We’ll get right to it: Truliant Federal Credit Union is the best overall credit union for getting a car loan, while Capital One Auto Loans is the best overall bank for auto loans. In this post, we also go into which financial institution is the best for military members (Navy Federal Credit Union) and which is the best for online car buying (Carvana).
We also explore what is an auto loan, places to get a car loan, the advantages of a dealership loan and more. Read on for more about auto loans and which financial institution is the best for your specific needs.
With our proprietary SimpleScore, we evaluate financial institutions to help us suss out which ones are the best for which situations. The SimpleScore looks at five criteria: minimum new car rate, minimum used car rate, maximum loan size, customer satisfaction and fees. At the bottom of this post, we go into more detail about the different criteria and what they mean for you.
New Used Lease Refinance
The 6 best places to get an auto loan in 2021
Best places to get an auto loan at a glance
|Lender||Starting APR||Loan Amount||Terms||SimpleScore|
|Truliant Federal Credit Union||as low as 3.24%||Up to $100,000||Up to 96 months||4.25|
|Navy Federal Credit Union||1.79%–5.59%||Undisclosed||Up to 96 months||4.5|
|LightStream||2.49%–11.89% with AutoPay||Up to $100,000||24 to 84 months||4.2|
|Capital One Auto Loans||Varies||Starting at $4,000||36 to 72 months||4.6|
|Carvana||Varies||Varies by state||36–72 months||4|
|Bank of America||as low as 2.49%||$100,000 max||12 to 75 months||4.4|
Rates accurate as of May 2021.
Best overall credit union – Truilant Federal Credit Union
Truliant is the doting grandma of auto financing — it’s just trying to help you buy a car at a reasonable rate.
as low as 3.24%
4.3 / 5.0
Truilant Federal Credit Union 4.3
While there are many great credit unions to choose from, the best one might be Truliant. It offers low interest rates and very flexible terms that meet just about anyone’s needs. Additionally, it has a lot of helpful perks that make your life easy, including Skip-A-Pay, which lets you miss one month’s payment every year without penalty. Truliant also has a 90-Day Deferred Payment where you can put off paying your first three months for more financial flexibility.
Best for military members – Navy Federal Credit Union
Navy Federal Credit Union is the VIP lounge of auto loan providers since you need a military connection to get in, but once you’re in you get solid rates and benefits.
1.79% – 5.59%
4.5 / 5.0
Navy Federal Credit Union 4.5
If you are connected to the military in some way, you definitely want to check out Navy Federal Credit Union when shopping for an auto loan. With rates as low as 1.79% and discounts for military members, you’ll be hard pressed to find a better offer elsewhere. An additional benefit is that you get a free Carfax report when you’re approved for a loan, allowing you to see a vehicle’s history. The only downside is that you have to have a connection to the military, either directly or through a family member. Read our full Navy Federal auto loans review.
Best for same-day financing – LightStream
LightStream is the fast food of auto loans — it’s quick, cheap and satisfying.
2.49% – 11.89% w/AutoPay
4.2 / 5.0
LightStream has perfected the art of simplifying auto loans. From your device, you can seamlessly check your rates, apply for a loan and even get funding all in the same day. LightStream has a Rate Beat Program, which offers a rate that’s 0.1% lower than a rate offered by a competitor for similar loans. Backed by financial giant SunTrust (now Truist), LightStream is many borrowers’ No. 1 choice for all kinds of financing — including auto loans.
Disclaimer: Your loan terms, including APR, may differ based on loan purpose, amount, term length, and your credit profile. Excellent credit is required to qualify for lowest rates. Rate is quoted with AutoPay discount. AutoPay discount is only available prior to loan funding. Rates without AutoPay may be higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice.
Payment example: Monthly payments for a $10,000 loan at 4.99% APR with a term of 3 years would result in 36 monthly payments of $299.66
© 2020 Truist Financial Corporation. SunTrust, Truist, LightStream, the LightStream logo, and the SunTrust logo are service marks of Truist Financial Corporation. All other trademarks are the property of their respective owners. Lending services provided by Truist Bank.
Best bank – Capital One
Getting an auto loan with Capital One is like playing tic-tac-toe with a two year old: you can’t lose.Capital One offers affordable auto loans to almost any credit score, and the lender has online tools to help you along the way. For example, Capital One has an easy-to-use online portal. It also has a car-finding tool to help you locate a vehicle at local participating dealerships and finance the car you select. Not only does this allow you to explore and compare several options, but it makes the process much smoother. By having your financing ahead of time, you can minimize your time at the dealership. Read our full Capital One auto loans review.
up to $100,000
4.6 / 5.0
Capital One 4.6
Best online car buying – Carvana
Carvana is like the Amazon of used cars, conveniently providing car shopping and financing all in one stop online.
Varies by state
Carvana is the most unique lender on this list since it also functions as an online dealership. When you visit its website, you can explore an assortment of used cars and find one you like near you. Carvana will even deliver the vehicle to you for free in some cases. You’re welcome to use third-party financing, but Carvana also provides auto loans. It takes about two minutes to fill out the form, and it instantly shows your terms without affecting your credit score. You’ll have the freedom to personalize your terms, and the competitive rates are valid for 45 days, which gives you a lot of information and time as you search for a used vehicle. Read our full Carvana car loans review.
Best for existing customers – Bank of America
Bank of America offers great auto loans, and the cherry on top is when you’re enrolled in its Preferred Rewards program.
as low as 2.49%
4.4 / 5.0
Bank of America 4.4
Bank of America offers auto loans beginning at $7,500 ($8,000 if you live in Minnesota) and offers competitive rates with its APR for a new car starting at 2.49%. As with any car loan, your creditworthiness and loan type will affect the rate. Members who are enrolled in Preferred Rewards at the time of applying will get a 0.25% to 0.5% discount on their auto loans. If you’re already banking with Bank of America, it makes sense to get auto financing from them as well, although it’s always worth shopping around to find the best offers. Read our full Bank of America auto loans review.
What is an auto loan?
Vehicles are so expensive that most people cannot afford one outright. To buy one, you can use an auto loan. This means you’re borrowing the money you need from a lender, purchasing the vehicle and then slowly paying back the lender in small payments over the course of months or years. This works the same way whether you’re buying a used car or refinancing. The lender will charge interest to make a profit, so in the end, you’ll pay a little more money than the vehicle’s purchase price. Various factors affect your interest rate, such as your credit score and which lender you choose. It’s always wise to shop around to see which lender can offer you the best terms.
[ Read: The Best Used Car Loans of 2020 ]
Places to get an auto loan
Unlike banks, credit unions are controlled by their members. Generally speaking, credit unions are not aiming for profits as much as they’re focusing on helping people. The result is lower interest rates and better customer service, which are big advantages for borrowers. Another advantage to credit unions is they might be more flexible even if you have poor credit. Like most lenders, the process involves you providing information, such as your income, employment, identity, the car you’re buying and sometimes proof of insurance. They’ll likely check your credit history as well, then let you know if you’re approved.
[ Next: How to Get a Car Loan With Bad Credit ]
When working with banks, you can shop around and get pre-approved for multiple loans, then compare the rates and pick the best one for you. Depending on your bank, you might be able to apply online for pre-approval or you may have to visit a branch. You’ll provide all the information the bank needs, including details on the vehicle you’re going to buy. The bank will give you a quote, which you take to the dealer. Being pre-approved may keep the salesman from adding unnecessary add-ons. Keep in mind that banks sometimes have particular limits when qualifying used cars if the mileage and age doesn’t meet their standards.
Online lenders offer fast and convenient financing from the comfort of your home. With a connected device, you can easily compare several online lenders in a few minutes, evaluating their loan amounts, terms and interest rates. Not only that, but online lenders are often willing to lend to people with less-than-ideal credit scores. The tradeoff, however, is that online lenders typically have pretty steep interest rates and may have poor customer service. Before you take out an auto loan from an online lender, it never hurts to check the company’s reviews on Better Business Bureau or Yelp.
Dealerships are like the clothing stores of cars — they’re businesses that specialize in selling cars on a retail level. A dealership has a team of salespeople trained in the art of getting a car loan for you. From here, there are three paths you might take. One, the dealer can shop around with lenders and arrange an auto loan for you.
[ More: The New Car Buying Guide ]
While it’s nice they do the work for you, you may end up with a higher interest rate than you would prefer, not to mention they may tack on a fee for the service. Option two is you might be able to take out a loan from the car manufacturer. Several car brands have their own financing division, such as GM Financial. The third option is you can take out a loan from the dealership itself, which can also function as a lender.
Benefits of dealer financing
The big benefit of dealer financing is how hands-off it is for the borrower. Basically, the dealer handles all of the heavy lifting — hunting down a loan and finalizing the paperwork. You can sit there, answer any questions the dealer might have and simply wait for the car loan to fall into your lap. Sometimes dealerships can be intimidating — they are trying to make a sale, after all — however, it’s nice to have a guide to walk you through the complexities of buying a car with a loan. Dealers have years of experience when it comes to getting auto loans for their buyers, which means they know where to get financing for your particular circumstances and needs.
How to choose the best place to get an auto loan
- Check your credit report: Your credit score is a big factor in determining what interest rate you can secure and how much you can borrow. Before you start applying for auto loans, look over your credit report for errors. Things like fraudulent activity can result in higher interest rates, or you may be disqualified for an auto loan altogether.
- Apply to multiple lenders: Now it’s time to research and apply to various lenders for auto loans, such as your local banks and credit unions, online lenders, dealership financing and big national banks. Compare your different offers, analyzing the annual percentage rate, down payment, loan term and fees.
- Get pre-approved for the best option: Pre-approval will give you a close, if not exact, figure of what you’ll be paying if you take out a car loan. The process typically involves giving personal information such as your Social Security number. Once you’re pre-approved, you can visit a dealer knowing you have financing and how much it’ll cost you.
Auto loan FAQs
Is it better to finance through a bank or a dealership?
It comes down to whether you want convenience or a lower cost. Financing through a bank is the same as financing through a dealership, but the dealer is doing the work for you. To compensate for its service, the dealer may factor in a fee.
What credit score do I need for an auto loan?
In quarter four of 2018, the average credit score of borrowers who received an auto loan for a new car was 718. If your score is lower than that, you can still qualify for an auto loan, but your options may be limited.
How does my credit score affect my car loan?
Generally speaking, the higher your credit score is, the better chance you have of getting a low-interest rate and fewer restrictions on your car loan. However, you still have a lot of options for auto loans even if you have bad credit.
Too long, didn’t read?
The best place to get an auto loan depends on your needs and circumstances. Dealerships essentially do the work for you, but banks and credit unions may offer lower interest rates. If you need fast financing, consider using an online lender like LightStream.
Last updated November, 2020 — Added SimpleScore data and updated editorial guide. We welcome your feedback on this article and would love to hear about your experience with the auto loans we recommend. Contact us at firstname.lastname@example.org with comments or questions.