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

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Updated on Friday, August 7, 2020

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 the 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

3.49%

3.49%

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 the 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

3.49%
To
9.49%

Terms

24 To 84

months

Fees

No Origination Fee

APPLY NOW Secured

on Lightstream’s secure website

Advertiser Disclosure

*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 the 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.

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