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Best car loan companies for February 2022

Need to borrow money to pay for a new car? Here's how to simplify the auto loan shopping process.

A car loan can help you pay for a new or used car. This type of loan is usually secured, which means the vehicle you purchase acts as collateral and can be subject to repossession if you fail to repay the loan. The tradeoff for this risk is a lower interest rate than an unsecured loan, such as a personal loan. Although rates for car loans are relatively low, it's still important to shop around in order to find the best rates and terms for you. You can apply for an auto loan at a car dealership, bank, credit union or via an online lender. 

In addition to laying out some basic information to know ahead of time, we've evaluated the major national auto loan providers and highlighted the best options for new, used and private party (financing the purchase of a car from a private seller) loans below. We'll update this list regularly as terms change and new loan products are released. Note that all the starting APRs listed assume an "excellent" credit score of 800 or above.

PenFed Credit Union
  • APR: Starting at 0.99% (new car loans), 1.99% (used car loans) through the PenFed Car Buying Service. Starting at 1.79% (new car loans) and 2.39% (used car loans) outside of the buying service. 
  • Loan amounts: $500 to $100,000
  • Loan terms: 36 to 84 months
  • Minimum credit score required: Not specified
  • Minimum annual income: Not specified
  • Availability: 50 states
  • Prepayment penalty: No

Pentagon Federal Credit Union is a credit union that offers auto loan rates of 0.99% and 1.79% for new and used cars respectively, when purchased through the PenFed Car Buying Service. When purchased outside of the PenFed Car Buying service, PenFed offers auto loan rates starting at 1.79% for new cars and 2.39% for used vehicles. It also offers financing of up to 125% of the purchase price, and cash allowances from select manufacturers. We named it the best overall auto loans lender because of its excellent low rates, flexible terms and wide availability. 

You can apply for a PenFed auto loan whether you have a membership or not – but keep in mind that membership will offer significantly discounted rates. Membership is open to everyone, and consists of opening a savings account with a minimum $5 deposit.

Consumers Credit Union
  • APR: Starting at 2.24% (car loans for 2020 or newer vehicles), 2.49% (car loans for 2016-2019 vehicles ) for Consumers Credit Union members. Starting at 2.74% (car loans for 2020 or newer vehicles), 2.99% (car loans for 2016-2019 vehicles) for nonmembers.
  • Loan amounts: $250 to $100,000
  • Loan terms: 0 to 84 months 
  • Minimum credit score required: Not specified
  • Minimum annual income: Not specified
  • Availability: Branches across Illinois, shared branches nationwide
  • Prepayment penalty: No

Consumers Credit Union is an Illinois-based credit union that has recently opened membership nationwide. Though its auto loan rates for vehicles made prior to 2020 are average for the market, their new car loan rates are a great deal. Consumers Credit Union also offers significant flexibility, with the widest range of loan terms and loan amounts of the providers we evaluated. Though membership is not required, the membership discount of 0.50% will assure the lowest rates. To become a member, you need to provide valid ID, two recent pay stubs, two recent years of tax returns, five references, two utility bills and a one-time $5 fee to the Consumers Cooperative.

Lighstream
  • APR: Starting at 2.49% (new and used car loans) and 3.49% (private party car loans).
  • Loan amounts: $5,000 to 100,000
  • Loan terms: 36 to 84 months
  • Minimum credit score required: Not specified
  • Minimum annual income: Not specified
  • Availability: Online
  • Prepayment penalty: No

LightStream is an online lender under Truist Bank that offers low private party car loans. Though its loan amounts and terms are of average flexibility, it's notable for its variety of auto loan options. It places no restrictions on model year, make or mileage, making it the ideal lender if you plan to purchase an older car. LightStream's slogan, Lending Uncomplicated®, promises a simplified lending process that includes being able to fund your loan the same day you apply, under certain conditions. 

In order to access LightStream's best terms, you'll need to sign up for AutoPay. LightStream's lowest rate loans are also unsecured so your car won't be repossessed if you can't make your payments, though your credit will suffer. And while unsecured loans generally offer higher rates than secure loans, LightStream's Rate Beat program ensures that it will offer a rate 0.1% lower than competitors.

Bank of America
  • APR: Starting at 2.49% (new car loans), 2.69% (used car loans), and 5.69% (private party loans)
  • Loan amounts: $7,500 ($8,000 in Minnesota) to $100,000
  • Loan terms: 48 to 72 months
  • Minimum credit score required: Not specified
  • Minimum annual income: Not specified
  • Availability: 50 states
  • Prepayment penalty: No

As one of the world's largest banks, Bank of America offers unbeatable availability and great rates. Though you don't need to be a member of Bank of America to use its auto loan services, members may qualify for special perks. For example, if you qualify for Bank of America's Preferred Rewards program – based on your qualifying combined balances in your Bank of America deposit and/or Merrill® investment accounts – you can be eligible for up to 0.50% off your APR. 

But Bank of America's loan policies can lack variety. For example, they offer one of the least flexible loan terms on this list, with the shortest loan term set at 48 months. In addition, their minimum financing amount is $7,500, which rules out Bank of America as a loan financier for less pricey used vehicles.

U.S. Bank
  • APR: Starting at 2.59% to 5.49% (for new and used car loans).
  • Loan amounts: $5,000 to $100,000
  • Loan terms: 12 to 72 months
  • Minimum credit score required: Not specified
  • Minimum annual income: Not specified
  • Availability: Branches in 26 states
  • Prepayment penalty: 1% of the original loan amount, with a minimum charge of $50 and a maximum of $100

U.S Bank offers interest rates as low as 2.59% for both new and used cars, which makes it a great lender for those purchasing preowned vehicles. If approved, the U.S Bank offers financing of up to 120% of your car's value, with no down payment required. However, their lowest used car rates are for those who meet specific criteria: Besides having excellent credit, you must have a loan-to-value ratio of 80% or less, bought a used car that's less than a year old, have a loan amount of at least $30,000, a loan term of 36 months or less and an automatic payment set up from a U.S. Bank account. Though these requirements are stringent, the low auto loan rates make them worth it for certain buyers. 

What are the drawbacks? U.S. Bank's availability is limited to just 26 states. Plus, it charges a prepayment penalty of 1% of the original loan amount if you pay off your loan within one year's time. 

Carvana
  • APR: Starting at 3.9% (used cars only)
  • Loan amounts: Not specified
  • Loan terms: 36 to 72 months
  • Minimum credit score required: No minimum, only requires some form of established credit. 
  • Minimum annual income: $4,000
  • Availability: Not available in Alaska or Hawaii
  • Prepayment penalty: No

Though Carvana is mostly known for its online used car shopping experience, it also offers auto loans on vehicles you buy through the site. Carvana's only requirements are that you're over 18, make $4,000 annually and have no active bankruptcies, so it's a great choice for those with poor credit. Furthermore, Carvana's wholly online model combines the buying and financing experience, making the process of purchasing a used car relatively painless. 

However, though Carvana makes it possible for customers with bad credit to obtain a loan, the best auto loan rates will always be reserved for those with excellent credit – and it's important to note that it offers, by far, the highest starting APR on our list. 

What to know when applying for an auto loan

While car loans usually have fixed interest rates and loan terms, they can often be negotiated, depending on your lender. Your loan rate will generally depend upon your credit score -- the higher your credit score, the lower your annual percentage rate. A higher credit score may also give you access to a larger loan amount or more favorable repayment terms.

Next, you should consider loan terms. Let's say you qualify for a 2.5% APR loan. You'll pay less interest over time with a shorter term loan, but your monthly payments will be higher. Likewise, you'll pay more in interest over time with a longer loan term, but your monthly payments will be lower. Consider your budget and financial goals to determine which loan term will work best for you.

As you consider lenders, find out if they offer a preapproval process. Preapproval allows you to see the rates you qualify for without a hard inquiry -- when a creditor pulls your credit file -- which can cause your credit score to dip slightly. It also allows you to review your options upfront, without committing to a particular lender.

Best car loan companies, compared:


PenFed CreditUnion

Consumers Credit Union

LightStream

Bank of America

U.S. Bank

Carvana

Best for

New and used car loans

New and used car loans, runner up

Private party car loans

Big bank option

Longer loan terms

Those with poor or no credit

APR for new car loans

Starting at .99% or  1.79% 

Starting at 2.24% or 2.74% (car loans for 2020 or newer vehicles) 

Starting at 2.49% 

Starting at 2.49% 

Starting at 2.59%  

N/A

APR for used car loans

Starting at 1.99% or 2.39%

Starting at 2.49% or 2.99% (car loans for 2016-2019 vehicles) 

Starting at 2.49% 

Starting at 2.69% 

Starting at 2.59%

Starting at 3.9% 

APR for private party loans

N/A

N/A

Starting at 3.49% 


Starting at 5.69%

N/A

N/A

Loan amount

$500 to $100,000

$250 to $100,000

$5,000 to 100,000

$7,500 ($8,000 in Minnesota) to $100,000

$5,000 to $100,000

Not specified

Repayment terms

36 to 84 months

0 to 84 months

36 to 84 months

48 to 72 months

12 to 72 months

36 to 72 months

Credit requirement (estimate)

Not specified

Not specified

Not specified

Not specified

Not specified

Accepts all credit, no active bankruptcies

Availability

All 50 states

Branches across Illinois, shared branches nationwide

Online

All 50 states

Branches in 26 states

Not available in Hawaii or Alaska

Lenders reviewed:

  • AutoPay
  • Bank of America
  • Capital One
  • Carvana
  • Chase
  • Consumers Credit Union
  • LightStream
  • MyAutoLoan
  • PenFed Credit Union
  • PNC
  • U.S. Bank

The editorial content on this page is based solely on objective, independent assessments by our writers and is not influenced by advertising or partnerships. It has not been provided or commissioned by any third party. However, we may receive compensation when you click on links to products or services offered by our partners.