Best Auto Loan Rates

PenFed, AUTOPAY, and Consumers CU are some of your best choices for auto loans in 2023

Updated May 25, 2023

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Buying a car is already tough enough, so it’s tempting to choose the first loan option put in front of you. But many people don’t realize that when you finance a car purchase, you’re actually buying two separate things: the car itself, and the car loan.?By choosing the right lender, you can set yourself up for a less stressful experience, save money, and even pay off your car more quickly.?

We’ve rounded up the best auto loan rates that can help you do just that, based on our review of 25 leading auto lenders. Lenders were examined and rated on their APRs, loan types, loan terms, vehicle and borrower requirements, and other factors. We also conducted a survey of 1,016 auto loan borrowers, collecting data on lender sentiment and the loan process.

Best Auto Loan Rates of 2023

Best Overall: PenFed
Best for Low Rates/Bad Credit: AUTOPAY
Best Credit Union: Consumers Credit Union
Best for Refinance: LendingTree
Best for Fair Credit: LendingClub
Best for Full Car Buying Experience: Carvana
Best for High Maximum Accepted Mileage: OpenRoad Lending

Best Overall : PenFed

PenFed logo.

Used APR Range: 5.19%–17.99%
Used Loan Amounts: $500–$150,000
Used Loan Terms: 3–7 years

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Pros & Cons

Pros

Full suite of auto loan types available
Allows private-party vehicle purchases
Promotional offers if you use car-buying service

Cons

Must join credit union
Doesn’t allow co-signers
No rate discounts available

Why We Chose It

PenFed is our top pick overall because it offers all of the loan types you’d ever hope to use, at excellent rates: loans for new or used cars, refinances, cash-out refinances, and even lease buyout loans. You can even use a used car loan to buy a car from a private seller, if you wish. PenFed will mail you a check if you’re approved for any of its loans.?

That can take a few days, but if you’re OK with using the TrueCar car-buying service, PenFed has a pretty good relationship discount with it. Your loan could be funded the same day you’re approved, if you use this service.

Borrower Qualifications

Available in all 50 states and Washington, D.C.
Must join the credit union by depositing at least $5 in a savings account.

Vehicle Qualifications

For loans less than seven years: No limit on vehicle age, and must have 125,000 miles or fewer
For loans of seven years or more: Vehicle must be less than five years old and be under 60,000 miles
Maximum loan-to-value ratio: 125%
Allows private-party vehicle purchases: Yes

Best for Low Rates/Bad Credit : AUTOPAY

Used APR Range: As low as 2.99%
Used Loan Amounts: $2,500–$100,000
Used Loan Terms: 2–8 years

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Pros & Cons

Pros

Wide range of loan types
No payments for 45 days
Low minimum credit score requirement

Cons

Very sparse on loan details
Doesn’t disclose partner lenders
Can’t apply with a co-signer, only a co-borrower

Why We Chose It

AUTOPAY is light on details, and that’s maybe intentional in order to get you to bite. If you have excellent borrower qualifications, AUTOPAY certainly has the potential to be one of your cheapest options, advertising lower rates than just about any other lender. And while it works with borrowers with credit scores as low as 500, it doesn’t specify the top end of the rate range you’d be likely to pay if you have poor credit, so you’ll need to be careful—especially since you can’t apply with a co-signer (only a co-borrower).

AUTOPAY does offer a full suite of auto loan types: used cars, new cars, refinances, cash-out refinances, and even lease buyout loans. It works with a network of partner lenders rather than offering the loans itself, and that’s how it can offer so much flexibility. For that reason, it’s a good choice to add to your shopping list, although we would prefer if it offered more concrete details.

The best auto loan rates are often advertised through third-party companies that network with partner lenders, like AUTOPAY. Most don’t disclose their partners, however, so you can’t always see all of the companies you’re actually checking your rates with.?

Borrower Qualifications

Recommened credit score of 500 or higher
Available in all U.S. states and Washington, D.C.

Vehicle Qualifications

Maximum accepted vehicle age: 10 years
Maximum accepted mileage: 150,000 miles
Maximum loan-to-value ratio: Not disclosed
Allows private-party vehicle purchases: Yes

Best Credit Union : Consumers Credit Union

Used APR Range: As low as 5.54%
Used Loan Amounts: $500–$350,000
Used Loan Terms: 36–84 months

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Pros & Cons

Pros

Allows co-signers
No age or mileage restrictions
Offers a full suite of car loan options

Cons

Can only be used at a dealership
Must join credit union to receive loan
Lack of transparency about loan requirements

Why We Chose It

As our highest-rated credit union, Consumers Credit Union is a good choice for people who prefer to bank with these institutions. It’s also a good choice if you’re trying to buy an older car from a dealership because it’s one of the few lenders that doesn’t put any limits on your vehicle’s model year or mileage. Consumers also offers an optional mechanical repair insurance plan through ForeverCar, which might be especially important if you are driving an older car.?

Consumers doesn’t specify what sort of credit you need to qualify for a loan (or any other qualifications, really), but it might be good to add this one to your shopping list if you have bad credit. The maximum rate you’ll pay for a refinance loan, for example, is about half of what some other lenders may charge.?

Borrower Qualifications

Available to people living in all 50 states and Washington, D.C.
Need to join Consumers Cooperative Association ($5 fee) and deposit $5 in a savings account to establish your membership, if approved for a loan

Vehicle Qualifications

Maximum accepted vehicle age: None
Maximum accepted mileage: None
Maximum loan-to-value ratio: 125%
Allows private-party vehicle purchases: No

Best for Refinance : LendingTree

Refinance APR Range: As low as 2.24%
Refinance Loan Amounts: Not disclosed
Refinance Loan Terms: 36–72 months

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Pros & Cons

Pros

Potential for very low rates
Compare many loan offers at once
No limits on age or mileage of vehicle

Cons

Can generate a lot of spam
Very low loan-to-value ratios
Doesn’t offer many details about its loans

Why We Chose It

LendingTree is another company that can help you quickly identify the lowest loan rates from among its network of lenders. It suffers from the same problems as other lender networks, however—namely, that it doesn’t tell you which lenders it’s checking your rates with, nor what the types of loans you might qualify for look like. You can also expect a lot of companies reaching out to you with spam, too.

Still, it’s a good option, especially if you’re looking for a car loan refinance. It can help you find offers for used and new car loans, but it advertises extra-low rates for refinances. You’ll just need to make sure you have plenty of equity in your vehicle since LendingTree lenders don’t offer loans with a loan-to-value ratio above 80%. That means underwater loans aren’t eligible for refinance and you may need to make a minimum 20% down payment if you’re purchasing a new or used car, too.?

Borrower Qualifications

Available to residents of all 50 states and Washington, D.C.

Vehicle Qualifications

Maximum accepted vehicle age: None
Maximum accepted mileage: None
Maximum loan-to-value ratio: 80%
Allows private-party vehicle purchases: Not disclosed

Best for Fair Credit : LendingClub

APR Range: 3.99%–24.99%
Loan Amounts: $4,000–$55,000
Loan Terms: 2–7 years

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Pros & Cons

Pros

Minimum recommended credit score of 600
No loan fees
Can refinance with the same lender
Low rates for well-qualified borrowers

Cons

Doesn’t allow co-signers
Many residency and car restrictions
Doesn’t offer new or used auto loans

Why We Chose It

LendingClub, the former peer-to-peer lender, is now in the auto refinance business where it offers very good rates to borrowers with good credit. Borrowers with fair credit can be approved too, but if your credit is quite bad LendingTree may charge you a higher rate than most other lenders. On the bright side, LendingClub doesn’t charge any fees—origination fees, late fees, prepayment penalties, nothing.?

LendingClub is one of a handful of lenders that allow you to refinance your current LendingClub loan with another LendingClub loan, if you happen to qualify. However, be aware that there are many loan limitations with this lender. It’s not available in many sparsely populated states, for example, and there are many makes and models of popular cars LendingClub won’t finance.?

Borrower Qualifications

600 or higher recommended credit score
Current auto loan must have been open for at least one month
Current auto loan must have at least 24 months remaining
Available to residents of all U.S. states except for: Alaska, District of Columbia, Hawaii, Maine, New Hampshire, North Dakota, Vermont, West Virginia, Wyoming
You must be at least 18 years of age
You must be a U.S. citizen or permanent resident or live in the U.S. on a valid long-term visa

Vehicle Qualifications

Maximum accepted vehicle age: 10 years
Maximum accepted mileage: 120,000 miles
Maximum loan-to-value ratio: Not disclosed
Allows private-party vehicle purchases: No

In addition:

The loan’s remaining balance must be between $5,000 and $55,000
Can’t refinance business vehicles
Vehicle must be registered in the same state you live
Many cars not eligible for financing, such as Nissan Leafs and models from Suzuki, Saturn, Mercury, Saab, Pontiac, Oldsmobile, Hummer, and more

Best for Full Car Buying Experience : Carvana

APR Range: Not disclosed
Loan Amounts: Not disclosed
Loan Terms: Not disclosed

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Pros & Cons

Pros

Neat, techy way to buy a car
Offers seven-day return policy
Long 45-day pre-approval window

Cons

Not available outside of contiguous U.S.
Doesn’t allow co-borrowers, only co-signers
Delivery charges not refundable if you return car

Why We Chose It

Carvana is a used car dealership that offers a completely online car-buying experience similar to TrueCar. You can apply for a loan online, find a car, and then pick it up or even have it delivered to you. One of Carvana’s claims to fame, however, is its car vending machines. If you’re pre-approved for a loan you can schedule an appointment to take a car for a test drive from one of its giant vending machines. The company will even provide you with a token to use.?

If you like the car, you can keep it. If not, you’ll have seven days to return it. It’s a futuristic way to buy a car that many people like; however, there can be problems with the setup. If you have a car delivered and you don’t like it, for example, you can return it, but the shipping charge is nonrefundable. That makes it costly and impractical to test drive different models like you would at a dealership.???

Borrower Qualifications

Minimum recommended credit score of 500
Must be at least 18 years old
Minimum annual income of $4,000
Must not have any active bankruptcies?
Available to residents in contiguous U.S.

Vehicle Qualifications

Maximum accepted vehicle age: Varies
Maximum accepted mileage: 140,000 miles
Maximum loan-to-value ratio: Not disclosed
Allows private-party vehicle purchases: No (only for used cars bought through the Carvana platform)

Best for High Maximum Accepted Mileage : OpenRoad Lending

Refinance APR Range: 1.99%–24.99%
Refinance Loan Amounts: $7,500–$100,000
Refinance Loan Terms: 24–72 months

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Pros & Cons

Pros

Maximum accepted mileage of 160,000, according to customer support
Offers lease buyout loans
Refinancing available if you’re underwater on loan
Can re-refinance your loan through OpenRoad again

Cons

Potentially high rates and fees
Doesn’t allow co-signers
Many vehicle restrictions

Why We Chose It

OpenRoad Lending’s website looks like it was designed in the previous decade. But it can be helpful if you’re struggling to make your auto loan payments and you’re not able to qualify for a better loan with another lender—especially if you need to refinance a loan for a high-mileage car.?

It comes with very high origination fees ranging from $249 to $449, a 5% late payment fee, and interest rates that zoom into credit-card-debt territory for less-qualified borrowers. However, OpenRoad Lending is still better than many other types of alternative auto loans, such as those from buy-here-pay-here lenders. You can still qualify if you have a poor credit score, even if you’re underwater on your current loan—a common problem for people with bad car loans.

OpenRoad Lending has a maximum loan-to-value ratio of 180%, meaning you may be able to borrow nearly twice your car’s actual value in order to pay off your existing loan—far more than most other lenders.?

Borrower Qualifications

Minimum credit score of 500?
Must be at least 18 years old
Available to residents in 46 U.S. states
You must make at least $2,000 per month (earnings from Uber or similar services do not count toward the income requirement)?
Your DTI cannot exceed 40%
Can only refinance auto loans issued by NCUA- or FDIC-insured lenders such as credit unions and banks

Vehicle Qualifications

Maximum accepted vehicle age: 8 years
Maximum accepted mileage: 160,000 miles
Maximum loan-to-value ratio: 180%
Allows private-party vehicle purchases: No
Business vehicles, Oldsmobile, Daewoo, Smart Car, and Isuzu vehicles are not eligible for refinancing

Final Verdict

If you’re looking for the best overall auto loans, try starting with PenFed; it's a credit union, but anyone can join for just $5 when approved for a loan. AUTOPAY is worth checking as well, especially if you'd like to browse a variety of lenders. LendingTree is also a top choice for a rate-comparison website. If you prefer sticking with credit unions, Consumers Credit Union is yet another good option that allows anyone to apply.?

Or, if you’re not too picky about your car and prefer a more streamlined experience, Carvana offers some unique and affordable options. And finally, while expensive, OpenRoad Lending offers a lot of potential if you’re looking to get out of a bad car loan.?

Guide to Choosing the Best Auto Loan

Types of Auto Loans

Auto loans fall into several different categories. You’re not going to end up with the wrong type of auto loan because your lender will usually make sure it’s correct, but it’s helpful to know how they’re different.?

Some people even choose the type of car they get based on these differences. For example, new cars are definitely more expensive, but the loans are often much cheaper than for used cars—and that’s one reason many people prefer new cars over used cars.

New car loan: Just about every lender offers new car loans. They feature lower rates and may come with longer term lengths since you’ll likely be financing a larger amount given the higher price tag for new cars.
Used car loan: Equally common, the rates on used car loans are generally a bit higher. Lenders may have more restrictions in place, such as only being able to buy used cars from dealerships or cars below a certain age or mileage level.
Auto loan refinance: Many lenders offer refinance loans, which work by paying off your current loan and replacing it with a new one. You might do this to get lower monthly payments and/or to pay off your loan faster while saving money.
Cash-out refinance: A cash-out refinance works the same as above, except you borrow a higher amount of money than you need. You get the difference back as cash that you can use for other things, like home repairs or debt consolidation.
Auto title loan: These are similar to payday loans except your paid-off (or mostly paid-off) car serves as loan collateral. Auto title loans are extremely expensive and difficult to repay, resulting in 20% of borrowers having their car repossessed, so we don't recommend them.
Buy-here-pay-here loan: These dealerships market to people with bad credit. Your car may come installed with a tracking device to make it easier to repossess, and you may be charged exorbitantly high rates. We don’t recommend buy-here-pay-here loans.
Lease buyout loan: It can be difficult and expensive to get out of a car lease contract early so you’ll need to calculate the costs for all of your options carefully. If you can’t pay cash, some lenders offer a lease buyout loan for this purpose.

In addition, auto loans can either be secured or unsecured. Most auto loans are secured by the very car you’re buying and offer lower rates because of that. Your car serves as collateral for the loan and if you don’t repay it, the lender will repossess your car.

Unsecured car loans aren’t as common, but some lenders (like LightStream) do offer them. They’re often faster to get but they charge much higher rates because the lender doesn’t have an easy way to get their money back if you default.

How to Compare Auto Loans

It’s best to shop around with as many lenders as you can in order to find the best loan. As you get pre-approved, take notes on these features so you can compare them and choose the best option later:

Annual percentage rate (APR): The total cost of the loan, including interest and fees. Use this to compare loan offers rather than the interest rate alone, which doesn’t tell the full story.?
Down payment: Some lenders require a down payment for the loan. Even if they don’t, it’s a good idea anyway because it lowers the total cost of your loan and can help you pay it off sooner.
Lender reviews: Read as many reviews and customer ratings about your top lenders as you can so you know how helpful your lender will be if you need assistance.?

How to Apply for an Auto Loan

You can get an auto loan from a few different types of lenders: online lenders, banks, and credit unions. Dealerships themselves also partner with these lenders to offer you financing. It’s best to do your loan shopping before you actually start looking for a car because you can find the best loan options and you’ll have more bargaining power when you do find the car you want.

Each lender will check two things in order to approve your loan: your financial situation, and the car you want to buy. You start the loan shopping process by getting pre-approved with different lenders, which completes the first loan check. If you’re pre-approved based on your qualifications, your lender will let you know what rates and terms you’re likely to qualify for.?

Lenders look for a few things. Your credit score, income, and debt payments are three of the most important factors, so it’s a good idea to clean up your credit in advance if it needs work and you have the time. If you’re not able to qualify on your own and you have someone who’s willing to help, asking them to be a co-signer or co-borrower can nudge a lender to approve your loan.

If you default on a loan, it will damage your co-signer’s credit too and they’ll need to repay the loan for you.

Once you find the car you want, you can contact your chosen lender and provide the car’s details. The lender will provide you with instructions on how they handle loan disbursement so you can get your car.?

Auto Loan Rates by Credit Score

Credit Score	Average APR (New Car)	Average APR (Used Car)
781-850	4.75%	5.99%?
661-780	5.82%	7.83%
601-660?	8.12%	12.08%
501-600	10.79%	17.46%
300-500	13.42%	20.62%

Source:?Experian: State of the Automotive Finance Market Q4 2022

Frequently Asked Questions

How Do You Get the Best Auto Loan Rate?
Not everyone qualifies for the best auto loan rates. Here are some things you can do to tip the odds more in your favor:
- Check your rate with as many lenders as you can (within a short timeframe).
- Pay down your existing debt, especially credit card debt.
- Check your credit reports and fix any errors before you apply for a loan.
- Use your loan pre-approval offers to negotiate a lower rate with the dealership.
Can You Get a 0% Interest Rate on a Car Loan?

Yes, although 0% interest loans are pretty rare when demand and interest rates are high. These are typically offered through auto manufacturers themselves and may have several limitations. Zero-interest loans are generally offered for specific new car models and for people with excellent credit. Dealerships may try to make up the cost elsewhere such as add-ons, and the no-interest-offer may only apply for a portion of the total loan agreement.
What Credit Score Do You Need to Qualify for a Car Loan?

There is no overall minimum credit score you’ll need to qualify for an auto loan. It depends on the lender; each lender has its own requirements. In general, if you have good or excellent credit (670 or higher), you’ll qualify for the best auto loan rates. See the best car loans for bad credit if you’re dealing with a lower score.
Can You Negotiate a Lower Rate on an Auto Loan?

Yes, you may be able to negotiate lower rates even if you buy a car from a dealership. Before you go car shopping, take a bit of time to get pre-approved for car loans from as many lenders as you can, within a short timeframe. Take the best offer with you to the car dealership and when you find the car you’re interested in buying, pull out your loan offer and ask if they can beat it with a lower rate.?
Other Types of Auto Loans

Methodology

Investopedia is dedicated to providing consumers with unbiased, comprehensive reviews of auto loan lenders. To rate providers, we collected hundreds of data points across more than 20 auto loan lenders, including interest rates, fees, loan amounts, borrower requirements, and vehicle requirements, to ensure that our reviews help users make informed decisions for their borrowing needs. We also conducted a survey of 1,016 auto loan borrowers for attitudes and opinions about lenders and the loan process.

Article Sources

Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.