation to verify your identity and income. You’ll have to agree to a hard credit pull with every preapproval application — which can temporarily drop your scores by a few points — but if you keep all of your applications within a 14-day rate-shopping window, they’ll only be counted as a single event.

In return, the lender will tell you whether you’ll likely be approved and provide a preview of the rates, repayment terms and loan amounts you’re expected to receive. Most preapproved offers are valid for 30 days, but some lenders allow up to 90 days to finalize the loan.

4. Compare loan offers

Once you’ve received multiple preapprovals, compare their terms to determine which lender offers the best deal. In addition to APRs, evaluate repayment terms, prepayment penalties, funding timelines and vehicle restrictions.

Besides the estimated monthly payment, consider your total cost of borrowing. A long loan term may have a low monthly payment, but you’ll pay more overall interest.

Example: Say you receive two offers for a $25,000 auto loan. The first offer has a slightly higher APR but a much lower monthly payment — at first glance, you may think this is the better option. After all, the monthly payment on the second offer is nearly double that of the first.

But consider the overall cost of borrowing — the first offer is almost $5,700 more expensive than the second. Your choice will depend on whether you prioritize monthly costs or overall savings.

5. Shop for a car

With your chosen offer in hand, research vehicles offered by dealerships and private sellers in your area to find the make and model you want. Then, contact the dealer or seller to start the negotiation process. You might also investigate using a lender’s car-buying service, which may offer discounted rates and car pricing.

If you’re buying from a dealer, it can be worth filling out another credit application to determine whether they can get you an even better deal than your best preapproved offer. They may be willing to match your preapproved offer to win your business.

6. Finalize your loan

After you’ve settled on terms for the sale of the car, you’ll contact your chosen lender to finalize the loan process. It may require additional documentation to verify your income, auto insurance and residence.

Your lender may run another credit check to ensure your credit scores haven’t changed since your preapproval. This process typically only takes a few days, but some lenders may offer quicker approval and funding.

Once the lender provides a final offer, review the loan agreement carefully before signing it.

Where to get an auto loan

Banks

Best for: Customer service

Generally, traditional banks don’t offer the best auto rates. They may also offer less flexibility with loan amounts and repayment terms.

However, going with a bank loan can still be worth it if you’re an existing customer and can qualify for a relationship rate discount. Banks also tend to have top-tier customer service options like physical branches with loan officers on staff, robust mobile apps and 24/7 support.

Credit unions

Best for: Low interest rates

Credit unions typically offer some of the lowest interest rates around and have long been considered the least expensive place to get a car loan. In fact, six of our 10 best lenders for auto loans are credit unions.

In the fourth quarter of 2023, the average interest rate on a three-year used car loan from a credit union was 6.33%, while the same loan from a bank carried an average rate of 7.17%, according to the National Credit Union Administration.

Credit unions can also provide a lot of flexibility with loan amounts and repayment terms, and may have less strict credit requirements. However, you’ll need to be a credit union member to get approved for one of its financial products. While many top credit unions make joining easy, others may have more restrictive requirements.

Online lenders

Best for: Flexibility and fast funding

If you have less-than-stellar credit, online lenders often have less stringent credit requirements. They also make it easy to rate shop from the comfort of your home and may even allow you to get pre-qualified with multiple lenders at once. If access to quick financing is your goal, an online lender may be able to approve and fund your loan request on the same day.

However, many online lenders charge higher fees, making borrowing more expensive. If you’re looking for personalized service, you may find the online lending process a bit impersonal.

Dealer-arranged financing

Best for: Convenience

If you’re in a hurry or don’t want to deal with the hassle of shopping around and comparing auto loan rates, having a dealer arrange your financing can be convenient. They’ll typically shop your credit application with multiple lenders to ensure you get a good deal.

That said, the interest rate you get may not be the lowest possible. In fact, some dealers may present higher rates than the lender offered, pocketing the difference as compensation for the service it’s providing. What dealer-arranged financing offers in convenience, it lacks in affordability and transparency.

Captive finance companies

Best for: Promotional APRs on new cars

Most major automakers have a financing arm of the business that provides loans and other financial services to car buyers. These auto manufacturer subsidiaries offer financing on their new vehicles and often run special deals with APRs as low as 0%. Credit requirements for 0% APR deals are high — typically, only borrowers with excellent credit qualify.

However, unless you qualify for the promotional rate, it’s unlikely that captive financing will offer the best rate on an auto loan. You can only find these loans at brand dealerships, and offers are only valid on brand-new vehicles from that automaker. For example, you can’t use a 0% APR loan from Ford Motor Finance to buy a Honda.

Auto loan rates by credit score

Your credit scores are one of the most important factors in determining your auto loan interest rate. A higher credit score will generally result in a lower interest rate because it means you present less of a risk of defaulting on your loan payments.

While lenders will also consider other factors, such as your income, other debt payments and the vehicle itself, here’s a look at current auto loan interest rates by credit score.

Example: Let’s say you want to borrow $35,000 to buy a new car and plan to pay it off over five years. With excellent credit, a 5.64% interest rate would result in a $671 monthly payment and $5,248 in total interest charges. If you have a 630 credit score, however, a 9.60% interest rate would give you a monthly payment of $737 and $9,207 in total interest charges. Simply put, you can save thousands of dollars in interest by applying with higher credit scores or a creditworthy co-borrower.

Average auto loan rates over time

With the economic turmoil of the Covid-19 pandemic, auto loan rates plummeted, as the average rate on a new car loan hit 3.86% in late 2021. But as inflation took hold and the Federal Reserve began to hike the federal funds rate, auto loan rates rose too. As of late 2023, average rates on new and used car loans hit 15-year highs: 7.18% and 11.93%, respectively.

How to qualify for the best auto loan rate

Even a small difference in your interest rate can translate into big savings over the life of the loan. Here are some steps you can take to maximize your chances of securing a low interest rate on your auto loan:

• Improve your credit scores. Review your credit scores and reports to understand which areas you can address, including paying down credit card balances, catching up on past-due payments and disputing inaccurate information on your credit reports.
• Shop around. While it may be tempting to get your vehicle and auto loan at the same place or to accept the first offer you receive, take some time to shop around and compare offers from multiple lenders to avoid leaving money on the table.
• Get a co-applicant. If your credit scores are too low to qualify for affordable rates, consider applying with a creditworthy cosigner or co-borrower to improve your chances of scoring a lower interest rate than you can get on your own. While cosigners and co-borrowers are both responsible for repaying the loan if you default, co-borrowers also share legal access to the loan funds and vehicle.
• Put more money down. The more you put down, the less you'll need to borrow. What's more, a higher down payment could indicate that you're less at risk of defaulting on your loan because you have more skin in the game, so to speak. As a result, you may qualify for a lower interest rate.
• Opt for a shorter repayment term. Because longer loan terms come with a higher risk of borrower default, most lenders offer their lowest rates on short repayment terms and raise rates for long terms. In addition to scoring a lower rate, a short term also means a lower overall cost of borrowing because interest has less time to accrue. Just be sure you can afford the higher monthly payment that comes with a short term.

Methodology

To determine the best auto loans, our editorial team created a rubric to evaluate 28 leading lenders. Then, our data research team gathered over 750 data points and scored the lenders across the following four categories to elicit a five-star rating. The 10 lenders listed above received the highest scores across each of the 28 loan features under consideration.

Loan cost (30%)

More than half of borrowers cited interest rates as the most important factor when shopping for an auto loan, according to a 2023 study from research firm Corporate Insight. With that in mind, we favored lenders that offer low interest rates, opportunities for rate discounts and fewer fees.

Loan details (30%)

We examined the basics of each lender’s loan product to provide an apples-to-apples comparison. We considered factors like repayment term options, available loan amounts, approval and funding speed and whether the lender offers other loan types (like private-party loans).

Accessibility (20%)

A great auto loan isn’t worth much if you can’t qualify. Here, we prioritized lenders that made their loans accessible to most borrowers by assessing factors like:

• Eligibility criteria, including credit score requirements
• Geographic availability
• Whether the lender allows cosigners and co-borrowers
• Vehicle restrictions

Customer experience (20%)

Finding an affordable loan is top of mind, but once you enter repayment, you want a trusted lender that offers great customer service. In this final category, comprising eight factors, we aimed to capture the quality of each lender’s customer service by assessing criteria like contact methods, customer service hours and whether the lender offers a robust mobile app. We also analyzed consumer reviews from independent organizations like the Better Business Bureau, Trustpilot and the Consumer Finance Protection Bureau.

What didn’t make the cut

Eighteen popular lenders didn’t make our list of best auto loan rates, including the following industry leaders. Most auto lenders that didn’t score highly lacked transparency, failing to disclose key details like APR, loan amounts, and eligibility requirements.

• Capital One, Chase Bank and Ally Bank don’t disclose their auto loan interest rates.
• Truist Bank and U.S. Bank aren’t available in all states.
• Wells Fargo has a poor customer service record.

Note: Carvana scored highly in many of our categories and received a rating of 4.4. Ultimately, we decided to exclude them from the list because of recent lawsuits alleging deceptive lending practices and failure to transfer vehicle titles.

Frequently asked questions (FAQs)

What credit score do I need to buy a car?

There’s no universal minimum credit score requirement among auto lenders. In fact, some may be willing to work with you if you have bad credit or no credit history at all.

That said, the lowest auto loan rates are reserved for borrowers with good or excellent credit. The higher your scores, the better your interest rate.

How long does it take to get approved for an auto loan?

Approval timelines vary by lender, but in many cases, you can get approved for a car loan in 24 hours or less. Smaller banks or credit unions may take several business days to process your loan application, while some of the biggest lenders offer instant approval. The higher your credit scores and the larger your down payment, the more likely you are to get a speedy approval.

How can I get 0% APR financing?

Some auto manufacturers may offer 0% APR financing for the entire repayment term and bonus cash on new models as an incentive, often as part of a holiday weekend sale or other promotion. You typically need to have excellent credit to qualify.

Can I negotiate the rate on my auto loan?

It can be possible to negotiate the interest rate on your auto loan. For example, if you shop around and compare interest rates from several lenders, one lender may be willing to match or beat other offers. 

You may also be able to negotiate a lower interest rate by making a larger down payment, buying a less expensive vehicle or getting a cosigner with better credit to apply with you.

Is a 72-month auto loan a bad idea?

A 72-month auto loan can help minimize your monthly payment, making it easier to fit it into your budget. But longer repayment terms also typically come with higher interest rates, and you’ll end up paying more in interest charges over the life of the loan. Generally, you should select the shortest repayment term that you can afford, and many industry experts recommend repayment terms no longer than 48 months.

When is the best time of year to buy a car?

Ultimately, the best time to buy a car is when you need one. But if you have some flexibility, dealerships and salespeople may offer better deals at the end of the month or the year and during holiday sales. When the next year’s models arrive in October through December, dealers are incentivized to offer good deals on last year’s models to get them off the lot.