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Best auto loans 2021: Get the best rates, even with bad credit

Best auto loans 2021: Get the best rates, even with bad credit
(Image credit: Jaguar)

Find the best auto loans and you’ll be able to finance your new car with a deal that can offer the best rates and most appealing terms, with repayments to suit your budget. This can be the case even if you’ve got bad credit – it’s true that the top-rated auto loans will only be available to those with stellar credit scores, but if you have a more potted history you could still benefit from finance, provided you find a good auto lender.

Making sure you’re getting a good interest rate for car loans is a must, but there are plenty of other things to consider when trying to find the right auto loan as well, from the fees that could be charged to the standard of customer service offered. The application times and claims processes of a lender should be thought about too, with the benefits of streamlined procedures often underestimated. 

If you’re looking for the best auto loans companies but aren’t sure where to start, this guide is here to help. From the car loan provider known for offering the best rates to the one with a super-fast approval process, you’ll be able to find a service to suit. There’s also a lender that can cater to those with bad credit and, of course, we showcase the best auto loans provider overall. 

Once you’ve got an idea of the car loans companies that can make your car-buying dreams a reality, the next step is finding suitable quotes. So why not let them come to you? LendingTree and similar comparison sites can make the whole process quick and easy – after filling in a simple form their panel of lenders will get back to you with their best rates. And to ensure your on-road needs are covered from every angle, you might like to take the time to consider the best roadside assistance services too. 

1. LightStream Auto Loans: Best auto loans 2021

LightStream is the best auto loans company overall

(Image credit: LightStream)

LightStream provides the best auto loans service for most users, in 2021

Specifications
Application process: Fast, simple and entirely online
APR: From 3.49% with AutoPay dependent on loan amount and terms
Fees: None
Loan terms: 24 - 84 months
Reasons to buy
+Fast loan application results+Rate guarantee and discount 
Reasons to avoid
-Upfront credit check will affect your rating-Phone contact not an option

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.


2. Capital One Auto Loans: Best auto loans customer service

Capital One: Best auto loans customer service

(Image credit: Capital One )

Capital One is top for customer service, and ideal for those needing support

Specifications
Application process: Online prequalification process
APR: Dependent on loan amount and terms
Fees: None
Loan terms: 24 - 84 months
Reasons to buy
+Digital prequalification process+Application doesn’t affect credit score
Reasons to avoid
-Must pre-qualify for detail over terms  -Limited to participating dealers

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.


3. Alliant Credit Union Auto Loans: Best auto loans company for low APR

Alliant Credit Union: Best auto loans company for low APR

(Image credit: Alliant Credit Union)

Alliant is great if low rates are your priority, and you have good credit

Specifications
Application process: Online or by phone
APR: From 2.74% for new vehicle, from 2.99% for used and refinance
Fees: None upfront
Loan terms: Up to 84 months
Reasons to buy
+Low rates compared with other lenders+Quick and efficient approval 
Reasons to avoid
-Disappointing customer reviews -Need to join credit union

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. 


4. Bank of America Auto Loans: Best auto loans company for fast approval

Bank of America: Best auto loans company for fast approval

(Image credit: Bank of America)

If you're in a hurry, Bank of America will approve auto loans fast

Specifications
Application process: Online, phone, in store
APR: From 2.69% for new car, 2.99% used, 3.69% refinance
Fees: No application fee
Loan terms: 12 - 75 months
Reasons to buy
+Decision possible in a minute+Wide range of loan terms
Reasons to avoid
-Slightly better rates available -Unknown credit requirements

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. 


5. U.S. Bank Auto Loans: Best auto loans company for used car rates

U.S. Bank: Best auto loans company for used car rates

(Image credit: US Bank)

U.S. Bank is the reliable auto loan choice for used car rates

Specifications
Application process: Online, in store, by phone
APR: From 2.84% with dependent on amount, terms and other factors
Fees: Prepayment fees for paying early
Loan terms: 12 - 72 months
Reasons to buy
+Same rates for new and used vehicles+U.S Bank account holders get discount
Reasons to avoid
-Need good credit score-Little detail on loan terms 

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. 


6. Ally Auto Loans: Best auto loans company for extras

Ally: Best auto loans company for extras

(Image credit: Ally)

If you're looking for auto loan extras, Ally is the best call

Specifications
Application process: Direct dealer application
APR: Negotiable, dependent on amount, terms and credit score
Fees: Fees apply, not disclosed
Loan terms: 12 - 84 months
Reasons to buy
+Various finance options+Online and mobile management
Reasons to avoid
-Must buy through a partner dealer-Lack of rate information 

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. 


7. Wells Fargo Auto Loans: Best auto loans company for low credit scores

Wells Fargo: Best auto loans company for low credit scores

(Image credit: Wells Fargo)

Wells Fargo provides the best chance of an auto loan if you have poor credit

Specifications
Application process: Direct dealer application or call
APR: Dependent on amount, terms and credit score
Fees: Fees apply, not disclosed
Loan terms: 36 - 72 months
Reasons to buy
+All credit scores considered+Different payment options
Reasons to avoid
-Long approval process-Loan information hard to find

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.   


8. LendingTree Auto Loans: Best auto loans comparison site

LendingTree: Best auto loans comparison site

(Image credit: LendingTree)

An online one-stop-shop to compare auto loan companies.

Specifications
Application process: Online
APR: Dependent on lender
Fees: Dependent on lender
Loan terms: Dependent on lender
Reasons to buy
+Share details once for many options+Competitive terms
Reasons to avoid
- Most lenders will contact you 

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. 


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.

Tim is Finance Editor at Top Ten Reviews. With over 20 years’ experience in the financial services industry, Tim has spent most of his career working for a financial data firm, where he was Online Editor of the consumer-facing Moneyfacts site, and regularly penned articles for the financial advice publication Investment Life and Pensions Moneyfacts. As a result, he has an excellent knowledge of almost areas of personal finance and, in particular, the retirement, investment, protection, mortgage and savings sectors. A keen armchair follower of most sports, Tim regularly plays soccer, and also enjoys attending live music events, when not having to chase after his two children.