Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.
Updated on Tuesday, September 15, 2015
Shopping for a new car involves a lot of moving parts.
How much can you spend on a new car? What type of car do you want? Are you getting a good deal? Will you be able to obtain financing? Will your auto loan have a good interest rate?
While all of these variables often make car shopping stressful, there are a couple of things you can do to simplify the process.
First, evaluate exactly how much you can afford to spend on a new car. Look at your budget and determine the absolute maximum you can afford to pay monthly. 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 new auto payment into the calculation.
Next, shop online for the best new 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 new car, you should walk into the dealership with financing already taken in place.
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. Be prepared with information from sites such as TrueCar to back up your negotiation.
After you have come to an agreement about the price of the new vehicle, show the dealer that you are preapproved, and ask the dealership to beat your rate. Often, auto manufacturers offer 0% financing, especially to those with excellent credit. Even if the dealership isn’t able to beat your preapproved financing, at least you know you can proceed with the purchase.
[Borrow Before You Buy a Car]
How To Apply
When shopping online for a new 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 pre approval)
- Financial Information: employment information, gross income and expenses
The Best Auto Loans for a New Car
With LendingTree, you can fill out one short online form and there are hundreds of lenders ready to compete for your business. Upon completing the online form, you can see real interest rates and approval information instantly. Some auto lenders will do a hard pull on your credit and this is common with auto lending. It’s important to remember, multiple hard pulls will only count as one pull with a specific timeframe, so the best strategy is to have all your hard pulls done at one time.
LightStream offers online auto loans with APRs as low as 3.49% to 9.49%*. It’s terms range from 24 to 84* months. LightStream has no origination fee. Before setting foot in a dealership, and if you are approved, you could receive funds into your bank account in as little as one business day.
The APR is dependent upon enrolling in AutoPay. If you choose to not to enroll in AutoPay, your rate will be 0.50% higher. While APRs from LightStream start at 3.49% and go up to 9.49%*, they do depend upon the amount financed.
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.
PenFed Credit Union offers rates from 2.14% to 17.99% on new auto loans from $500 - $100,000. It will finance terms of 36 to 84 months with 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
Approx. Loan Pmt.
Rates as of April 4, 2018
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 with a one-time donation of $14 or $15 to a PenFed approved charity supporting the troops. Also important to note is that even though the loan is entirely online, PenFed does not offer online pre approval.
Capital One offers auto loans with rates starting at 3.39% and terms from 36 to 84 months. It can finance $4,000 - $40,000, and has no origination fee. Capital One also offers online pre approval. You do need to find eligible dealers before walking onto a car lot with your offer. You can do that here.
Rates are dependent upon the financing terms, as seen in the chart below:
Purchase New Vehicle
Purchase Used Vehicle
Rates as of April 4, 2018
Jovia Financial Credit Union
Jovia Financial Credit Union is a credit union offering new auto loan rates from 2.89% APR. It can finance up to $100,000 for 12 to 96 months with no origination fee.
Your rate will be determined by creditworthiness, loan amount, year of the vehicle, and loan term.
In order to apply for an auto loan from Jovia Financial, 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
- Attend school 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
Navy Federal Credit Union
Navy Federal Credit Union offers new car loans with rates ranging from 1.79% to 17.99% with terms of 12 to 96 months. It can loan $250 - $500,000 and charges no origination fee. Navy Federal Credit Union does offer online pre approval.
Rates from Navy Federal Credit Union are determined by the car’s model year, as well as the loan term.
In the rate chart, new vehicles are year models 2014, 2015, and 2016 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 2014, 2015, or 2016 models with 7,500 – 30,000 miles. Used vehicles are any vehicle 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 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.
Shop Around for your Best Rate
When searching for your auto loan, don’t worry about how multiple credit inquiries will affect your credit score. All inquiries within a 30-day period count as one inquiry, so as long as you do your entire rate shopping within a 30-day period, the inquiries will have only a minimal impact on your credit score.
Even if you walk into the dealership with financing in hand, remember not to mention it until you have successfully negotiated the price of your car. Then, when you do tell the dealership that you already have financing, don’t be surprised if they try to beat it.