The Best Auto Loans in 2022
Whether you’re looking for an affordable used car, searching for your dream automobile, or want to change your terms through vehicle refinancing, you’ll probably prefer to find a good loan offer rather than paying cash upfront.
To help you find the right auto loan rates, we’ve compiled a list of some of the leading car lenders in the business. Our selection includes high-profile banks, reputable credit unions, and online car finance marketplaces.
Auto Loan Companies: Summary
Bank of America
Fortunly's Rating: Our editorial team determines the rating based on a set of evaluation criteria developed for each product and service category.
Bank of America offers some of the lowest auto loan rates in the industry. In addition to new and used car loans, BoA can help you out with old credit refinancing, buyouts of leased vehicles, and purchases from individuals. The bank also offers a special Business Advantage loan explicitly tailored to commercial and business vehicle loans. New car loan rates start at 2.09%, and there are no application fees or prepayment penalties. Online applications are usually approved within 60 seconds. Read Review
- •Lowest APR on the market
- •Bank client discounts
- •60-second decisions
Fortunly's Rating: Our editorial team determines the rating based on a set of evaluation criteria developed for each product and service category.
LightStream is an online consumer lending division of SunTrust Bank that offers a variety of auto loans and solid repayment rates and provides a straightforward application process. LightStream has some excellent car loan interest rates, a quick application process, and unique options like loans tailored specifically for classic car purchases. As long as you meet the credit score requirements, LightStream is an excellent choice. Read Review
- •Numerous auto loan types
- •Fast online application
- •No vehicle-specific restrictions
Fortunly's Rating: Our editorial team determines the rating based on a set of evaluation criteria developed for each product and service category.
If you’re looking for a decent car loan for low credit, myAutoloan might be the right place. It’s not a single lender, but a marketplace that presents you with various auto loan offers that match your needs and budget. In addition to the wide range of options, this marketplace also encourages competition, so you’re bound to get some great deals. You can easily fill out the application form and get offers from up to four auto finance companies in minutes. Depending on the lender, you might be eligible for special deals that don’t require you to make any payments for up to 90 days. Read Review
- •Offers from up to four lenders
- •Good for lower-credit customers
- •Special lender-specific deals
Consumers Credit Union
CCU is one of the premier credit unions for auto loans, offering low, competitive rates and a lot of flexibility with amounts and loan terms. The lowest APR you can get with an excellent credit score is 2.24%. In order to apply for auto financing loans, you need to become a member and pay a one-time fee of $5. The website doesn’t provide a great deal of information, but it does allow you to fill out your application online and get in touch with loan officers. Read Review
- •Very low APR when purchasing newer vehicles
- •Term length of up to seven years
- •Motorcycle and RV purchase financing
PenFed credit union gives you some of the best auto loans with an APR that can go as low as 0.99%. You’re eligible for this discounted rate if you agree to use the organization’s car buying service. Even without this discount, PenFed’s lowest APR starts at 1.79%, which is nothing short of amazing. Thanks to the payment saver option, PenFed also allows you to reduce your monthly bill in exchange for higher interest rates. The application process is easy, while the obligatory membership costs just $5. Read Review
- •Very low APR
- •Payment saver option
- •Easy online application
As you may have guessed from the name, RefiJet focuses solely on refinancing auto loans. It’s a marketplace of lenders that specialize in refinancing. To get an offer, all you need to do is fill out a form providing the necessary information, such as your preferred loan repayment term. The company does a soft pull of your credit score and helps you find the perfect match with customized options. RefiJet guides you through the entire process and doesn’t charge any extra fees for this service. APR rates start at 2.49%, with no payments during the first two months of your refinance loan’s term. Read Review
- •Excellent refinancing options
- •Soft credit pull
- •Online and phone applications
Capital One is the second-largest bank for financing new and used auto loans. It’s a highly reputable institution that collaborates with numerous dealers across the US in order to provide customers with the best auto rates and loan terms. Capital One is also a great place to save money by refinancing your loan, while its popular Auto Navigator tool helps you find and finance your next car in one place. Read Review
- •Prequalification available
- •Soft credit pulls
- •Great customer support
Carvana offers customers a unique rate-shopping experience by acting as both an online lender and a car dealer. The company offers online car loans for used cars as well as trade-in services. One of the main advantages of using Carvana’s services is the fast delivery of the purchased car to your front door. Read Review
- •Online lender and car dealer
- •Various purchasing options
- •Extensive inventory of used cars
Our Methodology for Evaluating Auto Loans
There are thousands of auto lenders on the web, all claiming to have low car loan rates and special deals tailored specifically to your vehicular needs. To find out how much of this is true and which companies deserve your attention, we’ve identified the essential factors you should keep in mind.
This gives us a clearer overview of the services and helps us pinpoint the right automotive lenders.
Types of Auto Loans
First off, we turn our attention to the variety of auto loans that the lender has to offer. Some customers search for used car loan rates, while others need cash for a brand-new family vehicle. Maybe you’re trying to refinance an auto loan or buy a leased vehicle. Perhaps someone wants to sell you their car, or you’ve come across a classic from the ‘60s that you want to restore to its former glory. What about other vehicles like RVs and motorcycles?
Even the biggest banks are unlikely to offer all of these options, but you can still expect a fair number of choices.
Interest Rates and Fees
Price is king. A bank or dealership can show you a range of benefits, but at the end of the day, you’re likely to opt for the lowest car loan rates. Because of this, we take a much closer look at the annual percentage rates and tell you exactly under which conditions they work.
Of course, if there are any hidden loan application fees or prepayment penalties, we’ll flush those out for you. That way, you’ll have all the information before you even start the application process.
Whether it’s a bank offering a generous discount to its long-term clients or a dealership trying to sweeten the deal, we make sure to include it in our reviews. These companies tend to show you the discounted price first and explain what it is later, which can be frustrating if you don’t read the fine print.
In our reviews, you’ll see what you need to do to be eligible for these offers and whether it’s worth your time or money. If a bank requires you to have a specific amount of money on your account for three consecutive months, there’s no time to waste.
Given the medium you’re reading these reviews on, it makes sense that our priority is finding car lenders that have simple online application processes. If you can find the car loan online, fill out the forms, send documents, and get approved without ever leaving your home, we consider that a success.
Naturally, if a company’s site is prone to glitches and isn’t user-friendly, it will be a major flaw. Another important element to consider is the speed of preapproval - how fast can you get a reply to your application and see the money on your account?
Finally, there’s the customer service. You’ll want to have the option of communicating with a specialized representative about the intricacies of your account whenever the need arises. It’s unreasonable to expect the auto lenders to include round-the-clock support.
However, they need to have decent working hours (at least a few hours over the weekend) and capable, knowledgeable support agents. In addition, it’s commendable when the organization has a quality help center and FAQ sections that can save you a lot of time.
Online Auto Loans - The Best Auto Loan Rates in 2022:
- Bank of America - Starts at 2.09% APR
- LightStream - Starts at 2.49% APR
- MyAutoLoan - Starts at 1.89% APR
- Consumers Credit Union - Starts at 2.24% APR
- PenFed - Starts at 0.99% APR
- RefiJet - Starts at 2.49% APR
- Capital One - Starts at 2.99% APR
- Carvana - Starts at 3.90% APR
Reviews of The Auto Loan Lenders
Bank of America Auto Loan Review
There’s a good reason why Bank of America is one of the most reputable auto loan lenders in the US and beyond. The bank offers a wide range of loans, competitive rates, and special discounts to loyal customers. You can apply for a new or used car loan or refinance your current credit.
With the backing of such a major financial institution, you can buy out a leased vehicle or purchase one from a private seller thanks to Bank of America’s private party auto loans. There are some limitations on the types of vehicles and the loan amounts, but overall, Bank of America easily ranks among the top banks for auto loans.
The annual percentage rate (APR) for new car purchases starts at 2.09%, and the rate for a used car loan is typically around 2.29%. In both cases, these are some of the lowest rates you’ll find online, especially if you factor in the discounts. As a rule, refinance loans are slightly higher and start at 3.09%, along with lease buyout options.
Vehicle purchases from individual sellers through private party auto loans will set you back more - these numbers change often, but they will likely have an APR over 5%. If you decide to pay off your loan ahead of time, there are no prepayment fees.
Discounts for Account Holders
To sweeten the deal, the Bank of America car loan section includes special discounts for applicants who are already clients: Gold, Platinum, and Platinum Honors members. Gold members are users who have maintained a balance of $20,000 on their accounts, so they qualify for a 0.25% discount.
Platinum members maintained a balance of $50,000 for a 0.35% discount, while Platinum Honors users had at least $100,000 on their accounts, earning them the full 0.5% discount off their APR.
Bank of America Online has a few strict requirements if you want the best auto loan rates available. First of all, the vehicle in question can’t be older than ten years or have driven over 125,000 miles. The car’s overall value needs to be at least $6,000 (and the loan value must be at least $7,500). Loans can’t be used for motorcycles, RVs, boats, or aircraft.
One downside is that these loans don’t support commercial or business vehicles, but for specialized car financing, you can apply for the Business Advantage auto loan instead. The minimum amount for this type of vehicle is $10,000, and it can’t be older than five years. The APR starts at 2.49%.
Finding online auto loans through the bank’s website is fairly easy. There is no application fee, and since the process is largely automated, you’ll get an answer within 60 seconds. After you’re approved, your loan submission and proposed interest rate are good for the next 30 days.
The site also includes a simple but useful loan calculator that gives you a good idea of the rates. You can monitor your loan details on the go through the Bank of America app that’s available for iOS and Android devices.
There are a few ways to get in touch with the bank to discuss your auto loan rates. Support agents are available over the phone during weekdays between 8 a.m. and midnight ET for new customers and 9 a.m. to 8 p.m. ET for existing ones. On Saturdays, it’s 8 a.m.-8 p.m. ET for new customers and 9:30 a.m.-6 p.m. ET for those who already have an account with the bank.
For a live consultation with a loan officer, you can schedule an appointment online or just visit the bank at your convenience. If you prefer not to contact the Bank of America customer service, you can find a lot of information on the site, especially in the FAQ section.
At a Glance
- Some of the best car loan rates on the market
- Useful loan calculator
- Quick approval times
LightStream Auto Loan Review
LightStream is SunTrust Bank’s online lending platform that offers cheap car loan rates. You can do everything online through the site’s comprehensive, user-friendly interface. The platform covers everything from new and used car purchases to motorcycles and private party loans.
One of the biggest advantages for most users is that there are no car model limitations or mileage requirements. This opens up a lot of possibilities.
The lowest APR for a car loan at LightStream is 2.49%. You can get it with a loan term of 36 months and amounts exceeding $50,000. This minimum reserved for users with excellent credit payment history is the same for new, used, and classic car loans, as well as refinancing.
Private party loans and lease buyouts have slightly higher current car loan rates starting at 3.49%. If you qualify for it, LightStream also offers a Rate Beat Program, in which the company will beat a competitive APR by 0.1 percentage points.
AutoPay provides borrowers with more refinance options than what’s usually found elsewhere on the market. In addition to traditional auto refinancing, there are also cashback and refinancing and lease payoff refinancing options, with no application or origination fees. However, keep in mind that the aforementioned rates for auto loans are calculated with the AutoPay option.
If you choose the standard invoice method, you’ll be paying 0.5% more. The platform warns you about this, though. And if you’re in Florida, you’ll also have to cover the documentary stamp tax that isn’t included in the APR.
The minimum amount you can take is $5,000, which is slightly lower than the industry average, while the maximum is capped at $100,000. Considering the rates, SunTrust LightStream is one of the better places to refinance a car loan. Of course, the terms and conditions forbid you from refinancing a different LightStream loan. This is relatively standard practice, but it doesn’t hurt to mention it.
The value of this lender lies in the fact that, unlike most of the competition, LightStream financing doesn’t have special requirements for the vehicle. There are no mileage or model restrictions, which is why it stands out as a unique option for classic car collectors.
LightStream’s biggest selling point is the online application process. You can get everything done online. All you need to do is fill out a couple of forms, send the necessary documents, and you can be eligible to get a car loan online. In theory, it’s possible to fund your loan on the same day you submit your application. However, in practice, you’ll most likely have to wait a couple of days.
The website works on any device, so you can easily apply from your computer, tablet, or phone, but keep in mind that LightStream doesn’t publish its exact credit requirements online.
LightStream customer service agents are available during weekdays from 10 a.m. to 8 p.m. & on Saturdays from noon to 4 p.m. There is no phone support, but you can fill out a contact form if you encounter problems or want to learn more about the company’s auto loan interest rates.
Note that the agents will only respond during working hours and won’t be able to reply to your Sunday inquiries on the same day. In those instances, you can turn to the site’s fairly detailed FAQ section.
At a Glance
- User-friendly platform
- AutoPay discount option
- Low minimum APR
There are numerous reasons why going with a marketplace instead of a single lender might be a great idea.
First of all, you get more loan options to choose from or, in the case of myAutoloan, up to four different loan offers. Secondly, the competition between these lenders is likely to produce better offers. Thirdly, you have a much better chance of finding auto loans because the results are based on your own score.
Here’s what you can expect from myAutoloan.
Because of the way the marketplace functions, you’ll come across different rates every day. The myAutoloan website gives you an overview of the auto loan rates to keep you in the loop. The APR for new car loans hovers between 2.09% and 2.50%, while you can expect anywhere from 2.34% to 2.75% for used cars. The auto refinance rates are the lowest, often dropping below 2%, while private party and lease buyouts can get as high as 3.44%.
While the rates depend on the term length (go for a repayment period of 36 months or shorter for the best prices), you’re unlikely to come across a quote for anything above 5%.
Tools and Resources
After you’ve seen the auto loans that the site has to offer, you should try out two other tools available on myAutoloan.com. The estimator tells you what rates you can expect in your area, based on the amount you want to borrow and a comprehensive self-assessment of your credit score.
In addition, you have a basic calculator at your disposal that lets you know what your monthly payments might be based on the total amount you want to borrow and the APR. myAutoloan also offers a handful of useful resources that can help you check your credit history, find a vehicle, or buy insurance.
When it comes to low interest car loans, it’s hard to beat the speed of the application process here. All you need to do is fill out a form and wait for the reply. In most cases, your offers will arrive within minutes. Of course, the lenders themselves might take longer to approve your request.
The only thing you can do to expedite the process is to ensure the information you send is accurate and upload all the necessary documents. Once you’re approved, you can immediately start using your funds.
If you have any questions regarding myAutoloan rates or the company’s online auto loans, you can either reach out to customer service or browse through the FAQ/Help sections. Customer support agents are knowledgeable and willing to help; however, you can only contact them by filling out a form on the site.
There are no phone or live chat options. The help section has a broad selection of reading materials, but that doesn’t exactly qualify as instant assistance.
At a Glance
- Detailed credit score assessment
- Wealth of resources
- Quick approvals
Consumers Credit Union Auto Loan Review
If you’re going with a credit union, you might as well go with one of the best-known organizations in the industry. When compared to the competition, one of the CCU’s key benefits is flexibility. It’s widely regarded as the leading credit union for auto loans because it doesn’t have a minimum loan term.
To become eligible for a loan, you’ll first need to become a member. Luckily, it’s an inexpensive, quick, and absolutely worthwhile process that can be done online or over the phone.
Lowest Rates and Discounts
Consumers Credit Union offers low car loan rates with a starting APR of just 2.24%. This option is available within a very flexible loan term of 0 to 60 months but limited to vehicles manufactured after 2018. Of course, you need to meet high credit score requirements before even considering this option.
The lowest APR for motorcycles is 4.90%, while RVs start at 4.40%. Note that these numbers are calculated with a 0.5% discount rate if you enable automatic payments through CCU. If you choose a third-party system, you’ll only get a 0.25% discount.
The first step towards becoming eligible for low-rate auto loans is acquiring a CCU membership. This is a standard requirement for credit unions because of the organizational structure - you’re a client and an owner at the same time. However, unlike some other unions, CCU isn’t conditioned by employment or location.
All you need to do is pay the one-time fee of $5, and you’re good to go. This stays in your account and buys you a single share in the organization. When you decide to close your account, you get your money back.
Loan Terms and Vehicle Restrictions
The maximum loan tenure is 84 months, and there is no minimum. The threshold for vehicle loan rates is 60 months, which is quite generous compared to the competition. Motorcycle loans have a maximum cap of 60 months, while loans for RVs can go up to 180 months in total. While Consumers Credit Union doesn’t impose mileage limits, the model has to be from 2014 or newer.
In fact, you’ll get the best deals for models manufactured in 2018 or later. The site does mention rates for vehicles older than 2013, but you’ll probably need to consult a CCU representative to find out if these are actually available.
Interface and Application Process
The site’s interface isn’t its strongest asset. You won’t find extensive information about auto loan rates or specific requirements for each loan. Everything seems a little disorganized. Aside from the online application method, you can also use the phone or locate a nearby branch. The Consumers Credit Union customer service has slightly shorter working hours than its competitors: 8 a.m. to 6 p.m. CST during weekdays and 8 a.m. to 2 p.m. on Saturdays.
At a Glance
- Highly flexible loan terms
- Inexpensive credit union membership
- No mileage limits
PenFed Auto Loan Review
PenFed is a reputable credit union that offers some of the lowest loan rates to both military-affiliated personnel and civilians. Anyone can get a loan here, but as is the case with other credit unions, there is a small membership fee. PenFed’s super-low APR rate of just 0.99% only works if you sign up for the PenFed car buying service.
But considering the offer, that’s definitely something worth doing.
Industry-Leading Low Rates
The star of the show is the 0.99% APR that you can get with the 36-month term for any amount you want, up to $100,000. However, to become eligible for these PenFed auto loan rates, you need to have an excellent rating and buy your vehicle through the company’s car buying service.
Even if you’re not searching for a discount, it’s a good platform for finding an affordable deal on a car and ensuring you’re working with a certified car dealership. Without this discount, the car loan rates start with an APR of 1.79%, which is still among the cheapest options on the automotive finance market.
Loan Terms and Amounts
Loan terms range between 36 and 72 months. The minimum amount you can borrow depends on the repayment period you choose. For example, for 36 months, the minimum is $500 (which works out to just $14 per month). With 60 and 72 months, the minimums are $10,000 and $15,000, respectively.
The calculator on the website gives you a pretty good breakdown of your payments if you include the down payment, interest, trade-in value, and other parameters.
Types of Loans
The PenFed auto loan is an excellent option for both new and used vehicles as well as refinancing car loans. You can also choose the payment saver option, which enables you to make lower payments than with a conventional auto loan but with a higher interest rate.
You can choose what happens with the remaining loan balance at the end of the term - pay it off, refinance the debt, or sell your car. The PenFed car loan payment saver system can be applied to new cars (no older than 2020) or used vehicles (2019 and newer).
PenFed is a credit union and requires you to be a member to access the most affordable rates on car loans. If you’re affiliated with the military, you and your family members can automatically join the union. All you need to do is clarify your military record on your online application. If you have no affiliation with the military but still want to join the union, you can make a one-time $5 deposit.
Application and Customer Support
The application process is straightforward, and everything is done online. After creating an account, you’ll be able to review the auto loan rates that fit your eligibility requirements and check the status of your recent applications. The online portal works on almost every browser and operating system, so you shouldn’t have any problems.
You can contact PenFed customer service agents by phone or an email contact form, but make sure you know their working hours. The agents work a double shift on weekdays, a couple of hours on Saturdays, and a full shift on Sundays. If you want to learn more about auto financing, find specific forms, or use calculators, PenFed offers a comprehensive Advice Center with a very useful FAQ section.
At a Glance
- Rate discounts for using the company’s car buying service
- Great choice for military families
- One of the lowest annual percentage rate options
RefiJet is one of the leading auto loan companies, thanks to its competitive rates and simple application process. It has a partnership with numerous high-end lenders, so you can easily find the best car loans for your needs without damaging credit.
What separates RefiJet from the competition is the company’s level of involvement in the entire process, as well as its range of refinancing options. RefiJet does a lot of your paperwork for you and enables you to buy motorcycles, SUVs, and even trucks.
Rates and Fees
Although it ultimately depends on the lenders and their customized quotes, RefiJet’s auto refinance loans start at 2.49% APR. Note that even if you have a perfect credit score, you might not be eligible for this rate, but prequalifying for a loan does not impact the credit score.
This offer also grants new clients a two-month period with no payments. RefiJet won’t charge you anything for its service, but you’ll still have to pay for title transfers and additional fees required by the state. There is no application fee, while prepayment penalties and late fees depend solely on the lenders. Some are more generous than others.
Reasons for Refinancing
The RefiJet car loan site explains how and why you should refinance your car loans. The company’s selection of auto loan providers can help you lower your interest rate, extend the terms, or decrease monthly payments through refinancing.
This is often used to get cash back from equity, add or remove co-borrowers, or take a break from payments for a month. These reasons are explained in great detail on the site.
There are a few requirements. First off, you need to be employed and have proof of income. When getting auto loans for fair credit, your most recent car payments need to be in order, and you have to have valid license and registration documents. The vehicle mustn’t be older than ten years and needs to have full insurance coverage. The minimum loan amount is $5,000.
Application Process and Customer Service
The application process is straightforward and very user-friendly. RefiJet’s loan officers guide you through the process, handling most of the paperwork for you. The prequalification process relies on the soft pull method, so it doesn’t affect your credit score. You get your customized offers within minutes and can discuss prospects with RefiJet's specialists.
Note that once you choose one of the best auto loan companies, the lender will do a hard pull to verify all the information. If you have any questions, concerns, or want to learn more about RefiJet’s work, you can contact customer service. It’s available via phone, email, or through the on-site contact form.
At a Glance
- Fantastic customer support
- Pre-qualification with a soft credit check
- Simple application process
Capital One Review
Founded in 1994, Capital One has since acquired more than $360 billion in total assets. It’s one of the largest banks in America and is currently the second-largest auto financing company in the country. Capital One is based in Virginia, but it provides a wide range of financial products across the US.
Types of Loans and Restrictions
Thanks to its nationwide network of car dealers, Capital One is one of the best banks for auto loans. Whether you want to buy a new or a used vehicle, Capital One will help you find the most suitable option. You can also choose between individual and joint loans, with the latter being an ideal choice if you’re buying a car with your spouse. With joint loans, you can qualify for a better loan rate and borrow a larger amount of money.
As for Capital One refinancing, the bank only refinances standard auto loans with a single lienholder on the car title. You must refinance the full amount of your auto loan, and there’s no cashback offer or lease buyout option.
Despite this, Capital One is still one of the leading banks for refinancing auto loans. If you decide to refinance your credit at Capital One, it won’t impact your credit score, and you can save an average of $75 per month.
Of course, you can also get new and used auto financing. These loans can be used to purchase cars, trucks, sport utility vehicles for personal use, and minivans. The vehicle must not be more than seven years old. There are also restrictions on some car models and brands, including camper vans and RVs, Oldsmobile, Daewoo, Saab, Suzuki, and Isuzu vehicles.
Lastly, the car has to come from Capital One’s network, though with more than 12,000 eligible dealers, that should not be a problem.
Requirements and Loan Terms
When you apply with the bank to get a car loan, you need to meet its unique set of requirements. Capital One’s requirements align with industry standards, which means that applicants must be US residents who are at least 18 years old and have a steady income.
The income requirements range from $1,500 to $1,800, depending on the company’s inquiry of your creditworthiness.
The APR range goes from 2.99% to 24.99%, depending on several factors, including the loan amount and term length, loan-to-value ratio, down payment, and vehicle characteristics. As for the loan amount, the minimum you can apply for is $4,000, while the maximum goes up to $75,000.
After you complete a prequalification procedure, you’ll be informed about the APR, monthly payments, and term length.
Capital One might not be the best place for affordable auto finance, but that doesn’t mean that people with lower credit scores can’t get a good deal.
User-friendly Auto Navigator
One of the reasons Capital One is among the most popular places for car loans is its simple and effective online prequalification tool. Auto Navigator helps you find a vehicle and a dealer in a few easy steps without impacting your credit score.
Its intuitive interface gets top marks for navigational efficiency, allowing you to conduct fast and comprehensive online searches on any device you use. During prequalification, you can personalize your purchase and compare your monthly rates from various dealers.
It will let you scroll through multiple car loan rate options and help you pick an option that fits your budget.
According to numerous online reviews, Capital One has excellent customer service. There’s no live chat or email support, but you can get a hold of agents by phone from Monday to Friday between 9 a.m. and 9 p.m. and on Saturdays between 10 a.m. and 7 p.m. (ET).
At a Glance
- Fast online application
- Reasonable requirements
- Save on car refinancing
The next name on our list of automobile lenders is Carvana. Founded in 2012, Carvana is an Arizona-based company that provides an all-in-one auto shopping service. Its unique selling model is the best for those who want to get a loan and buy a car from the same place, as Carvana offers financing options for its inventory of vehicles.
You can choose from thousands of cars and purchase them online, and the company delivers them to your front door. In addition, you can trade your car in for a new one or sell it to Carvana.
Loan Terms and Requirements
If you are looking for a good used car financing solution, Carvana is the perfect place, especially if you don’t have a stellar credit score. This online lender offers affordable online car loans to applicants with credit scores below 600.
However, to qualify for a loan at Carvana, you need to meet other requirements. For starters, you must be a resident of a state where Carvana provides its services (the company does not operate in Hawaii and Alaska) and be at least 18 years old.
To get low used car finance rates, you also need to have a minimum annual income of $4,000 and no active bankruptcies.
The minimum loan amount at Carvana is $1,000, and the company offers repayment terms between 36 and 72 months.
Carvana sells used cars with low milestones and has more than 20,000 vehicles. To search the database and compare various vehicles, you first need to create an account. You can narrow down your search by using nine filters. Note that you cannot negotiate car prices, but considering the rich inventory, you shouldn’t have any trouble finding your perfect car.
In addition to offering some of the best used car auto loans on the market, Carvana’s services are available around the clock, meaning that you can make a purchase at any time you want. You can choose a car, buy it, and select a delivery date.
Carvana can deliver the vehicle to your address within one business day. Once you get your contract and review it, you can close the purchase in just 10 minutes.
Another great thing about Carvana is that you can use other sources of financing a car, including other online lenders and banks.
Not only is Carvana a solid option to get a good rate for a used car loan, but it’s also a great place to sell your vehicle. The entire process goes through Carvana’s website, where the company appraises your car. The final trade-in inspection is possible through some of the company’s vending machines, or Carvana’s representatives will do it in person, depending on where you live.
To get any clarification about Carvana's auto loans for used cars, you can contact the company’s knowledgeable and polite customer support team. Agents can be reached by phone during business days from 7 a.m. to 9 p.m. (ET). You can also use ticketing support or talk with a representative via live chat. There’s also a short video that may answer some of your questions and an extensive FAQ section on the site.
At a Glance
- Trade-in service
- Available in most states
- Seven-day money-back guarantee
A Guide to Car Loan Lenders: Credit Unions vs Banks
One of the biggest decisions you have to make when choosing where to get an auto loan is whether you should pick a credit union or a bank. Both of these options have their pros and cons, so here’s a breakdown of some of the main characteristics.
Credit unions are nonprofit organizations focused on providing financial services to specific groups or communities. These can be communities residing in the vicinity of the institution, military or healthcare personnel, or employees of a company partnered with the union. In order to get a credit union auto loan, you need to become a member.
The main appeal of credit unions for most clients is the lower fees. As a nonprofit, the organization isn’t obliged to pay federal income tax and, therefore, can afford to offer lower fees to its members. Another benefit that many users appreciate is that unions tend to be less strict about credit scores. If you want to get a car loan with a low credit score, you’ll have a better chance of doing so with a credit union.
The ultimate goal of any bank is to make money. Banks generally offer higher fees than unions but lower interest rates.
Some people may argue that credit unions adopt a personal approach with their clients, compared to banks that are perceived as cold and disinterested. However, that really depends on the bank. Some smaller institutions will provide you with the same amount of care and devotion you’d normally get from a union.
In addition to offering low car interest rates, banks also tend to invest more in technology, which is essential for staying relevant in today’s high-tech world. A quality auto loan app can provide you with all the necessary data about your loan, rates, and repayment process whenever you need it.
Credit Union or Bank?
The leading credit unions are generally considered more flexible and customer-friendly, and usually have lower fees. On the other hand, banks offer more comprehensive coverage, invest a lot more in technology, and have lower interest rates. You can find a good auto loan rate in either of these institutions, but you’ll have to do some research.
What is a good interest rate for an auto loan?
The average car loan interest rate for a new vehicle sits at around 5%, so anything below that is good. Used car interest rates, however, are slightly higher on average, hovering around 9%. Naturally, the interest depends on a number of factors, including your credit score and the repayment period. Even the most affordable lenders for customers with lower credit scores struggle to offer you anything below 13% if your score is under 500.
Which credit union is best for car loans?
Consumers Credit Union is among the biggest lenders on the market, with competitive rates tailored to clients who don’t have the perfect credit score. Another option is Alliant Federal Credit Union.
You’re eligible for membership at this union if your employer is partnered with Alliant or you live/work near the company’s headquarters in Chicago. If you’re interested specifically in auto loans for military members, you should go with Pentagon Federal Credit Union, also known as PenFed.
Is it better to finance a car through a bank or dealership?
In most cases, dealerships are just intermediaries between the bank and the client, so it’s usually better to do business with the bank directly. That way, you’ll get lower rates and won’t have to pay the dealer his cut. Of course, this is not always the case. Dealerships might also offer lower rates based on deals they have with specific banks. Either way, to find the best interest rates for auto loans, you’ll need to take a look at both options.
Why is my APR so high with good credit?
A good credit score is not the only factor that makes you eligible for a loan. Lenders often don’t disclose all the elements of their screening process, but they will look into various aspects of your credit report. Banks are more likely to offer advertised rates to applicants who are already their clients. That gives them direct insight into your financial situation, and they can determine whether you should get a vehicle loan with a low APR.
What is the catch with 0 percent financing?
Most of the time, when you’re presented with a 0% financing plan, it means that the interest is calculated into the price of the vehicle. Essentially, you pay a higher price for the car than you would if you’d gone with the cash option. However, sometimes the dealership might also offer 0% interest as an incentive to buy the car with no strings attached.
These are the best auto loans around and are reserved for special customers or provided as time-sensitive offers. Make sure you read the fine print, though, because scammers often catch people with these kinds of deals.