Best Auto Loan Rates & Car Finance Lenders (2024 Guide) (2024)

According to our research, AutoPay currently offers the best auto loan rate for new car purchases, with annual percentage rates (APR) as low as 4.67% for new vehicles. PenFed Credit Union, Auto Approve, Consumer’s Credit Union, Auto Credit Express and iLending also offer some of the most competitive rates available.

Compare Car Loan Rates

The table below highlights the lenders offering the best car loan rates. To allow for an easy comparison of top lenders’ best rates and terms, we’ve broken down each provider’s lowest rate, loan amounts and term lengths available:

Page 1 of

*Starting APRs for the providers in the table above are only available for borrowers with excellent credit.

**Rates are for refinancing

In our review of lenders, we found that the best auto loan companies are Autopay, PenFed Credit Union, Auto Approve, Consumers Credit Union, Auto Credit Express and iLending.However, to find the best car loan for you, we encourage you to shop around and compare auto loan rates from various lenders — including banks, credit unions, dealerships and online providers.

With that in mind, below we review several lenders offering the best rates, covering each of the top auto financing companies that made our list in detail.

Finding the best auto loan rates requires some background knowledge. There are many factors that determine the best auto loan rates you can get and several methods that can help you get the lowest rates possible.

Below, we’ll discuss what current auto loan rates are, what is considered a good interest rate and the difference between an interest rate and APR. We’ll also go over the factors that lenders consider when determining your auto loan rates.

How To Get the Best Car Loan Rates

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

1. 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 in getting lower interest rates.

Say you were planning to finance a used car and your credit score improved from 650 to 680. Your rates could improve from about 12% to around 8%, allowing you to save thousands of dollars on a used vehicle. There are many ways to improve your credit score, and below are seven steps you can take to get started and lower your auto loan rates.

2. 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 lower rates. If a family member or friend has excellent credit, you could gain access to some of the best auto loan rates.

Read over your loan terms carefully to make sure you can cover monthly costs. If you make late payments or default on the loan, it will affect both your and your co-signer’s credit scores.

3. Shop Around for Car Loans

To find the most competitive rates available, compare auto loan offers from various lenders when making a decision on who to borrow money from. Technological advancements have made comparing rates online a key part of this process.

There are many online lending marketplaces that allow you to compare multiple providers at once, helping you find the best deal. On top of this, using an auto loan calculator lets you compare the total cost of each financing option.

4. Compare Auto Loan Rates

When comparing auto loan rates, there’s more to keep in mind than just APRs when you’re looking for the best rates possible. To see the big picture, do the math and look at the total cost of your loan over its lifetime — and not just the APR or the monthly payment.

What To Look for in The Best Car Loans

To get the lowest possible rate on a car loan, consider the following factors when shopping:

Interest Rates vs. APRs

An interest rate is the annual percentage of the loan that the lender charges you on top of the money you’re borrowing.

Let’s say you have a total loan of $60,000 that you have to pay back across 48 months. Every month would be $1,250, which would make every year $15,000 that you’d pay back. If you have an interest rate of 5.0% on this loan, 5.0% of $15,000 is $750. So every year, you’d pay back $15,750 on your loan.

Your loan’s APR (annual percentage rate) is your interest rate plus all loan fees. This is often the auto loan rate you’ll see advertised across lender and broker sites. Even a small difference in your APR could save you hundreds or thousands over the life of the loan.

Loan Terms

The loan term or 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 shorter term.

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 between 0.25% and 0.5% off of your APR for signing up for autopay.

Fees and Penalties

Lenders often charge fees for missed or late car payments. Some auto lenders also charge borrowers prepayment penalties for paying loans off early because it reduces the amount of interest the lender collects. These fees and penalties are in the fine print of a loan contract, so read it carefully before agreeing to a loan.

What Is a Good Car Loan Interest Rate?

Generally speaking, a good auto loan interest rate is anything below 4.0%. However, what a good interest rate is for you depends heavily on your credit score and the average rates within your credit band. It’s best to look for rates below these averages when gauging what lenders to choose.

Average Auto Loan Rates

Based on a study conducted by our research team, the average interest rates across credit profiles are 6.63% for new car loans and 11.38% for used car loans. The table below shows the average auto loan rates (full APRs) for new and used cars based on buyers’ credit scores, according to Experian’s State of the Automotive Finance Market Q4 2023 report.

Page 1 of

How Does APR Work on a Car Loan?

Much like car insurance companies, lenders determine auto loan rates based on information about you and your vehicle. While most lenders use many of the same factors to determine rates, some may weigh specific factors such as your credit history differently than others.

How Are Auto Loan Rates Determined?

There are many factors that go into auto loan rates. Below are some of these factors in detail:

• Credit score: Auto loan rates you’re offered are highly dependent on your credit report. Borrowers with higher credit scores tend to receive lower interest rates than those with poor credit.
• Loan term: The longer your loan term, the higher your loan interest rate will likely be.
• Loan type: The age of the vehicle being financed also has an impact and rates are generally higher for used car loans than for new car loans.
• Down payment: Making a larger down payment on your vehicle could help you get a lower rate since it makes your loan less risky for the lender.

Best Way 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 are our best steps to apply for an auto loan:

Page 1 of

In this article, along with providing helpful purchasing tips for those who are looking for the best auto financing options, we reviewed the top six lenders offering the lowest auto loan rates:

• Best Auto Loan Rates: AutoPay
• Best Credit Union Auto Loan: PenFed Credit Union
• Best Auto Refinance Rates: Auto Approve
• Excellent Credit Union Auto Loan: Consumers Credit Union
• Best Auto Loan for Bad Credit: Auto Credit Express
• Best Auto Refinance Loan for Bad Credit: iLending

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.

• Industry standing: Our research team considered ratings from industry experts and each lender’s years in business when giving this score.
• Rates and discounts: Auto loan providers with low APRs, good discount opportunities and high loan amounts scored highest in this category.
• Availability: Companies that cover a variety of circ*mstances are more likely to meet consumer needs.
• Customer service: This score is based on customer satisfaction ratings and transparency. We also considered the responsiveness, friendliness and helpfulness of each loan company’s customer service team based on our shopper analysis.

Learn more about our and editorial guidelines.

Our credentials:

• 300+ hours researched
• 25 companies reviewed
• 2,000+ consumers surveyed

*Rates as of 7/14/23
**Data accurate at time of publication.