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Auto Loan, Reviews

Review: Navy Federal Credit Union Auto Loan

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Are you shopping around for your best auto loan rates before you buy a car? If not, you should be.

It helps to get an idea of the type of loan you could be approved for before you make a trip to the dealership. Plus, credit unions like Navy Federal Credit Union may offer some of the best rates compared to traditional banks. Navy Federal auto loan rates range from 1.79% to 17.99% for those eligible for membership, including active-duty military members, veterans, retirees and their families.

Navy Federal auto loan details

APRs (annual percentage rates) start at 1.79% for terms up to 96 months. Like other lenders, however, some of the lowest Navy Federal auto loan rates go to new-car buyers who choose the shortest terms. The credit union has competitive APRs for used cars, too, particularly late-model vehicles. The maximum loan term for used vehicles is 72 months. Used or new, loan amounts start at $250 — there is no maximum.

Starting APRs for New, Used and Refinance Car Loans
Vehicle AgeUp to 36 months37 - 60 months61 - 72 months73 - 84 months85- 96 months
New, up to 7,499 miles1.79%2.19%2.29%4.69%5.59%
Used, within 3 model years, 7,500-30,000 miles2.29%2.39%3.89%N/AN/A
Used, over 30,000 miles3.89%3.89%4.29%N/AN/A

Long auto loans

We don’t recommend an auto loan longer than 72 months. The longer your term is, the more you’re going to pay over the life of the loan. Navy Federal offers a 96-month auto loan, but no one wants to be paying back a car loan for eight years. Stick to your budget and remember not to focus solely on the monthly payment — take the overall cost of the loan into consideration.

The fine print

There are no additional fees associated with a Navy Federal auto loan. Rates are based on your credit (having a FICO Score over 700 helps) and, as mentioned earlier, the year model of the car you’re looking to finance. You may use Navy Federal auto loans to buy from dealerships and private parties.

How to apply for a Navy Federal auto loan

To apply for a Navy Federal car loan, which is possible to do online, you’ll first need to be a member of the credit union. We’ll talk more in a minute about membership requirements, but here’s what you’ll need to start the auto loan application process.

Information needed to apply for an auto loan

For each person that is to be on the loan (including a cosigner, if there is one), you’ll need to provide their name, address, employer and income. From there, the level of information you need depends on where you are in the car-buying process.

If you’re still shopping for a car and looking for a preapproval, you’ll need:

  • Amount you want to borrow. Leave room for taxes and fees, which usually add up to 8% to 10% of the car’s value, and subtract the down payment you plan to make. If possible, we recommend paying cash for taxes and fees instead of rolling those costs into your loan.
  • Trade-in details. If you have a trade-in vehicle, you’ll need to provide its VIN (vehicle identification number) or year, make, model and trim.
  • Loan term. Preferred number of months for repaying the loan.

If you already know the exact car you want to buy, you’ll need to provide additional information:

  • Details of the car you want. Its exact mileage, VIN, year, make, model and trim.
  • The seller’s information. The name and address of the dealership or private seller.

Navy Federal membership requirements

Those with military connections are eligible to join Navy Federal Credit Union. This includes family members of and those who are:

  • Active duty in the Army, Navy, Marines, Air Force, Coast Guard, National Guard or Space Force
  • A member of the Delayed Entry Program
  • A Department of Defense (DoD) officer candidate or ROTC member
  • DoD Reservists
  • Retirees from any service branch

You may also qualify if you’re:

  • A DoD civilian employee or retiree
  • A federal government employee assigned to a DoD installation
  • A DoD contractor assigned to a federal government installation

Navy Federal defines family members as parents, grandparents, spouses, siblings, grandchildren, children (adopted children and stepchildren included) and members of your household.

Pros and cons of a Navy Federal auto loan

Navy Federal auto loan rates are among the lowest we’ve seen, even among fellow credit unions, which tend to have lower APRs than many banks. But membership criteria is stricter than other credit unions, so a Navy Federal car loan won’t work for everyone.

Pros of a Navy Federal auto loan

  • Competitive APRs
  • APR discount: Active-duty and retired military members with direct deposit could get a 0.25 percentage point discount off even the lowest rates.
  • Auto-buying program: Shop for and finance a car, all in one place, through Navy Federal’s auto-buying program. You may be eligible for member-only pricing on new cars. If you’re car shopping while serving overseas, Navy Federal offers a car-buying program for you, too. Delivery is possible stateside or to your overseas duty station.

Cons of a Navy Federal auto loan

  • Strict membership requirements: If you don’t have a connection to the U.S. armed forces, you might not be eligible to join.
  • Not instant: In a world of near-instant gratification on the internet, it seems odd that you have to go to a branch in person or wait to get your auto loan check in the mail. Other lenders will overnight a check to you or arrange for electronic delivery.

Comparable auto loans

If you don’t meet Navy Federal’s membership criteria, there are still great options out there for an auto loan. We encourage you to reach out to your local credit union or take a look at these other top auto lenders listed on our site:

Consumers Credit Union

  • APRs as low as 2.69%
  • Terms up to 84 months
  • Loan amounts up to $250 - $100,000

Capital One

  • APRs as low as 3.39%
  • Terms from 36 to 84 months
  • Loan amounts from $4,000

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Auto Loan, Reviews

The Best Auto Loans: 2020 New & Used Car Loan Rates

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Reviewed By

Just because cars are getting more expensive doesn’t mean your car loan has to break the bank. Car payments have been hitting new highs recently, and with the added economic pressure that COVID-19 may be causing, finding your best auto loan rate is more important than ever. To that end, we looked at more than 800,000 successful loan applications from over 28 lenders to find the best auto loan rates.

Best Auto Loan Rates
LenderNew Car Starting APR*Used Car Starting APR*Terms (months)Amounts
Best overall: Consumers Credit Union

2.69%

2.94%

0-84

Up to $100,000

Best auto loan rates for prime and subprime credit: Capital One

3.39%

3.39%

36-84

$4,000+

Best for midprime credit: LightStream

2.49%

2.49%

24-84

$5,000-$100,000

Best for a completely online experience: Carvana

N/A

3.90%

36-72

Not available

Best for those with a military affiliation: Navy Federal Credit Union

1.79%

2.29%

12-96

$250 min., no max

Best auto refinance rates: Auto Approve

N/A

1.90%

12-84

$8,000-$100,000

*Starting APRs may include an autopay discount.

Best auto loan rates overall: Consumers Credit Union

Consumers Credit Union
APR

As low as
2.69%

Terms

84

months

Fees

No Origination Fee

SEE OFFERS Secured

on Consumers Credit Union’s secure website

Don’t let the words “credit union” scare you off. Consumers Credit Union offered the lowest average APR across all credit tiers among lenders we examined. Joining the national financial institution only requires a one-time payment of $5 to the Consumers Cooperative Association; unlike some other credit unions, you don’t have to live in a certain county or work for a certain employer to qualify for membership. However, if you prefer to apply for an auto loan in person, Consumers Credit Union only has branches in Illinois.

Consumers Credit Union rates

APRs for cars that are model years 2018 and newer start at 2.69%; used cars that are model years 2014 to 2017 start at 2.94%. For used vehicles 2013 and older, the lowest possible APR is 5.49%.

Pros of a Consumers Credit Union auto loan

Getting a preapproved auto loan is important to getting your best auto loan rate. Not all lenders offer them, but Consumers Credit Union does.

Cons of a Consumers Credit Union auto loan

The lowest starting rates that Consumers Credit Union advertises includes a 0.50 percentage-point discount that borrowers can receive by making automatic payments from a Consumers Credit Union account. That discount is halved if you make automatic payments from another financial institution and it disappears if you don’t make automatic payments at all.

How to apply

You could apply on the Consumers Credit Union website or by calling 877-275-2228.

Best auto loan rates for prime and subprime credit: Capital One

Capital One
APR

3.39%
To
11.25%

Terms

36 To 84

months

Fees

No Origination Fee

SEE OFFERS Secured

on LendingTree’s secure website

Known primarily as a credit card provider, Capital One is one of the largest banks in the U.S. Its size might account for why it’s good for borrowers on both ends of the credit spectrum: among lenders we studied, Capital One offered the lowest average auto loan rates for those with prime (740+) and subprime credit scores (579-). Capital One’s 3.39% starting APR is for new and used vehicles.

Pros of a Capital One auto loan

The Capital One Auto Navigator program gives car buyers a ballpark idea of the car loan rate they can expect and connects them to its network of 12,000+ partner dealerships.

Cons of a Capital One auto loan

The Auto Navigator program offers prequalifications, not preapprovals. This means you’ll have to fill out a complete credit application at a participating dealership. Only then, would you know your exact rate and terms. The dealership is your only car-buying route with Capital One — it does not permit private party auto loans.

How to apply

You could apply for a Capital One auto loan prequalification.

Best auto loan rates for midprime credit: LightStream

LightStream
APR

2.49%
To
20.49%

Terms

24 To 84

months

Fees

No Origination Fee

*Your loan terms, including APR, may differ based on loan purpose, amount, term length, and your credit profile. Rate is quoted with AutoPay discount. AutoPay discount is only available prior to loan funding. Rates without AutoPay are 0.50% higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice. Payment example: Monthly payments for a $10,000 loan at 3.49% APR with a term of 3 years would result in 36 monthly payments of $292.98.

The online lender LightStream offered the lowest average APR to applicants with midprime credit (580-739) among lenders we inspected. LightStream’s starting used car loan rates are the same as the rates it offers for new car loans. The company is a division of Truist, which formed from the merger of SunTrust and BB&T in 2019.

Pros of a LightStream auto loan

If you receive an auto loan offer with a lower APR, LightStream will beat it by 0.10 percentage points. And if you aren’t completely satisfied with your customer experience, $100 will be deposited into your account, provided you fill out a questionnaire within 30 days of closing on your loan.

Cons of a LightStream auto loan

The lowest advertised auto loan rates include a 0.50 percentage-point autopay discount, which disappears if you don’t enroll in autopay. LightStream does not offer preapprovals — although you could get a regular approval that’s good for 30 days and then go to the dealership.

How to apply

The only way to apply is through the LightStream website.

Best auto loan rates for a completely online experience: Carvana

Carvana Auto Loan
APR

3.90%
To
28.00%

Terms

36 To 72

months

Fees

No Origination Fee

SEE OFFERS Secured

on LendingTree’s secure website

Across all credit tiers, Carvana is a popular choice among used car buyers. It offers “touchless” car delivery, removing the human element almost entirely from a car-buying experience that’s already online. This could be a major plus when COVID-19 is a concern.

Pros of a Carvana auto loan

Because it’s online, Carvana provides a lot of photos and information about its cars. It has a payment calculator on every car result page to help you crunch numbers.

Cons of a Carvana auto loan

Although it was a popular choice for the best auto loan rates, some other lenders offer lower average APRs. Plus, your vehicle choice is limited to what Carvana has in stock. Lastly, getting your car might be inconvenient or expensive if you live far from a Carvana center.

How to apply

Pick out the vehicle you want on Carvana and then click the “get started” button.

Best auto loan rates for those with military connections: Navy Federal Credit Union

Navy Federal CU
APR

1.79%
To
17.99%

Terms

12 To 96

months

Fees

No Origination Fee

Navy Federal offers the lowest starting auto loan rate on this list. But there’s a catch — you must meet a strict set of membership requirements. New vehicle rates start at 1.79%; late model used vehicles could qualify for rates starting at 2.29%. Navy Federal defines late model vehicles as model years 2019 and newer with 7,500 to 30,000 miles. Older vehicles or those with more miles qualify for rates starting at 3.89% APR.

Pros of a Navy Federal auto loan

You could potentially get an additional 0.25 percentage-point discount off the lowest rate if you meet two additional criteria: you are an active-duty or retired military member and you pay by direct deposit on a new auto loan.

Cons of a Navy Federal auto loan

You must have a connection to the U.S. military in order to qualify for Navy Federal Credit Union membership and therefore a Navy Federal auto loan. See Navy Federal’s membership page for full details.

How to apply

Once you are a member, you can apply for an auto loan online through your account or by calling Navy Federal at 888-842-6328.

Best auto refinance rates: Auto Approve

Auto Approve
APR

As low as
1.90%

Terms

12 To 84

months

Fees

No Origination Fee

SEE OFFERS Secured

on Auto Approve’s secure website

Auto Approve offered the lowest average refinance rates and was the most popular choice among 22 lenders we examined. It offers refinancing for cars, trucks, motorcycles, RVs, boats and ATVs, as well as loans for lease buyouts.

Pros of an Auto Approve car refinance

Auto Approve assigns individual loan consultants to applicants, so you’ll have one person who will guide you through the car refinance process. The company also handles documents for you that are required by your state’s Department of Motor Vehicles (DMV).

Cons of an Auto Approve car refinance

Auto Approve is not a lender, but a loan marketplace. It performs a soft credit pull to show you potential offers from actual lenders when you apply on their site. A soft pull is not always accurate and when the lender you choose does a hard pull, your final offer may be different from what you expect.

How to apply

Visit Auto Approve or call 844-336-3365 to submit an application.

How we choose the best auto loan rates

To find the best new, used and refinance auto loan rates, we analyzed more than 800,000 successful applications with dozens of different auto lenders made through the LendingTree platform from November 2019 through April 2020. We wanted to know: 1) which lenders consumers chose most often, and 2) which offered the lowest average APR over the course of a six-month period.

To find the best rates for those with military connections, we looked at rates offered by USAA Bank, Navy Federal Credit Union, Pentagon Federal Credit Union and Randolph-Brooks Federal Credit Union, and chose the one with the lowest advertised APR for a traditional new car loan not including any other discounts that may be available, such as discounts for using a car-buying service.

What to do before getting an auto loan

Look up your credit score

Lenders sort applications into credit tiers. Tiers vary by lender, but the interest rate you receive heavily depends on where you fall.

Here’s an example of how different APRs affect the cost of financing a car.

Borrowers with the lowest scores could pay about $16,000 more in interest charges over the life of an 84-month $25,000 car loan.

How Credit Score, APR and Interest Charge Relate
Credit ScoreAverage APRInterest Charge
720 or higher

6.62%

$6,306

680-719

7.13%

$6,828

660-679

8.57%

$8,331

640-659

11.47%

$11,478

620-639

13.32%

$13,569

580-619

15.02%

$15,547

560-579

17.44%

$18,451

Less than 560

20.85%

$22,714

Average APRs based on LendingTree users in May 2020.

Bad-credit car loans

If you don’t have the best credit score, don’t sweat too much. There are bad credit car loans available and steps you can take to improve your credit score. Ultimately, the rate that you obtain is determined by many factors, including your credit score and income, how much you borrow versus how much the car is worth, the car itself, as well as the loan term.

You could potentially refinance your bad credit auto loan after six months to a year for a lower rate, after your score improves.

Choose your auto loan term carefully

The length of your loan is known as the loan term. There are disadvantages and benefits of long loan terms. The longer the term, the lower your payment but the higher the amount of interest you’ll pay over time. For example, for someone with good credit, choosing a $20,000 auto loan with a 6% APR over 48 months versus 60 months will drop your payment by $83 per month, but you would pay an additional $653 in interest over the life of the loan.

How Loan Term, Payment and Interest Charge Relate
Loan TermMonthly PaymentInterest Charge
36 months

$608

$1,904

48 months

$470

$2,546

60 months

$387

$3,199

72 months

$332

$3,865

84 months

$292

$4,542

Use an auto loan calculator

To see the bottom line on an auto loan you’re considering, use an auto loan calculator. Here are three types of auto loan calculators. You could use the auto affordability calculator to help set your budget before you apply for auto loans. Then, when you’re car shopping, you could use the payment calculator to estimate your payments and see the total finance charge.

Estimate 8%-10% in taxes and fees

You’re going to pay more for a car than what’s on the windshield sticker. Taxes, registration and dealership fees can have a sizable impact on what you pay, about 8% to 10% of the car’s price.

If you’re trying to decide how much to spend on a car, consider the 20/4/10 rule. To see how a car might fit into your larger household budget, check out the 50/30/20 rule

Research add-ons

Dealerships and some lenders like to sell add-ons by telling a potential customer that their payment with a warranty is $500. What the salesperson doesn’t say is that the warranty costs $2,000 and without it, your monthly payment is $480. Research add-ons such as an extended warranty or guaranteed auto protection (GAP) before you head to the dealership so you’ll be prepared.

Common Auto Loan Add-on Prices
Add-onTypical PriceEstimated Increase in Monthly Payment
Extended Warranty

$2,000

$20

Auto GAP Insurance

$800

$8

Tire & Wheel Insurance

$900

$9

Appearance Package

$1,000

$10

Get a preapproval, not a prequalification

A preapproval is a firm offer by a lender that performs a hard credit pull. In a preapproval offer, you’ll see the maximum amount you can borrow plus your APR, loan term and estimated payment. It’s vital to get one because dealers can often raise customers’ auto loan APRs by as much as 2 percentage points for their own profit. Apply to a few lenders directly, without the dealership being in the middle, so you know what APR you deserve and get your best auto loan rate.

A prequalification is when a lender does a soft credit pull or no credit pull and gives you an estimate or an example of the auto loan you may get. When you do get a firm offer from a lender, it may be very different from your prequalification.

Apply to a few lenders

When searching for your auto loan, apply to a few lenders of your choice. All inquiries within a 14-day period count as one inquiry, so they will have only a minimal impact on your credit score.

Consider a cosigner. If your credit score or income is low, and you’re not receiving good offers when you apply to a few lenders, consider getting a cosigner. A friend or family member cosigning could make a big difference on being approved for an auto loan and in getting a good auto loan offer.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Auto Loan

7 Reasons to Get a Preapproved Car Loan Before You Go to the Dealership

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.

Written By

Reviewed By

A preapproved car loan could prevent a dealership from overcharging you. It isn’t hard to get preapproved for a car loan — it simply means a lender reviews your credit and tells you how much you may borrow and what interest rate you could expect. An auto loan preapproval may seem like an extra step, but it will actually expedite your car-buying journey.

7 advantages of getting preapproved for a car loan

1. Knowing your budget

When you apply for a preapproved auto loan, you’ll typically list the amount you want to borrow along with personal information, such as income, the name of your employer and housing costs. If your bank, credit union or online lender approves you for that amount, you’ll start your car shopping knowing the total amount you can borrow, what your maximum monthly car payment would be and the price range you should be seeking.

Shop below your preapproval amount

Just because you can borrow up to a certain amount doesn’t mean you should. Aim for a vehicle priced 8%-10% below your preapproval amount to account for taxes and fees. There’s wiggle room here if you plan to make a down payment that would effectively cover those costs.

2. No more markups

Many car shoppers skip the preapproval step and go straight to the dealership to arrange financing. But dealerships can and often do raise customers’ loan rates beyond what the lender charges, taking the difference as profit. A 1%-2% APR increase can send hundreds or thousands of dollars from your pocket into the dealer’s wallet. An auto loan preapproval cuts out the middleman, giving you a huge advantage.

3. A stronger negotiating position

One of the biggest mistakes people make when buying a car is focusing on the monthly car payment. By getting an auto loan preapproval and knowing your total possible loan amount, you’re set up to focus on total price instead. That makes it harder for the salesperson to pad the deal with extras you might not even want. The dealer may even lower the car price to meet your budget.

Negotiate for a lower APR

In addition to negotiating a lower car price, leverage your car preapproval for a lower APR. Dealerships may be able to beat your preapproved rate, especially if they want to keep your business.

4. Protection from add-ons

Extras like rustproofing and window tinting are easier to slip into your car loan if you’re only focused on the monthly car payment. You might not notice a $5 increase in your monthly payment, but you’d probably raise an eyebrow if the total cost jumped by $900. If the dealer wants to upsell you, they’ll have to explain why the total price has changed.

5. Freedom to find another dealer

With an auto loan preapproval, you can act as a cash buyer. Rather than being tied to the one dealership where you did a credit application with its particular lender partners, you can comfortably check out multiple dealerships if you want. An auto loan preapproval is portable.

6. Save time

No one likes to spend time at a dealership, but car buying can take the entire day if you’re not prepared. When you have an auto loan preapproval, you can cut to the chase — you already know your price range, down payment amount, maximum monthly payment, lender and APR. By doing what is arguably the most difficult part of car buying ahead of time, you should be able to cut down on time in the sharkpool.

7. Less stress

Having a preapproved car loan lessens the stress of making a major purchase. You know what you qualify for and won’t be fooled into paying a higher price or APR than you deserve.

How do preapproved car loans work?

When a lender preapproves your auto loan, it means the lender agrees to finance a car for you up to a certain amount, at a certain APR for a specific time.

Preapproval vs. prequalification

A prequalification is a soft offer in which most lenders do not pull your credit. This means your actual loan offer might be very different, because lenders will perform a hard pull on your credit and get a fuller picture of your credit history once you fill out the full loan application.

A preapproval, on the other hand, is a firm offer by a lender. The offer will include a loan term, APR, the maximum amount to be borrowed and an estimated payment. Some lenders require that you choose a specific car for the preapproval, but you could change the vehicle after you test-drive and decide on the car you want.

Preapproved Car Loan

How to get preapproved for a car loan: 5 steps

Step 1: Figure out how much you want to borrow

You probably don’t need to know the exact car you want to buy, but it helps if you’ve got a figure in mind for how much money you want to borrow from the bank, credit union or online lender.

Step 2: Gather documentation

The preapproval application may ask for:

  • Personal details, such as address, date of birth and Social Security number
  • Employment information, including where you work and how much you make each month
  • A basic idea of the vehicle you want (i.e. new or used)
  • Loan information, including how much you want to borrow and for how long
  • Your assets and debts, such as how much you have in your checking and savings accounts, or the value of your stocks, bonds and debts

Step 3: Fill out the application

Visit the lender’s website or go to a bank or credit union branch in person. You can request a preapproval from multiple lenders, which is a smart way to get the best deal possible. Some lenders, such as LightStream, even have a program where they’ll agree to beat any competitor’s rate you can find that’s lower than theirs.

Step 4: Shop with your preapproval

If you are preapproved, the lender will tell you how much financing you qualify for, your loan APR and term. The preapproval offer is likely good only for a certain time, typically 30-60 days, so it’s time to get shopping.

If the dealership beats your preapproval offer with a lower rate, or you change your mind about that particular lender or decide not to buy a car, you’re under no obligation to use the preapproval; simply let it lapse.

Here’s what else you’ll need to bring when buying a vehicle.

Step 5: Use your preapproval

If and when you use your preapproval, contact the lender and supply it with the information it needs about the exact car you purchased: year, make, model, mileage and VIN.

The lender will guide you through finalizing the loan.

Where to find a preapproved auto loan

Many lenders offer preapprovals for auto loans, including most of those on our list of best auto loans. Start with your current bank, but check with the competition, too — some of the lowest rates can be found at credit unions and online lenders.

It won’t hurt your credit to apply to multiple lenders any more than it does to apply to one, as long as you do so within a 14-day window. Some credit-scoring models allow up to 45 days. It’s smart to apply to a few places so you can compare offers. Don’t just fill out one application and think that’s the best you can get.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.