Auto Loans

MagnifyMoney can help you find the auto loan that's right for you. Getting preapproved for an auto loan can help you walk into a car dealership with confidence and secure you the lowest interest rate. You can use our tool below to find the best deal.

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Editorial Disclaimer: The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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LightStream

Recommended:
Low rates and same day cash*

Rates as low as 2.29% APR* w/AutoPay

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PenFed Credit Union

Recommended:
Borrow with a credit union

Rates as low as 1.49%

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Hot Deals of the Week:

SHOWING 7 LOAN OFFERS

How We Rank Products ?

 
LightStream

A

Very Transparent

24 To 84

months

2.29% +

APR

$100,000

max loan

$0

Yes

Capital One

A

Very Transparent

36 To 72

months

3.24% +

APR

$40,000

max loan

$0

Yes

PenFed Credit Union

B

A little complex

12 To 84

months

1.49%
To
3.84%

APR

$100,000

max loan

$0

No

Bank Of America

B

A little complex

12 To 60

months

2.84% +

APR

No

max loan

$0

No

Wells Fargo

B

A little complex

12 To 72

months

3.89%
To
10.51%

APR

$100,000

max loan

Information not available

No

NEFCU

B

A little complex

12 To 96

months

1.45%
To
13.99%

APR

$70,000

max loan

$0

No

Navy Federal CU

B

A little complex

12 To 96

months

1.99%
To
17.99%

APR

$500,000

max loan

$0

No

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Shopping for Auto Loans

gplus-profile-pictureNick Clements

Shopping for an automobile can be extremely stressful, even under the best of circumstances. You have to negotiate the cost of your automobile, determine the cheapest way to finance the car and make decisions on costly warranties. The internet has made comparing the cost of cars much easier. Websites like TrueCar help you get “actual, upfront pricing” by seeing what other people have paid. However, the dealership makes most of its money with financing and warranties. And far too many people walk onto dealership lots confident in what car they want to buy, but clueless about how they are going to finance it.

Every borrower should follow a simple rule: obtain financing before walking onto a car lot, and force the dealership to beat it. In a worst case scenario, you found the best deal online. In a best case scenario, the dealership is actually able to offer cheaper financing.

To be a little more specific, here are our specific recommendations, in order:

  • Determine the maximum you want to spend on your vehicle. You should set a cap for the absolute amount and the monthly payment that you can afford. If you only focus on the monthly payment, you may end up paying far too much, or extending the term to a long 7 years. As a general rule, your fixed expenses (including your mortgage, insurance, utilities and other recurring expenses) should not exceed 50% of your net take-home pay. An auto payment would be part of that fixed expense calculation.
  • Shop online to get pre-approved at a low interest rate for an auto loan. You should walk onto an auto dealership with excellent financing lined up, and in your back pocket. You can use the tools at MagnifyMoney, on this page, to identify where to shop online. We recommend applying to a wide variety of lenders. You should try Lightstream, Capital One, PenFed and a few of the marketplace personal loan companies.
  • When you are on the dealership lot, negotiate the price of the vehicle first. Focus on getting the best deal possible, using the data from a service like TrueCar as a guide. Don’t intermingle financing and the sticker price of the car.
  • Once you agree the absolute price of the car, show the dealership your financing, and see if they can beat it. Don’t let the salesman fool you with monthly payment savings. You should compare the APR at the same tenor. For example, if you have a 4.99% APR on a 36 month term loan, you should only accept a 36 month term loan with a lower APR. They can (and often) try to show savings by giving you a lower monthly payment.

Today, financing tends to come from three places:

  • The auto manufacturer, which frequently provides 0% financing. It can be hard to beat the deal from the manufacturer. However, your credit score usually has to be excellent, and the term is often shorter (for example, a maximum of 36 months). If you have excellent credit, you should entertain this offer. Most auto manufacturers advertise their 0% offers, and you can find them on their websites prior to reaching the dealership.
  • Credit unions, which are now originating more auto loans than finance companies. Leading national credit unions include PenFed. Anyone can join PenFed by making a contribution to a charitable organization. But you can also find a local credit union by using this government website. We have included a number of the best national deals on this website.
  • Banks, including Capital One, whose auto financing program is one of the largest in the country.
  • Online lenders, like Lightstream, which provide a very unique service. For people with very good credit, Lightstream will make a fully unsecured loan. The money will be put into your checking account, as cash. You can then take that cash to the dealership and bid on the car. If you end up getting a better deal at the dealership, you can always repay your loan without any prepayment penalty.
  • Other personal loan companies, which offer unsecured loans. Although interest rates will likely be higher than traditional lenders, they may not be.

You should not worry about your credit score when searching for an auto loan. All inquiries in a 30 day period only count as one inquiry. So make sure you do all of your comparison shopping in a 30 day period, and look for the best deal.

The auto dealerships will not be happy that you walk onto the lot with financing in hand. However, they will still be keen to make some money from financing. Don’t be surprised if the dealership is able to beat the deal you obtained in advance. But feel good about that savings.

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