Best Auto Loans of 2018

Eli McCormick ·
Finance Senior Writer
Updated
We maintain strict editorial integrity when we evaluate products and services; however, Top Ten Reviews may earn money when you click on links.

After 40 hours of looking through rates, comparing terms and reading the fine print to find out about any hidden fees, we concluded that LightStream is the best overall auto lender. It has good rates and terms and doesn’t place any restrictions on the age or mileage of the car you buy with the loan. LightStream, which is a division of Sun Trust Bank, has quick approval times, lets you pay online and also offers refinancing on existing auto loans.  

Best Overall
LightStream
With relatively low rates, good terms and no origination fees or pre-payment penalties, LightStream is our pick for best overall auto lender.
View on LightStream
Best Value
LendingTree
While not a lender itself, LendingTree can show you multiple offers, which lets you find the best value in terms of interest rate and other costs.
View on LendingTree
Get Quote@LendingTree
Best Value
LendingTree
Best Credit Union
Alliant Credit Union
Credit unions often have lower rates than banks, and Alliant has some of the lowest rates of any lender we looked at. You do have to meet membership requirements.
View on Alliant Credit Union
Product
Price
Overall Rating
Rates & Terms
Application & Eligibility
Loan Repayment
New Car Interest Rate
Used Car Interest Rate
Minimum Loan Term (Months)
Maximum Loan Term (Months)
Mileage Limits
Vehicle Age Limits
Approval Times
Pay Online
Pre-Payment Penalties
Refinance
Origination Fee
Check Price
10 10 10 10
3.59%
3.59%
24
84
-
-
1 Day
-
-
Check Price
9.9 9.8 10 10
2.99%
3.24%
12
60
-
-
1 Day
-
-
Check Price
9.4 10 10 6.3
3.99%
3.19%
18
84
-
-
1 Day
Varies
Varies
Varies
Check Price
9.4 10 8.3 10
1.99%
7.50%
12
84
120,000
9 Years
1 Day
-
-
Check Price
9 9.3 8.3 10
3.69%
3.89%
12
60
125,000
10 Years
1 Day
-
-
Check Price
8.9 9.3 8 10
3.89%
4.06%
36
72
120,000
12 Years
1 Day
-
-
Check Price
8.5 9.3 7.8 7.5
4.21%
4.21%
12
72
100,000
8 Years
1-2 Days
-
Check Price
8.4 9.3 8.8 5
3.76%
4.56%
36
72
100,000
6 Years
1 Day
Check Price
8.4 8.8 7.3 10
4.39%
4.54%
48
72
120,000
10 Years
1-3 Days
-
-
Check Price
7.6 7.3 9.3 5
Varies
Varies
Varies
Varies
-
-
1-2 Days
Varies
Varies
3rd party
Varies
Best Overall
LightStream, an online lending platform offered by Sun Trust bank, is our choice for the best overall auto lender because of its favorable rates, terms and eligibility requirements.
The rates on a 36-month, $30,000 auto loan start at 3.59%, among the lower rates we saw. Interest rates on a loan of around $20,000 can get as low as 3.09%. There are no prepayment or origination fees on a LightStream auto loan. If you choose not to sign up for automatic payments your rate will be 0.5% higher. It’s important to note that actual interest rates vary a lot depending on your credit score, debt-to-income ratio and the type of car you’re buying. LightStream’s listed rates reflect a best-case scenario and a borrower with an excellent credit score. Loan terms range from 24 months to 84 months. The best rates are on loans under 36 months; loans with a term longer than 72 months have rates up to 7.89%. The application process takes place online and most applicants are approved in one day. One area where LightStream stands out is that it doesn’t have any restrictions on the vehicles you can use the loan for. Other lenders have restrictions on the mileage or age of the vehicle. It’s important to note, however, that for some cars you may pay a higher rate.
Pros
  • No restrictions on vehicle mileage or age
  • Quick approval times
  • No pre-payment penalties
Cons
  • Higher rates if you don’t pay online
  • Interest rates are high for long term loans
  • No physical branches
Get QuoteLightStream
Read the full review
Best Value
LendingTree isn’t a lender itself, but one of the ways it provides the best value for a consumer is by providing you with multiple offers from lenders.
This way you can weigh your options and choose the loan with the rate and term length that best fits your financial situation. As of July 2018, you may be able to get a loan with a rate of 3.99% for a new car and 3.19% for a used car. We must stress that these rates represent the best possible scenario in terms of credit eligibility, and rates can vary depending on your credit score and the car you want to buy. Loan terms can range from 18 months to 84 months. LendingTree works with a wide range of lenders, including local banks and larger institutions, some we’ve reviewed separately. One thing to keep in mind when using a service like LendingTree is that each offer you receive requires a hard inquiry which affects your credit score. The credit bureaus usually allow for some shopping, so several hard inquiries at once will only count as credit pull. One advantage to using LendingTree is that there’s no restriction on the car you can get a loan for. Some other lenders have limits on the mileage or age, but through LendingTree you can get financing for any car you find, though older cars tend to have higher interest rates.
Pros
  • Multiple offers can help you find the best rate
  • Can find a loan no matter your credit situation
  • No restrictions on car age or mileage
Cons
  • Multiple offers may require multiple hard credit pulls
  • You’ll receive many offers through phone and email
  • Not a loan provider itself
Get QuoteLendingTree
Read the full review
Best Credit Union
Credit unions often have lower rates and other advantages over commercial banks, but they do have membership requirements you need to meet.
Alliant Credit Union is the best credit union for auto loans, with some of the lowest rates we saw. Interest rates for a new car through Alliant are as low as 2.99%, and they start at 3.24% for a used car. These are among the lowest we saw, especially the new car rate. These rates are current as of July 2018 and reflect the rates you’d get if you meet the highest credit requirements. Interest rates vary depending on your credit score, income and the type of car you’re buying. Loan terms range from 12 months to 60 months. Some lenders offer terms of up to 84 months, which has the benefit of giving you lower monthly payments, but with a longer term you’ll likely pay more interest, increasing the overall cost of your car. Alliant doesn’t have any restrictions on the type of car you can get, nor on the mileage or age. There are no pre-payment penalties or origination fees. To get a loan through Alliant, you’ll need to become a member of the credit union. There are multiple ways to join. If you’re a current or retired employee of a business or organization partnered with Alliant, a family member or partner of an Alliant member, or live near its Chicago headquarters – or if you make a donation to a non-profit of Alliant’s choosing – you can become a member.
Pros
  • Low rates on new cars loans
  • Quick approval process
  • No pre-payment penalties
Cons
  • Need to meet membership requirements
  • No loans for longer than 60 months
  • Not many physical branches
Get QuoteAlliant Credit Union
Read the full review
Why Trust Us 

We’ve been reviewing auto loans for eight years, and for this update we spent 40 hours reviewing lenders rates, terms and lending requirements. We spoke to John Van Alst of the National Consumer Law Center. He told us that 70 percent of auto financing comes from dealerships. Consumers should know that dealerships generate most of their revenue from their financing and service departments. It’s worthwhile to check at your bank or credit union to see what you’re eligible for before financing through a dealership. Dealerships may advertise attractive deals, like 0% APRs, but only customers with the best credit scores are eligible for those offers. 

In researching the best auto lenders, we primarily considered banks and credit unions which tend to offer better interest rates than dealerships and other types of lenders. We also included a few services that help you find multiple loan offers, so you can choose the loan with the length and rate that works best for you.

How We Tested

To arrive at our ranking of auto lenders we compared the rates, terms and application process for each lender. Comparing rates is tricky; lenders base interest rates on your credit score, your debt-to-income ratio, the age of the car and how much you put down on the car, so they can vary widely. The rates we list come from each lender’s website and generally reflect the rosiest scenarios, like excellent credit and a low debt to income ratio. Your actual rate will probably vary considerably. And if you have less-than-excellent credit, your rate can be one percentage point higher – or more. According to Experian, the average interest rate on an auto loan is 5.17%, and many of the lenders offer potential rates much lower than that.


Loan terms typically range from 12 months to 84 months, and 60 months is about average for a car. A longer term can be helpful because you have lower monthly payments, but a longer term means you’ll pay more in interest over the life of the loan, increasing the real cost of your car.

We also looked for fees that lenders add. One of the more common fees is a prepayment penalty, or a fee for paying the debt early. Some loans precalculate the interest and include it in the loan, so even if you pay it off early, you still pay all the interest. Look for a loan with simple interest, one that calculates interest based on how much you owe.

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.


Get Preapproved: Getting preapproved 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 loan. 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.

Avoid Add-Ons: Dealers will often try to up-sell you additional features. Some of these include window tinting, anti-theft devices and interior protection packages. Van Alst reports that add-ons like these are where many of the most egregious markups occur, with no transparency or consistency in the pricing. It’s best to avoid them.