Tracking down the best auto loans can be just as important as choosing a new car. While a cheap car loan will obviously save you money, the best auto loan services can offer you much more, including fast loan approvals and great customer service. If you have bad credit or debt, there are auto loan companies that will still be happy to lend to you too, and help you get that new car on the road.
With auto loans available through banks, credit unions and dealerships, distinguishing between what they have to offer is key. Always look at the interest rate (or APR), the fees, and how long you might have to wait to get your loan approved. Then find out how long you will have to pay your auto loan back, and any charges that may be applied should you unfortunately struggle with your payments at any time. To judge the standard of service on offer, past customer reviews can often be of use.
Fortunately, these are all factors that we evaluate when compiling our shortlist of the best auto loan services. Our rundown has something for everyone as well. Yes, a good APR is important, but who should you approach if your credit score is less than favorable? Another car loan company might have slightly higher fees, but have you considered the extra services that they offer?
Our assessment is that the following providers can be rightly adjudged as offering the best auto loans for a variety of reasons. To compare auto loan rates yourself, also note that LendingTree offers the fastest way to get quotes from a wide range of car loan companies all at once. And if you're buying a used car, it's probably worth checking out the best roadside assistance plans too, just to give you some breakdown peace of mind.
1. LightStream Auto Loans: Best auto loan service 2020
LightStream is the online auto loans division of SunTrust Bank and manages to successfully bridge the gap between traditional and digital banking. The best APR on offer is 3.49%, while there is a rate guarantee and always the potential for a discount too.
The auto loans process is completely digital, very fast and supremely efficient - LightStream has been optimized for mobile devices, so you can apply directly from your mobile phone, if you so wish. The downside is that there’s no call center support, but as a safety net, LightStream offers a loan experience promise that will reward you with cash if you're unhappy with the service you receive.
- Read our LightStream review
2. Capital One Auto Loans: Best customer service
Capital One has everything you would expect of one of the largest auto loan providers in the U.S. and offers the ability to search for your new car through its Auto Navigator service too. The website is attractive and eye-catching, while digital pre-qualification won't affect your credit score, but will pave the way for greater insight into your possible loan terms.
However, where Capital One really stands out is for the customer service that it has to offer, with support available online and over the phone. Importantly, it also emerges relatively unscathed from the notoriously difficult-to-please critics that tend to frequent review sites. If you rate customer service as your highest requirement when picking where to place your auto loan, then Capital One is very likely the right lender for you.
- Read our Capital One review
3. Alliant Credit Union Auto Loans: Best for low APR
Alliant Credit Union might need you to become a member before taking out an auto loan, but this minor inconvenience can lead to some of the best rates on the market. The APR can be as low as 2.74% on a new car and 2.99% on a used car, while an additional 0.5% discount is up for grabs if you use its car buying service.
The costs you could face are all laid bare, and the approval process is really fast too – you could have a new car in less than a day. There's also round-the-clock customer support to help you on your way. The shortage of positive customer reviews might prove a slight concern, but if it's a low-cost auto loan that you want, Alliant won't disappoint.
- Read our Alliant Credit Union review
4. Bank of America Auto Loans: Best for fast and efficient approvals
Bank of America should be your first auto loan port of call if speed is of the essence for you. With loan decisions pre-approved in as little as 60 seconds, the dream car you've just spotted won't be snapped up before you have your funds in place - the rate is then locked for 30 days as well, giving you time to consider your purchase if you're unsure.
As you would expect, applying online is almost seamless, while there is plenty of support on offer at the end of the phone or in store, if you prefer. Slightly lower rates might be on offer from other auto loan providers, but Bank of America Preferred Rewards members can nick something off the costs with a discount. And while you might pay a little extra, remember that you're securing the services of a leading all-round auto loan company too.
- Read our Bank of America review
5. U.S. Bank Auto Loans: Best for used car rates
U.S. Bank is ideal if you’re undecided between a new and used car, as it will offer the same auto loan rates for both. The caveat is that you’ll need a strong credit history to qualify for the lowest APRs, while you should make use of the 0.5% discount available to U.S. Bank check and saving account customers too.
Applying for an auto loan is relatively fast and straightforward, while you can pop into your local branch if you prefer managing your finances face-to-face. However, be aware that it might take you a while to find the extra snippets of auto loan information that most borrowers like to know - U.S. Bank has a website that would definitely benefit from some clearer FAQ direction.
- Read our U.S. Bank review
6. Ally Auto Loans: Best for extras
Ally is ideal if you're looking for something extra from an auto loan company. In particular, this well-known name offers two innovative finance options that mark it out from the competition, in the form of its Balloon Advantage and Buyers Choice programs.
Ally is also ahead of the game with the scope of its online and mobile account management, but balancing this out, there are aspects that disappoint too. What will likely frustrate the most is the lack of loan detail available unless you are willing to visit an auto dealer. However, if you take a trip to the showroom and like what you hear, you'll also probably discover a little something extra on offer from Ally that you didn't know you could get.
- Read our Ally review
7. Wells Fargo Auto Loans: Best for low credit scores
Wells Fargo provides the best chance of securing an auto loan if your credit score is slightly below par. You will probably pay more for your loan – and the fees are higher here than some of the other auto loan providers as well – but at least you won't be turned away before you've even started.
Where Wells Fargo does fall down is in respect of the information available to potential borrowers, with the main website notably short on detail. You must buy a car through one of its dealers too, but with over 11,000 partners across the U.S., there should still be ample choice. Ultimately, Wells Fargo is worth a look if you're unsure about your credit standing; for others, however, more rounded auto loan propositions are probably available elsewhere.
- Read our Wells Fargo review
8. LendingTree Auto Loans: Best comparison site
LendingTree allows you to compare auto loan rates from multiple lenders after completing just one online application. Tell LendingTree how much you need to borrow and what you have to put down, and confirm the type of car you want and some income details, and you’ll be presented with a rundown of auto loan offers from its panel of lenders. Not only does LendingTree save time when it comes to comparing auto loans across the market, you will also likely receive the most competitive terms that the lenders possibly can, as they know they are competing for your business.
If you need more information about the auto loan process, LendingTree has plenty of in-depth articles and guidance online. There are also a number of calculators that can be used to check what you might be able to afford, how much you could pay, and what you could save with an auto refinance deal.
The entire LendingTree website is extremely easy to use and immaculately presented. The one potential downside is that in sharing your contact details with several auto loan providers all at one time, you may be subject to a number of follow up calls. But given the competitiveness of the auto loan proposals you receive back for giving up so little of your time, this is likely to prove a minor inconvenience.
- Read our LendingTree review
How do auto loans work?
Most auto loans are simple interest loans that are secured against the vehicle. The majority of auto loans are structured so the monthly repayments at the start of the loan you pay high amounts of interest (the fee you are paying the lender) and slowly shifts to repayment of the principal (the amount you borrow) the closer to the end of the term the loan gets. Auto loan terms usually varying between 36 and 72 months.
Longer loan term mean smaller repayments but usually results in a bigger over all cost and repayment. You can get auto loans with bad credit, but this will affect the rate of the loan. As there is a higher risk, you will have a higher repayment on the loan. Auto loans are available through dealerships, banks, online services, or via credit unions.
What to know before applying for an auto loan
An auto loan isn’t a mortgage, but it’s still a significant expense that affects your finances. Before applying here are some things to do.
Check your credit: Knowing your credit score before you apply can give you a clearer idea of what rates you can expect to pay. There are many free options for checking your credit score, and some credit cards offer free monthly credit checks. Alternatively read our guide to the best credit report services. You can still get an auto loan with bad credit, but you will be paying a higher premium for it.
Get pre-approved: Getting pre-approved for a loan gives you an advantage when shopping for cars. By knowing how much you can afford, you’ll be better positioned to negotiate with dealers.
Come prepared: To apply for an auto loan, you’ll need to provide the lender with the necessary documents. Most want to see proof of income, credit and banking history, proof of residence and proof of insurance. Getting a loan through your current bank or credit union makes this step much easier, since they will have much of this information on hand.
Remember your budget: This goes for your monthly payment, down payment and the total auto loan amount. Make sure you can afford the monthly payment. You don’t want to fall behind and risk losing the car. According to an Experian study, the average monthly payment on an auto loan is around $532. You’ll also need a down payment, usually 20% for a new car and 10% for a used car.
Use dealers as a last resort: Dealers may sometimes be your only option, especially if you have poor credit. But always try and find financing through a bank or credit union because you’ll usually get a lower rate. Dealers also tend to add markups to the interest rates, so you’ll end up paying more if you get a loan through a dealership.
Budget for a warranty: If you're buying second-hand, it's smart to set aside a little money for an extended warranty. You could save $1000s on repairs and servicing, which are extra costs that really pile up if you already have an auto loan. If the dealer doesn't offer it, check out the best extended car warranties providers, to give yourself peace of mind after buying the car.