December 6, 2023

Car Auto Finance

Car Auto Finance FOR Everyone

Top 5 Companies (April 2023)

The best auto loan rates can save you thousands of dollars over the course of your loan. But with so many options to choose from, finding the right provider for your needs can be a challenge.

We at the Guides Auto Team researched the top car loan providers, comparing interest rates, industry ratings and customer reviews to help you make an informed decision about financing your vehicle.

Auto Loan Providers With the Best Rates

Based on our research, the auto loan providers with the best rates are myAutoloan, Consumers Credit Union, AutoPay, PenFed Credit Union and iLending. While we’ve ranked these companies based on their rates, reputations, availability and customer service, it’s smart to compare personalized quotes from each before making a decision.

Best Auto Loan Companies

Listed below are our picks for the companies with the industry’s best auto loan rates. These car lenders are dependable, offer reasonable APRs and commonly approve a wide range of customers.

When it comes to the best auto loan rates, each provider offers varying numbers to car buyers in different situations. While one lender may offer lower interest rates on good credit auto loans, another provider may specialize in lending to people with bad credit. We’ve noted the starting APRs for top providers in the table above, but only borrowers with excellent credit will be eligible for rates that low.

#1 myAutoloan: Best Low Rate Option

Starting APR: 3.69% for new vehicles, 3.94% for used vehicles
Loan amounts: $8,000 purchase minimum
Loan terms: 12 to 84 months
Availability: 48 states (not available in Alaska or Hawaii)
Minimum credit score: 575

The myAutoloan online marketplace lets you comparison shop for the best auto loan interest rates from a number of lenders. You can enter personal information into the site’s online form and receive loan offers from lenders almost immediately, allowing you to compare offers side by side. We name it the Best Low-Rate Option because of its availability and fantastic rates.

Our research indicates that myAutoloan rates are low for the industry. Borrowers can access rates as low as 3.69% APR for new vehicles through the company’s marketplace. With a minimum credit score requirement of 575, myAutoloan can be a good option for people with below-average credit.

That said, the company’s $8,000 purchase minimum loan amount may mean that you need to spend more on a car than you had originally planned. In addition, myAutoloan won’t authorize a loan on a car more than 10 years old or with more than 125,000 miles on it. Some may find these restrictions a little too cumbersome.

myAutoloan Pros and Cons

myAutoloan Reviews

Within the auto financing industry, myAutoloan has a strong reputation. It holds an A+ rating from the Better Business Bureau (BBB) and is accredited by the organization.

Overall, customers rate myAutoloan favorably, giving it 4.3 out of 5.0 stars on Trustpilot. myAutoloan reviews elsewhere are limited, perhaps due to the fact they only connect borrowers with lenders and don’t service loans themselves.

Positive customer reviews consistently praise the company’s easy application process and great rates. Customers reporting negative experiences, however, mention being sent too many ads after entering their information into the company’s website.

Our team reached out to myAutoloan for a comment on these reviews but did not receive a response.

#2 Consumers Credit Union: Most Flexible Terms

Starting APR: 4.69% for 2020 or newer vehicles, 4.94% for 2016 to 2019 vehicles
Loan amounts: No minimum or maximum amount
Loan terms: Up to 84 months
Availability: 50 states
Minimum credit score: 640

Consumers Credit Union is an Illinois-based credit union that is now open to national membership. While the lender features average rates for the industry, it offers a wide range of terms and loan amounts, which is why our team awarded it Most Flexible Terms.

The credit union has a lot of loan options. Its best auto loan rates start at 4.69% APR for members. As long as you qualify, you can borrow nearly any amount with term lengths of up to 84 months.

It’s important to note, however, that these rates are only for cars that were made in 2020 or later. The company has higher rates for older cars, with rates starting at 4.94% APR.

While Consumers Credit Union is a membership-based organization and not a bank, anyone can become a member. All you need to do is provide a Social Security number or a tax identification number and pay a $5 nonrefundable fee to the Consumers Cooperative Association.

Consumers Credit Union Pros and Cons

Consumers Credit Union Reviews

Consumers Credit Union has a relatively strong standing in the industry. It is accredited by the BBB and holds an A+ rating from the organization.

There aren’t many Consumers Credit Union customer reviews online. However, the positive reviews we found praise the lender’s good customer experience, consistently great rates and low fees.

Customers are also pleased to be part of a member-owned organization instead of a bank. That said, people who reported a negative experience with Consumers Credit Union mention technical issues and delays with applications.

Our team reached out to Consumers Credit Union for a comment on these reviews but did not receive a response.

#3 AutoPay: Most Well-Rounded

Starting APR: 2.99% for new vehicles and used vehicles
Loan amounts: $2,500 to $100,000
Loan terms: 24 to 96 months
Availability: 50 states
Minimum credit score: 575

AutoPay is an online lending marketplace that offers low interest rates for auto loans and auto loan refinancing. With its low rates and flexible terms, we award it the Most Well-Rounded of auto loan companies.

Based on our research, borrowers with good credit can find APRs as low as 2.99% for new and used vehicles from AutoPay’s network of lenders. Those with bad credit may still qualify for good rates, as the company tends to approve car loans for bad credit as long as your credit score score is 575 or greater.

With AutoPay, you also have greater flexibility with loan terms, which range from 24 to 96 months. This means that you can decide to pay off your auto loan quickly with a shorter term or space it out over several years.

Auto Pay Pros and Cons

AutoPay Reviews

Within the lending industry, AutoPay has a solid reputation. The company holds an A+ rating from the BBB and an “Excellent” rating on Trustpilot from over 450 customers.

Positive AutoPay reviews center on the company’s excellent customer service, knowledgeable staff members and its fast, transparent process. While in the minority, negative reviews mention high interest rates and issues with paperwork that led to unapproval for the car loan or refinance.

Our team reached out to AutoPay for a comment on these reviews but did not receive a response.

#4 PenFed Credit Union: Most Cohesive Process

Starting APR: 4.44% for new vehicles, 5.64% for used vehicles
Loan amounts: $500 to $150,000
Loan terms: 36 to 84 months
Availability: 50 states
Minimum credit score: 610

Pentagon Federal Credit Union, or PenFed, is a military credit union that offers competitive auto loan rates. We name it the Most Cohesive Process for auto loans because of its car buying service and availability.

While PenFed is primarily for military members and their families, it is also open to people who work for certain government agencies and nonprofit organizations. Even if you don’t fall into any of these groups, you can join by making a donation to an approved charity.

At 4.44%, PenFed’s starting APR for new vehicles is relatively low. To get that rate, however, you’ll need to buy a new car through PenFed’s car buying service. Like with most credit unions, PenFed members are eligible for special deals, such as discounts and reimbursements for shopping at partner dealerships.

However, qualifying for a PenFed auto loan might be hard for some. The credit union only accepts borrowers with credit scores of 610 or higher. In addition, PenFed has a steep $29 charge for late loan payments.

PenFed Credit Union Pros and Cons

PenFed Credit Union Reviews

PenFed is not accredited by the Better Business Bureau (BBB) but is rated A+ by the organization.

Customer ratings for PenFed Credit Union are among the highest in our research. The organization has an impressive 4.6-star rating out of 5.0 on Trustpilot. Customer ratings are considerably lower on the BBB website, however, where reviewers give PenFed 1.2 out of 5.0 stars.

Positive reviews consistently mention a smooth and easy loan application process and low rates. Customers reporting negative experiences tend to mention slow processing times for loan applications.

Our team reached out to PenFed Credit Union for a comment on these reviews but did not receive a response.

Starting APR: 2.14% for auto refinance
Loan amounts: Varies
Loan terms: Varies
Availability: 50 states
Minimum credit score: 560

ILending has a reputation as a refinance auto loan specialist, making it a viable option for those looking to get lower interest rates and better terms for their vehicles. The company works with a network of lenders and financial institutions to offer some of the lowest APRs we’ve seen in the industry.

Since it functions as an auto refinance marketplace, the loan amount and terms will vary depending on which lender you choose to refinance with. ILending does not provide new or used auto loans at this time.

ILending Pros and Cons

ILending Reviews

ILending has an overall positive customer service reputation. The company has an A+ rating on the BBB, with a 4.8-star rating given from over 960 customer reviews. Similar reviews can be found on Trustpilot, where it has a 4.7-star rating out of 5.0 from over 750 reviews.

The majority of positive reviews across both review sites mention the ease of ILending’s approval process, great customer service, and low auto refinance rates.

While in the minority, negative reviews do exist. On the BBB, the company has had 61 complaints closed within the last three years, a small number compared to the amount of business the company does. The few complaints we found discuss problems with interest rates and higher loan amounts than the borrowers previously had.

Our team reached out to ILending for a comment on these reviews but did not receive a response.

What Are Current Auto Loan Rates?

An auto loan rate is the annual cost of borrowing money for a vehicle purchase or refinance. It’s shown as a percentage, and it’s usually fixed for the duration of the loan term.

Auto loan interest rates are highly dependent on your credit report. Borrowers with higher credit scores tend to receive lower interest rates than those with poor credit. The age of the vehicle being financed also has an impact, as rates are higher for used cars than for new cars.

Here are the factors that will affect your credit score and subsequently the rate of your auto loan: 

Pie chart showing the five factors that determine FICO credit scores  

Current Average Auto Loan Rates

The image below shows the average rates for new and used cars based on buyers’ credit scores, according to Experian’s State of the Automotive Finance Market Q2 2022 report.

Bar graph displaying average loan rates by credit score

How Do Lenders Determine Your Auto Loan Rate?

Much like insurance companies, lenders determine auto loan rates based on information about you and your vehicle. Here are some of the factors that can affect your car loan rate:

  • Credit score: By far the biggest influence on your rate is your credit score. People with the highest credit scores get the best auto loan rates.
  • Loan term: Generally, the longer your loan term, the higher your interest rate will be.
  • Vehicle age: Banks and other lenders often charge higher interest rates on older cars.
  • New or used vehicle: Most lenders save their lowest interest rates for new car loans. If you want a used car loan, you might pay a higher interest rate.
  • Down payment: Some lenders will adjust interest rates based on what percentage of a vehicle’s cost you put down when you buy it.

Be sure to compare auto loan quotes from lenders before making a decision. Some lenders may weigh factors such as your credit score differently than others. Do the math and look at the total cost of your loan over its lifetime, and not just the APR. 

How To Get the Best Auto Loan Rates

There are many methods that you can use to find the best auto loan rates for your situation. In the sections below, we’ll outline a few different ways to lower your interest rates for new and used car financing.

Improve Your Credit Score

Your credit score is the primary factor that determines the best auto loan rates you’ll find from a lender. Even if you’re only able to improve your score by 30 to 40 points, the difference could be a huge help to getting lower interest rates.

Say you were planning on financing a used car and your credit score improved from 650 to 680. Your rates could potentially improve from 10% to around 6%, allowing you to save thousands of dollars on a used vehicle. There are many ways to improve your credit score, and below are 7 steps you can take to get started and lower your auto loan rates.

Graphic showing seven tips to improve your credit score

Find a Co-Signer

If your credit score is less than desirable but you need a car soon, getting a co-signer on your loan could make it easier to find the best possible interest rates. If a family member or friend has excellent credit, you might gain access to some of the best auto loan rates.

Carefully read over your loan terms to make sure you can cover monthly costs since late payments will affect both you and your co-signer’s credit score.

Compare Auto Loan Quotes

Comparing quotes online is a key part of finding the best auto loan rates available. There are many online lending marketplaces that allow you to compare multiple providers at once, helping you to find the best deal. On top of this, using a car loan calculator to compare total costs is helpful for finding cheap car financing options.

What to Look for When Comparing Auto Loan Quotes

There’s more to keep in mind than just APRs when you’re looking for the best auto loan rates. Below are several factors to consider when comparing auto loan quotes.

  • Interest rates: An interest rate is the percentage the lender charges you to borrow money while your APR  is the interest rate plus all loan fees. Even small differences in your APR could save you hundreds or thousands over the life of the loan.
  • Loan term: The term length refers to how long you have to repay your auto loan. The longer the loan term, the lower your monthly payments will likely be. However, you’ll pay significantly more in interest overall than you would with a short-term loan.
  • Discounts: Some lenders offer rate discounts on their car loan products. One common discount is a reduction of your APR when you sign up for automatic payments from your bank account or credit card. Based on our research, providers usually offer to take 0.5% off of your APR for signing up for autopay services.
  • Fees and penalties: Lenders often charge fees for missing a car payment or for paying late. Some auto lenders also charge drivers with prepayment penalties for paying off car loans early, since they’ll collect less in monthly payments and interest. These fees and penalties are usually tucked away in the fine print of a loan contract, so read carefully before agreeing to a loan.

How To Apply for an Auto Loan

Although there are some small differences in how you apply for an auto loan depending on the lender, the process is mostly consistent. Here’s a step-by-step guide to applying for an auto loan:

  1. Make sure you’re eligible: Most lenders require you to be at least 18 years old and have a valid Social Security number or tax identification number.
  2. Check your credit score: Lenders have different minimum credit requirements. Check your score first to see which lenders are likely to offer you the best auto loan rates and to get an idea of what you might pay.
  3. Get preapproved: Some lenders give you the option to get preapproved for an auto loan. Usually, you can do this through a lender’s website. This will help you understand what you can afford before you start shopping for vehicles. It will also give you a negotiating point at the dealership.
  4. Find your new vehicle: Once you know your budget, you can start shopping. These days, even physical dealerships have an online presence to help you research quickly and easily.
  5. Listen to the dealership financing offer: Dealerships have special relationships with lending institutions and may be able to offer rates that beat what you can find on your own. Let them know what your preapproved rate is and see if they can beat it.
  6. Compare offers: Look at your preapprovals and the loan offer from the dealership. You can sometimes use online tools to generate quick quotes from other lenders. Make sure to look for hidden fees and other fine print.
  7. Choose the best offer for you: When choosing which offer to accept, consider all aspects of your loan offers — not just APRs — and find the one that best fits your financial situation. Work with the dealership to get all your paperwork in order. When it’s ready, sign for your loan.
  8. Make monthly payments on time: If you fail to make your regular monthly payments, you could face steep penalties or the lender could even repossess your car. Setting up automatic payments can help to ensure that you never miss a payment or pay late.

Best Auto Loan Rate: Conclusion

You can find the best auto loan rates through various banks, credit unions, online lenders, and dealers. There are also many factors that affect your interest rates and different methods for you to get the lowest rates possible. We encourage you to shop around and compare your options to find the best auto loan for you.

You can start comparing auto loan rates and providers with the free tool below.

Best Car Loan Rates: FAQ

Below are some frequently asked questions and answers about the best auto loan rates:

Because consumers rely on us to provide objective and accurate information, we created a comprehensive rating system to formulate our rankings of the best auto loan companies. We collected data on dozens of loan providers to grade the companies on a wide range of ranking factors. The end result was an overall rating for each provider, with the companies that scored the most points topping the list.

Here are the factors our ratings take into account:

  • Reputation (30% of total score): Our research team considered ratings from industry experts and each lender’s years in business when giving this score.
  • Availability (20% of total score): Companies that cover a variety of circumstances are more likely to meet borrowers’ needs.
  • Loan Details (15% of total score): We considered the types of loans, term lengths and loan amounts that are available from each lender to determine this score.
  • Rates (25% of total score): Auto loan providers with low APRs scored highest in this category. Available discounts were also taken into account.
  • Customer Experience (10% of total score): This score is based on customer satisfaction ratings and transparency. We also considered the responsiveness and helpfulness of each lender’s customer service team.

*Data accurate at time of publication.