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Updated on Wednesday, February 5, 2020
Just because cars are getting more expensive, it doesn’t mean your car loan has to break the bank. Car debt and car payments have been hitting new highs recently, so it’s more important than ever that you do your research for the best rate. To that end, we researched the best auto loans of 2020, whether you’re purchasing or refinancing, or if you’re a credit union loyalist or an online-only type of shopper.
Overview of the best auto loans in 2020
Best for Comparison Shopping
As low as 3.49%
24 - 84
$5,000 - $300,000
3.49% - 9.49%*
24 - 84*
$5,000 - $100,000
As low as 3.39%
36 - 84
Best Credit Union
2.14% - 17.99%
$500 - $100,000
As low as 1.79%
12 - 96
$250 Minimum, No Maximum
Best Online-Only Lender
36 - 72
Any vehicle on website
How we picked the best auto loan rates
Using information from LendingTree, we compiled auto loan data over a six-month period across 31 auto lenders. We analyzed new and used auto lending, as well as refinance loans, selecting lenders from among those that consumers chose most often and offered the lowest average APRs.
Start with LendingTree
As low as
24 To 84
LendingTree is our parent company. LendingTree is unique in that they allow you to compare multiple, auto loan offers within minutes. Everything is done online. LendingTree is not a lender, but their service connects you with up to five offers from auto loan lenders based on your creditworthiness.
Advertised rate is for new and used auto loans for 36 month term.
With LendingTree, you can fill out one short online form, and there are dozens of lenders ready to compete for your business. Upon completing the 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, so the best strategy is to have all your hard pulls done at one time.
Best purchase for top credit: LightStream
24 To 84*
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.
LightStream is the online-only division of SunTrust Bank, which recently merged with BB&T. It offers auto loans for people with good to great credit (660-plus). It even has a Rate Beat Program in which LightStream will offer a rate 0.10 percentage points lower than the rate offered by a competing lender.
Its lowest rates assume you will enroll in AutoPay, which automatically deducts your monthly payment from your bank account or charges it to your credit card. Enrolling in AutoPay means a 0.50% APR discount; if you do not enroll in AutoPay when you accept the loan offer, your APR will increase by 0.50%.
Best purchase for fair credit: Capital One
36 To 84
No Origination Fee
Capital One is one of the largest banks in the U.S., and offers rates competitive with other large lenders. It has several hundred branch locations and works with more than 12,000 dealerships. It also offers pre-qualification with the Capital One Auto Navigator, which can help you to find a car and get approved for a car loan before going to a dealer.
However, it may offer a relatively low maximum amount you could borrow, up to $40,000 in the past ( spokesperson recently declined to provide a maximum). Other lenders offer up to $100,000 auto loans.
Best credit union auto loan: PenFed Credit Union
36 To 84
Information Not Available
PenFed Credit Union can offer its membership some of the lowest rates available on new and used auto financing and refinancing. Qualified borrowers may be able to finance up to 110% of the vehicle’s value.
However, because PenFed is a credit union, you must be a member before accepting a loan. But wile the credit union has historical ties to the U.S. military, the only requirement to become a member is to have a valid Social Security number or a Tax Identification Number (TIN).
Runner-up for best credit union auto loan: Navy Federal Credit Union
12 To 96
No Origination Fee
Navy Federal Credit Union also has some of the lowest auto loan rates available. Its prices for auto loan add-ons, such as GAP insurance, are also very low. However, you will have to have ties to the U.S. military to join Navy Federal.
Best online-only lender: Carvana
36 To 72
No Origination Fee
Carvana may be enticing for people who want to do the entire car-buying process online. It offers used cars as well as financing for those cars, but only those cars — you could not finance a car you bought from another seller with Carvana.
The average APR in the six-month period we examined was nearly 12%, higher than the average 9.6% for used vehicles, but Carvana financing may be a possibility for those with fair credit. Its auto loan calculator lists “below average” credit scores of 588, but it doesn’t have a credit score option lower than that.
Understanding the auto loan process
Most people apply for an auto loan through a dealership after they’ve picked out a vehicle, but there’s a smarter way to go. Dealers tend to make more money setting up auto loans than selling cars. Here are some tips to help you keep your money in your account by obtaining your own auto loan.
Tips when shopping for a car loan
Know what you can afford. You’re going to pay more for a car than what’s on the car’s price sticker. Government taxes, dealership fees and auto insurance can have a sizable impact on what you pay. MagnifyMoney suggests following a 50/30/20 rule when setting your budget.
Don’t let the dealer be the middleman. Dealers often raise customer auto loan APRs for their own profit. One of the best things to do is to apply to a few lenders directly, without the dealership being in the middle, so you know what APR you deserve.
Apply to a few lenders. It does not hurt your credit to apply to several auto lenders any more than it does to apply to one, as long as you do all applications within a 14-day window. You are not obligated to accept any of the loan offers you get and most are good for at least 30 days.
Consider a cosigner. If your credit score or income is low, a cosigner could make a big difference on your being approved for an auto loan and in getting a good auto loan offer.
Get a preapproval. This way, if you know you qualify for a 4% APR auto loan, you’re not likely to accept a dealership offer of a 7% APR auto loan. And if you have a preapproved auto loan when you walk into the dealership, you could even ask the dealer to beat the rate you got.
Finalize the loan offer. Once you choose a car, contact the lender with the car’s information to finalize the loan offer. And if it suits you, follow the lender’s directions regarding how to sign off on the loan.