Are you looking for the best car loans in 2023? Whether you are purchasing a new vehicle, used vehicle, or leasing a car, you may eventually need auto financing. While it’s tempting to go straight to the dealership, our experts recommend exploring your options online from multiple auto loan lenders.
In order to help you get the best rate, our team spend hours gathering the top loans for car financing. The following loans are suitable for a variety of borrowers from different financial backgrounds.
In this article, you will learn everything you need to know about the best auto loan options available today. Keep reading t0 find the top loan for your unique needs.
#1. Lightstream – Best auto loan overall
#2. Bank of America – Best bank auto loan
#3. Capital One – Best auto loan for convenience
#4. Carvana – Best for auto loans online
#5. MyAutoLoan – Best for checking multiple auto loan offers
#6. Upstart – Best for fair credit
#7. Consumers Credit Union – Best for used car purchase loans
#8. Autopay – Best for potential low APR on auto loans
#9. Digital Federal Credit Union – Best for new car purchase loan
#10. Pen Fed Credit Union – Best for low auto loan amount
Lightstream is one of the best auto loans overall offering an easy online application process with reputable lenders. Loan amounts range from $5,000 to $100,000 with an estimated APR range of 6.49-12.49%.
Lightstream is known for their quick turnaround times, primarily for borrowers with fair to excellent credit scores. The minimum credit score requirement is 660 with no appraisal or restrictions on car age or mileage.
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Bank of America auto loans are ideal for borrowers that prefer working with a large bank that may offer rate discounts based on high balances. Bank of America does not disclose auto loan interest rates, loan maximums or minimum credit score requirements. The minimum loan amount specified is $7,500 with a rate discount for applicants that have a qualifying account.
Borrowers can easily apply online, by phone call, or walk-in to a financial center. You can also go straight into an authorized dealership to claim a Bank of America auto loan. If you are seeking auto financing, you will usually receive a decision within a few minutes post-submission.
The lender will check your credit history to check your qualification for a car loan, as well as your reviewing your financial background with the bank itself. You will need to submit your social security number upon application, as well as additional information on the new or used car you are interested in.
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Capital One auto loans are great for borrowers that want to conveniently check multiple lender’s rates without affecting their credit score. If you want to buy within the Capital One Auto Navigator Network, this is a great loan opportunity for you, especially if you want to refinance existing car loans.
Capital One allows borrowers to pre-qualify with a soft credit pull that won’t effect your credit score. In this case, you can check your potential rates, monthly payments, and credit qualifications since Capital One doesn’t disclose this information for car loans beforehand.
There are no origination rates with this lender, and you can decide on the loan payment due date that works best for you. Keep in mind that Capital One is not available in all states and borrowers must purchases a vehicle at a participating dealership.
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Carvana is a great option for borrowers that buy a vehicle through the lender and want to find a car loan online easily. This lender is known for making car buying and financing easy, especially if you are a borrower that will qualify for their lower tier rates. The minimum loan amount is lower than other auto lenders, so there is more flexibility for borrowers to find what’s right for them.
Before you apply for a car loan from Carvana, you can apply for pre-qualification with a soft credit pull. In order to determine your interest rate and monthly payment, Carvana will check your credit report, debt-to-income ratio, minimum annual gross income, and maximum loan to value ratio. In some cases, borrowers report the annual percentage rate being higher than other lenders.
On average, the Carvana APR range is between 3.90-27.90% with a loan amount of $1,000-$100,000. The minimum credit score requirement is 450, so fair credit borrowers are welcome to apply.
However, excellent credit holders can expect to claim for competitive rates loans on their new and used cars. The auto loan term is unspecified and greatly depends on your loan amount, fixed interest rates, and monthly payments.
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MyAutoLoan is known for offering borrowers multiple car loan options from different lenders. If you want a used car loan for a dealership car or private party, MyAutoLoan could be a great place to go to seek rates from multiple lenders. They are also open to accepting bad credit borrowers, so you may qualify if you have poor credit.
Contrary from other online lenders, MyAutoLoan applicants will often receive four lender offers with a soft credit check. Approval for used car loans is usually within minutes, so you can rest assured your loan lenders will get financing to you quickly.
The lowest daily rates are always provided on the MyAutoLoan website, and borrowers are allowed to have co-signers. The estimated APR is between 3.94-21.00% with loan amounts of $8,000 to $100,000 and a minimum credit score of 575. If you choose automatic payments, some online lenders will offer a rate discount on your overall loan amount.
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Upstart promises their customers smarter rates on their pre-existing loans, a seamless application process and trusted company from their customer service group. Car refinancing starts at $9,000 with repayment terms between 24-84 months.
Potential borrowers can check their payment rate online without effecting their credit score. Depending on your loan amount, payments will be calculated over a fixed payment term.
Upstart does not disclose their minimum credit score requirements, although their listed APR range is between 2.20-29.99%. There is no origination fee or prepayment penalty, which is another reason Upstart guarantees some of the most affordable car loan rates. Fair credit borrowers have a high probably of securing a low interest rate on your current loan, or lower auto loan refinance rates.
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Consumers Credit Union is a great option for applicants that want to secure rate discounts and some of the other benefits that come with credit unions. Rate estimates are adjusted through their website with a soft credit check. The minimum loan amount is $7,500 with an estimated APR of 5.19-17.54% and a minimum credit score of 620.
Consumers Credit Unions accepts applications through their website, physical branches, or over the phone. However, borrowers can also apply through authorized dealerships in Illinois and Wisconsin. There is an offer rate discount with automatic payment, and borrowers can secure more affordable car loan rates by bringing on a co-signer.
If you want to qualify for even more discounts, you can use Consumers Credit Union online car-buying service. The downside is that a credit union membership is required to get a loan, and there are no rate discounts if you are using their online car-buying services. The maximum loan to value ratio is 125%.
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Autopay is one of the best options for borrowers that want to compare multiple pre-qualified offers without influencing their credit score. Autopay also welcomes borrowers with poor or fair credit, so there is flexibility to qualify if you are struggling with your credit score. Loan amounts range from $2,500 to $1,000,000 with an estimated APR of 1.99-17.99% and a minimum credit score of 560.
Some Autopay lenders offer rate discounts with automatic payments, and borrowers can choose their loan payment date. Co-signers are allowed which allows for borrowers with bad credit scores to enhance their chances of qualification. Loan approval can take 24-48 hours longer than other lenders, so Autopay is not the quickest option on the market.
Loan funding, on average, takes nearly one to two weeks. Some loans will require an origination fee, although the amount is not specified upfront. Autopay does have around the clock customer service on Sunday’s if borrowers have any issues.
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Digital Federal Credit Union is ideal for borrowers that want flexible loan options for a new car purchase loan. There are possibilities for a discount auto loan rates and additional benefits from a credit union membership. Digital Federal Credit Union did not disclose their minimum credit union, although the loan amount is $2,500 – $500,000 and the estimated APR is 3.74-13.24%.
The entire application process can be done online with the option for co-signers. Digital Federal Credit Union provides same-day or instant loan approval. There are two opportunities for additional discounts on existing low rates for borrowers.
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Pen Fed Credit Union is best for car buyers that want to find low auto loan terms for their new or leased vehicles. The loan process is simple if you are a pre-existing credit union member using the PenFed online car buying service to get a rate discount. The minimum loan amount is lower than other lenders, ranging between $500 and $100,000. The car average APR is between 4.44-10.19%, and the minimum credit score is not disclosed.
Pen Fed Credit Union finances vehicles that are purchased from private parties, and discount pricing and rates are available for buyers that use the platform. The entire application can be done online with fairly fast loan approval and funding.
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If you are a buyer looking for a new car to purchase, a new car loan is what’s right for you. Typically, these loans will be offered on the dealership lot. However, in some cases, this can lead to inflated interest rates. New car loans are also available from online lenders, banks, and credit unions.
Sometimes buyers will get a loan at a dealership but decide to refinance for a better rate later on. In this case, you’ll want to look for an auto refinance from some of the lenders we mentioned in this article.
In some cases you can rework your terms to get a better rate, but you typically can’t refinance directly from your dealership.
Borrowers that buy a car from an independent seller might not have cash in hand to pay upfront, in which case you will need to acquire a private party car loan. Some banks, credit unions and online lenders offer these loan types.
If you want to purchase a used car from a dealership, you’ll need a used car loan. You can find used car loans from banks, online lenders, and credit unions similar to new car loans. Some lenders will put requirements on the maximum mileage of the car, as well as the age of the car.
If you want some extra cash for a refinancing situation, consider a cash-out auto refinance. In this case, equity from your car can be borrowed against the balance you are refinancing. You’ll want to check with your individual lender to see if they offer a cash-out auto refinance.
When you are leasing a car, you may have the option to buy it at the end of your lease terms. Lease buyout loans can help you gather the money for this purchase.
Check the approval requirements
In this article alone, we covered an array of top car loan lenders that each have their own set of requirements. Lenders will look into things like your credit score, income, debt-to-income ratio, car model and more.
Some lenders will only offer you loans if you are a credit union member, or if you purchase through a specified dealership. All of these factors will influence the rates you receive on your loans. Loans for cars can be more complicated than other loan types like personal loans, so you’ll want to make sure you do your research ahead of time to find what loans you qualify for.
Compare annual percentage rates
When you see a high annual percentage rate, it means you will pay higher interest rates on your monthly costs. Borrowers should always look at the total loan amount as well as the APR so that you can ensure you are getting the most well-rounded deal.
Explore loan terms
Keep in mind that longer repayment terms may seem appealing, however, you’ll end up paying more in interest. Determine how much you can reasonably pay every month for car loans, then consider which options will keep your interest low and your payments doable. Instead of jumping into an offer, always try to find the happy medium that works best for your financial situation.
Which lender is best for car loan?
All of the lenders we listed in this article are some of the top contenders for car loans in 2022. However, the best lender for you will depend on your unique situation so make sure to do you research accordingly.
Are auto loans worth it?
In general, auto loans won’t add much to your cars costs if you find a reasonable interest rate. They can be a necessity for some buyers that want to secure a car, however, it will all come down to your credit score and financial history. You’ll want to ensure you aren’t paying too much in interest.
How much is a good car loan?
Car buyers with excellent credit are usually able to secure an interest rate of around 2.47%, according to 2022 research. However, a good car loan will depend on your financial situation as loans are not a one-size fits all solution.
Is it better to get a car loan or bank loan?
In some cases getting a car loan from a bank can be a better option for securing lower interest rates. Some dealerships will charge more because they know buyers like to shop in one location, however, it’s always a good idea to look into multiple auto financing options.
What’s the easiest car finance to get?
The easiest car finance to get will depend on your credit score. If you have an excellent credit score, you will qualify for a variety of competitive rates and loan options. If you have poor credit, make sure to look into a loan that caters to your needs.
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