Shopping for used cars can be tricky. Not only are you trying to avoid buying a lemon, you are looking for just the right model year, mileage, and price.
While all of these variables can make car shopping stressful, there are a couple of things you can do to simplify the process.
First, decide exactly how much you can afford to spend on a used car. Look at your budget and determine the absolute maximum your monthly payment can be. Also be aware of your total debt payments when compared to your income. Generally speaking, the total of all your debt payments – auto loans, student loans and mortgage – should not exceed 50% of your income. Make sure to factor your auto payment into the calculation.
Next, shop online for the best used-auto loan rates and get preapproved for the most attractive offer for which you are eligible. In order to strike the best deal possible on your used auto, it is best to walk into the dealership with financing already in hand.
Once you get to the dealership and find the car you want, negotiate the price of the car before telling the salesperson that you are approved for financing.
How To Apply
When shopping online for a used auto loan, the application process is very similar to that of a brick-and-mortar bank, but more streamlined. In general, be prepared with:
- Your contact information: Name, address, phone number, email address
- Vehicle information (if known – required for lenders that do not offer online preapproval) Make, model, mileage, VIN, dealership information.
- Financial Information: employment information, gross income and expenses
The Best Auto Loans for Used Cars
With LendingTree, you can fill out one short online form and see real interest rates and approval information instantly. There are hundreds of lenders on LendingTree ready to compete for your business.
It is important to note that some lenders will do a hard pull on your credit and this is normal within the auto lending space. Keep in mind that multiple hard pulls will only count as one pull, so the best strategy is to have all your hard pulls done at one time.
Disclosure: LendingTree is the parent company of MagnifyMoney.
LightStream offers auto loans for used cars online with APRs ranging from 2.49% to 9.04%. It’s terms range from 24 to 84 months, it can finance up to $100,000, and it charges no origination fee. It does offer the ability to obtain preapproval online, before setting foot in a dealership, and if you are approved, you could receive funds into your bank account in as little as 1 business day. The funds can be used on any vehicle, from any dealership, with no restrictions concerning the year, make, model, or mileage of the vehicle you buy.
The 2.49% APR is dependent upon enrolling in AutoPay. If you choose not to enroll in AutoPay, your rate will be 0.50% higher, starting at 2.99%. While rates from LightStream start at 2.49%, they do depend upon the amount financed, and the financing term.
Because LightStream offers no telephone customer support, it offers a guarantee that you will love its service, from start to finish. If you aren’t completely satisfied with your experience, $100 will be deposited into your account, provided you fill out a questionnaire about your experience within 30 days of closing on your loan.
Pentagon Federal (PenFed) Credit Union offers rates as low as 2.49% on used auto loans up to $100,000. It will finance terms of 36 to 72 months and charges no origination fee. Rates are dependent upon the amount financed, and the terms financed for, as shown in the chart below:
APR as low as*
$500 to $100,000
$7,500 to $100,000
$10,000 to $100,000
$15,000 to $100,000
Because PenFed is a credit union, you will need to join in order to apply for an auto loan through it, but anyone can join by making a one-time donation to Voices for America’s Troops ($14) or National Miliary Family Association ($15). Also important to note is that even though the loan is entirely online, PenFed does not offer online preapproval.
In order to apply, you’ll need the following information about the vehicle you will be purchasing:
- Dealer or private party information
Once approved, the loan proceeds will go directly to the vehicle’s seller, rather than into your bank account.
Capital One offers auto loans with rates as low as 3.24% for new vehicles and 3.64% for used vehicles. Their terms range from 36 to 72 months. It can finance up to $40,000, and has no origination fee. Capital One also offers online preapproval through its Auto Navigator. You can then use the funds at any of 12,000 approved dealers. Proceeds from the loan will be sent directly to the seller, rather than deposited into your bank account.
Rates are dependent upon the financing terms, and subject to credit approval, as seen in the chart below:
36 or 48 or 60 mos
66 or 72 mos
Purchase New Vehicle
Purchase Used Vehicle(Dealer)
NEFCU is a credit union offering auto loan for used cars with rates as low as 2.240% for used vehicles. It can finance up to $70,000 for 12 to 84 months with no origination fee. NEFCU does not offer online preapproval.
NEFCU offers a $300 coupon offer valid at select dealers on your new or used auto. You can apply online, at a branch or by telephone by calling 1-800-99-NEFCU. Your rate will be determined by creditworthiness, loan amount, year of the vehicle, and loan term, as per the rate chart.
In order to apply for an auto loan from NEFCU, you must be a member. You are eligible for membership with NEFCU if you:
- Live in Nassau and/or Suffolk Counties
- Work in Nassau and/or Suffolk Counties
- Worship in Nassau and/or Suffolk Counties
- Attend school in Nassau and/or Suffolk Counties
- Regularly conduct business in Nassau and/or Suffolk Counties
- Family Sponsorship – An existing NEFCU member can sponsor in an immediate family member (mother/father, brother/sister, child, grandparent or grandchild) or any household member
- Membership is not open to individuals who live, work, worship, attend school and do business exclusively in East Hampton, Southampton and Shelter Island.
- If you have any questions on membership or eligibility, please contact us at 516.561.0030 or at 800.99.NEFCU outside LI/NYC or send an email to info@myNEFCU.org.
Navy Federal Credit Union
Navy Federal Credit Union offers auto loans for used cars with rates as low as 1.99% with terms of 12 to 96 months. It can loan up to $100,000 and charges no origination fee. Navy Federal Credit Union does offer online preapproval.
Rates from Navy Federal Credit Union are determined by the car’s model year, as well as the loan term, as seen in the chart below:
Auto Loan Rates
|As of: December 5, 2017, 1:00 AM EST|
up to 36 mos.
Late Model Used Vehicle
In the rate chart, new vehicles are year models 2016, 2017, and 2018 with 7,499 miles or less, and the minimum loan amount is $30,000 for terms 85-96 months. Late model used vehicles are described as 2016, 2017, or 2018 models with 7,500 – 30,000 miles. Used vehicles are vehicles (up to 20 years old) with 30,001 miles or more.
In order to apply for an auto loan from Navy Federal Credit Union, you must become a member. You are eligible if you are Active Duty Army, Navy, Marines, Air Force, Coast Guard, Army or Air National Guard, a member of the Delayed Entry Program, a Department of Defense (DoD) Officer Candidate/ROTC, a DoD Reservist, or a retiree from any of these service branches. You are also eligible as a civilian if you are a DoD civilian employee, a U.S. government employee assigned to a DoD installation, a DoD contractor, or a DoD retiree. Finally, if you are the immediate family member of anyone eligible to join, you are also eligible to become a member.
After loan approval, the proceeds will be sent directly to the dealership, rather than deposited into your bank account.
You Should Shop Around
Often concerns arise about the effect of shopping around for auto loans on your credit score. However, all inquiries within a 30-day period count as one inquiry on your credit report, so as long as your shop used auto loan rates within a 30-day period, those inquiries will only have a minimal impact on your credit score