Are you looking for the best used car loans in 2023? With so many auto loans on the market, it can be overwhelming to determine what the best loan is for you. When you are purchasing a car, it’s normal to get sold loans that look good on paper. However, some lenders might be charging you higher interest rates and longer loan terms than you had hoped.
Our team of experts gathered the ultimate list of used car loans that suit a variety of borrowers, regardless of your credit score and history. If you are ready to find the most affordable loan for your used car, keep reading this article to learn everything you need to know.
#1. Lightstream – Best auto loan overall
#2. MyAutoLoan – Best for bad credit
#3. Carvana – Best for fair credit borrowers
#4. Autopay – Best for refinance loan or auto financing
#5. CarMax – Best for a variety of used car options
#6. PenFed Credit Union – Best for reasonable car loan rates
#7. Vroom – Best for purchasing a Vroom vehicle
#8. Chase – Best auto loans with flexible payment options
#9. Consumers Credit Union – Best for credit union loans
#10. Bank of America – Best for bank auto loans
Lightstream offers a virtually paperless online process with no appraisal on age or mileage. If you have good credit, it’s simple to get a low-interest, fixed rate loan from $5,000 to $100,000 with funding as quick as your application day.
Typically, the estimated annual percentage rate (APR) for Lightstream loans is 6.49-12.49% with a minimum credit score of 660.
If you want a reliable loan for your used car, this online lender is a great option for your if you have fair to excellent credit. Additionally, Lightstream offers a new car loan as well as refinancing options on your current auto loan.
Upon application submission, Lightstream will run a hard inquiry credit report to determine down payment requirements, minimum loan amount, and monthly payments.
Overall, Lightstream has competitive rates with no origination or late fees. There are no vehicle or mileage restrictions and finances are accepted from private party purchases. They also offer a rate discount with automatic loan payment setup.
For some borrowers, Lightstream has a high minimum credit score requirement. Lightstream has bankruptcy restrictions, although the rest of their requirements are generally flexible.
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MyAutoLoan is great for applicants that want to review multiple loan offers from different online lenders before purchasing used cars from dealerships or private parties. On average, all applicants will receive up to four lender offers after a soft credit pull.
Approval is generally confirmed within minutes of application submission. Depending on the lender you choose, you may receive rate discount with automatic payments.
If you struggle with poor credit, you can use c0-signers to get approved for a low-interest rate loan. MyAutoLoan car loans will range from $8,000 to $100,000 with an estimated APR of 3.94-21.00%.
Minimum credit score requirements are reasonable set at 575, with an annual income requirement of $26,100.
MyAutoLoan does have maximum mileage requirements which are 125,000 or below. Overall, this online lender is a great option for anyone that wants to research the best car loan rates and accommodate their credit history.
There are various opportunities to secure reasonable annual percentage rates even if you aren’t a borrower with excellent credit.
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Carvana offers auto loans that come with reasonable low-tier rates if you meet the minimum requirements. If you want to make the car buying service and refinancing easy, Carvana is a great one-stop-shop online solution.
They offer a quick pre-qualification approval with a soft credit check, allowing borrowers to gauge their target rates and deals prior to applying.
Borrowers can use the Carvana to change their monthly payment date for auto loans depending on their preferences. Minimum loan amount starts at $1,000, which is lower than most other lenders.
However, you can also claim a loan up to $100,000. The estimated APR is around 3.90-27.90% with minimum credit score requirements of 450.
Carvana’s minimum annual gross income is $4,000 and borrowers must have zero active bankruptcies. Auto loans are only available for borrowers that purchase a used car from Carvana.
Keep in mind that Carvana financial and car buying service is not available in Alaska or Hawaii. The maximum possible APR is higher than some other lenders, although many borrowers are able to secure a reasonable rate with Carvana.
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Autopay is ideal for borrowers with diverse credit scores that want to compare multiple loan’s interest rate options. This lender is great for refinancing a new or used car since payment and funding dates may take longer.
Loan amounts are between $2,500 to $100,000 with a minimum credit score of 560 and estimated APR of 1.99-17.99%.
Autopay offers pre-qualification with a soft credit check that will calculate your estimated interest rate and loan amount. S
ome of the network lenders will offer auto discount with automatic payments. All borrowers can choose to add a co-signer and determine their ideal monthly payment date.
Keep in mind that loan approval can take up to 48 hours and funding may take up to 2 weeks. Autopay is not idea for borrowers the need to loan refinancing quickly. Additionally, origination fees may apply but the amount is not disclosed.
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CarMax is a great choice for buyers that want to purchase a used car from a large inventory. This lender makes it easy to finance your car online, while finding a compatible auto loan that suits your budget.
CarMax auto loans range from $500 to $100,000 with no disclosed minimum credit score requirement. On average, the estimated APR is between 2.95-26.00%.
Keep in mind that you can only finance used cars purchased from CarMax. On the bright side, there is a three day window where borrowers can replace their CarMax financing with a better loan offer they may find.
The minimum loan amount is lower than many other lenders, making it an excellent choice for anyone that needs a flexible loan range.
All payments can be managed through the MyCarMax online platform, and the payment due date can be changed online as well. There is no pre-qualification with a soft credit pull so prospective borrowers will have to apply to see their rates.
No co-signers are allowed, but co-borrowers are an option. No minimum credit score is disclosed, but this lender is known for welcoming a variety of borrowers with different credit history.
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PenFed Credit Union is known for offering reasonable auto loan rates with an overall streamlined application and approval process. If you use their auto buying service, you can expect to receive reduced rates and vehicle pricing.
In order to get a car loan from PenFed, you will need to have a credit union membership to save money and apply online.
There is no disclosed minimum credit score, however, loan amounts range from $5,000 to $100,000. Typically, the estimated APR range is between 4.44% to 10.19%. Borrowers with excellent credit will have better chances of qualifying for a decently priced auto loan.
After submitting an application, you will receive around six offers with different rates, loan amounts, and repayment terms. From here, you are able to move forward with the auto loan that works best for you. Keep in mind that borrowers with bad credit scores might have a a lower range of options.
If you want a discount rate, you’ll have to use the PenFed online car buying service. The application process can be done entirely online and vehicles purchased from private parties are open for financing.
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Vroom is reliable among auto loan lenders, especially for borrowers that specifically want to purchase a vehicle through the platform. There is a simple pre-qualification with a soft credit check, and the remaining application is completed 100% online.
Vrooms works alongside finance partners to find the best offer on your auto loan rate.
Keep in mind that the estimated APR range is undisclosed, so you’ll have to pre-qualify online to find out more information on your interest rate discount. Loan amounts range from $5,000 to $100,000 with no stated minimum credit score requirement.
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Chase car loans are best for borrowers that are shopping for cars in the Chase network and want to apply online prior to going to the dealership. While there are multiple lenders that are a financial institution, Chase is great if you need flexible payment options.
Minimum credit score requirements and the APR range is not disclosed. Additionally, there is no maximum loan amount but the minimum is around $4,000.
If you want to finance your car through Chase bank, you’ll need to purchase a vehicle that’s approved by their network. Keep in mind that if you switch dealerships after applying for the application, you’ll need to submit another application online.
There are no co-signers allowed and rate discount is available only to Chase Private Clients.
Chase can help you keep track of your debt while ensuring your car payment is manageable, and the auto purchase is simple. There are over 12,000 Chase dealership partners with dealers in all 50 states.
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Consumer Credit Union is another great option for borrowers that want to source an auto loan from a credit union. Although you need to be a member, you can oftentimes save money and guarantee a much more affordable interest rate. Consumers Credit Union allows you to finance 100% of your purchase for qualified buyers.
Overall, they have low-interest rate loans with flexible terms. There is up to a 0.25% rate reduction for members and borrowers only pay interest on their unpaid balance. An added bonus is that you have free Mechanical Repair Coverage with 24-hour emergency service.
APR rates are between 5.19-17.54% with a minimum auto loan amount of $7,500 with a credit score requirement of 620 or above. Whether you need a new or used car loan, Consumers Credit Union is definitely an option to consider.
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Bank of America has auto loan options for borrowers that enjoy working with a well-established bank that offers rate discounts. There is no minimum credit score requirement and the loan amount minimum is $7,500.
If you qualify for a Bank of America Preferred Rewards rate, you can significantly cut down on costs while financing a car at a Bank of America authorized dealer.
Keep in mind that rate discount is only available with deposit balance of $20,000 or more. Borrowers can apply online, at a bank, or directly at a dealership however you must present your social security number for the application process.
On average, a loan decision is provided within seconds after submission of your application.
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Secured loans require the lender to put a lien on the vehicle, however, some lenders will use other types of collateral to cover risk. If you don’t make your payment, the lender may repossess and sell the collateral asset to cover the additional debt.
It’s important for borrowers to understand what their lender is using as collateral so that you can be prepared in case anything occurs in the future. Secured auto loans usually have a lower finance charge and lower overall loan cost, however there are more requirements when it comes to collateral.
A simple interest loan means that your monthly payment is calculated based on your interest rate, loan balance, and daily interest accrued. Simple interest loans are the most popular type of car loan.
Typically, a higher amount of your monthly payment with go toward interest at the beginning of the loan term. By the end of the loan term, you are majorly paying off the principal.
Unsecured loans is not associated with any assets, so borrowers don’t have to worry about repossession of their assets. If payments are missed on the borrowers end, the lender has to figure out other legal solutions to cover the debt.
Unsecured loans usually come with higher fees and interest rates but there are no restrictions on how you use the money.
Personal loans, credit card debt, personal lines of credit and student loans are all unsecured loans. For the most part, you have probably dealt with unsecured loans more than you may imagine.
Precomputed interest loans are when the loan balance, origination fees, and interest are all calculated at the beginning of your loan term. This calculation is then evenly broken up over your repayment period.
If you have late fees, a portion of your payment that goes toward principal might be reduced to cover fees. In some cases, monthly payments on precomputed interest loans may be lower than a simple interest loan. However, there is no benefits for paying off your loan early.
It’s important to determine your budget ahead of time, especially if you are going to purchase an auto loan at a dealership. Sometimes it may seem like you are paying a lower monthly amount, however, you could just have a loan stretched out over a longer period of time. In this case, you might end up paying even more interest over time.
A good way to approach your car loan is to look at the overall cost of the car, and compare the total amount when you are shopping around. You want to ensure you don’t have a dealer putting unnecessary features into your loan that might inflate the monthly budget.
Once you know the size loan you can afford and what you may qualify for, it’s time to start comparing different loan options. Borrowers can find loans from credit unions, banks, dealerships or online lenders. Make sure to take the opportunity to pre-qualify any chance you get, so that you can gather information without influencing your credit score.
Before you apply for any loan, it’s a good idea to check your credit score and reports to get an idea of where you stand financially. Some people might choose to delay getting a car loan if they have bad credit, as this increases your chances of a debt cycle.
If you have fair to excellent credit, you can confidently go into your loan applications knowing that you have great chances of claiming the most competitive rate. The more informed you are about your credit history, the easier it will be for you to be confident in your negotiations.
Some lenders will require that you apply for a loan through their dealership or the car inventory platform. If you have a lender in mind, you’ll want to ensure that you meet their requirements before finding the car of your dreams elsewhere. Some people decide to shop around multiple dealerships in person and discuss with them directly what loans they will accept.
If you want to choose the best auto loan, you’ll want to consider all aspects of your loan not just the APR. Take a look at your interest rates, loan terms, requirements, discounts, fees and penalties.
All lenders will have something different to offer, but that doesn’t always mean you should take their benefits at face value. Determine how long you want to pay off your loan and make a list of your top priorities.
Some people want to work with lenders that have flexible terms and zero fees, whereas others prefer to work with a reputable lender that has fees, harsh guidelines, but perhaps more benefits.
There is no one-size fits all solution, so the best thing to do is to make a list of your needs and find something that matches up with those non-negotiables. Do you research on your own so you aren’t directly persuaded by any dealerships or lenders.
Is it hard to get a loan for a used car?
It’s not difficult to get a loan for a used car, especially if you have excellent credit. All of the lenders on this list are experts at used car loans, you have plenty of options to choose from. Borrowers will bad credit can still qualify for used car loans, it just may take a bit more research and investment.
How does a loan for a used car work?
When you receive a loan for a used car, it will be used to pay off the balance of your car so that you can take the vehicle home. Depending on your loan terms, you will make payments every month to pay off your car. After the repayment period is over, you will own your used car as long as you met all payment requirements.
What is a good car loan rate right now?
A good car loan rate right now is 3.65% for the most creditworthy borrowers, however, rates can go up to 14.39% if you struggle with your credit. Interest rates will fluctuate depending on the economy, your location and finances.
Is it better to finance a car through a bank or dealership?
Banks sometimes offer better and lower interest rates, as they work with multiple lenders to find the best option for you. Banks themselves don’t sell cars, so they don’t have an incentive to get their investment back by selling the vehicle. For the most part, you might save money by working with a bank.
Dealerships can occasionally inflate prices because they have an incentive to make the sale. It’s important to note that this is not always the case. Sometimes it can be convenient to get a loan from a dealership, especially if it’s an exclusive lender that might be hard to find elsewhere.
FinanceWise.com makes comparing loans, investments, savings, and purchasing credit cards a lot easier. With just a few clicks, you have a complete overview of suitable loans, at the lowest interest rate.
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