The main factor that determines your eligibility for an auto loan is your credit score. Consumers with bad credit can still get an auto loan, but they should expect to pay higher interest rates.

Search around for an auto loan before you buy your vehicle. While dealerships offer financing, they don’t always have better rates than your local bank or credit union. It’s a good idea to have a few quotes from other lenders in hand when you walk into the dealership to buy your new car.

Top 10 Best Rated Auto Loans

RoadLoans.com offers car loans and auto refinancing loans for customers within a wide range of credit scores. Instant online decisions allow customers to get pre-approved before shopping for a new or used vehicle.
CarsDirect provides auto loans for people with bad credit, no credit or who have filed for bankruptcy. Applications are processed within minutes, and CarsDirect partners with auto dealers to provide online auto browsing.
PNC Bank offers full service banking, including auto loans. Consumers can get auto loans for purchasing a new or used vehicles. They can also get loans to refinance an auto or buy out a lease. Applications can be completed online.
Car Credit City is an auto dealer with locations in Missouri and Illinois. The dealer offers financing for customers without involving outside banks, which allows it to offer credit to customers turned down by other lenders.
Mazda offers financing through Chase Bank. Consumers can apply for financing online, so they have a credit offer before they visit a Mazda dealer. Approved customers can use several online tools to manage their accounts.
Wells Fargo Auto Loans provides auto refinancing to customers wanting to lower their payments, as well as loans for people shopping for a new or used vehicle. Discounts are available for Wells Fargo checking customers.
Large national bank Chase offers a program where customers can get loans in order to purchase an automobile. The company, headquartered in New York City, NY, offers both auto loans and loan refinancing.
Toyota began offering financing directly to consumers in 1983 through Toyota Financial Services (TFS). TFS offers special deals for certain groups, including recent college graduates and military service members.
Capital One Auto Financing offers online auto financing pre-approvals through its Auto Navigator service. Existing car owners can apply online through Capital One to lower monthly payments by refinancing a car loan.
CashPoint offers car title loans to borrowers who own an automobile without a lien. Borrowers can be approved and get cash very quickly. CashPoint serves consumers in Virginia and surrounding areas.

Lauren Fix is an automotive expert who earned the title of The Car Coach, and is recognized throughout all forms of media as a woman with in-depth knowledge on vehicles, technology, automotive finance, repair and trends. Founder of Automotive Aspects, Inc., her understanding of automobiles has made her the “go to” person on TV, radio, print and the internet. She writes a column for multiple outlets including Parade Magazine, NewsMax and Car Coach Reports. She is a regular guest on all the major news and morning shows discussing the latest updates on cars that will help drivers of all ages learn to about cars and make smart decisions.

Want your company to be on this guide?

What features matter most?

Total cost

When purchasing a vehicle, always know the total cost before seeking financing. This will help determine if the vehicle is affordable in your budget with your credit rating. Total cost is calculated by knowing the loan amount, interest rate and length of years.

  • Trade-in value: This value an offer from the dealer, this price is typically less than you'd get in a private-party sale because the dealership must factor in the cost to recondition the vehicle and make a profit when it resells it. The plus for car shoppers is that trading in your car can be very convenient and you can take the equity from the trade-in toward your next auto. Basically, you want the car to be worth more than you owe on it. If you owe more than the vehicle is worth, then this is considered “upside down” and will make your payments higher.
  • Down payment: Making a significant down payment on a loan can reduce the overall total cost of the loan. It's best to make a down payment of at least 15 percent of the total cost.
  • Affording the vehicle: Your monthly income will impact your auto loan payment. A general guide is 20% of income. However, a conservative spender might base their calculation only on the extra income they may have every month, while a more aggressive spender might focus on current expenses.

Loan minimums and stipulations

Some auto-loan companies put restrictions on the amount of a loan that can be given or a vehicle that can be purchased.

  • Minimum loan amount: There are car companies that require customers to borrow at least a certain amount of money, ensuring that they do not take out a loan that is too small.
  • Income requirements: Many auto-loan companies require customers to have a certain steady monthly income in order to take out a loan. Proof of income will be required.
  • Zero percent financing: Zero percent financing is sometimes available, however, 0% financing is almost impossible to get without excellent credit. The vehicle price may be inflated to make up for the loss in interest. Typically, other incentives and offers do not typically apply. Additionally, even if the dealership does not require any money down on the car itself, there will still be fees due up front to the state, as well as taxes and dealership fees. You should also check whether lack of a down payment impacts the interest rate or other terms of the loan.

Terms

Auto loan companies provide consumers with funds to purchase a new car, and they also negotiate the terms of the loan with financial institutions.

  • Annual rate: Based on an applicant's credit history, financial background and other factors, loan companies will be able to offer different annual rates on loans.
  • Monthly payments: Monthly payments can vary with each customer and company. Generally, when the monthly payment is higher, the customer can pay off the loan quicker. Loans can have varying term lengths, but most commonly people choose to pay off their loans in 36 months or 60 months, otherwise the interest fees can become very expensive. Down payments or cash paid in advance can lower your payments as well. There typically are no prepayment penalties, if you choose to pay off the loan quicker.
  • Short term auto loans: Companies that offer short term auto loans give customers a maximum amount of weeks in which they can pay the loan. They often do not have fixed dates for repayment installments, simply a date by which the total must be re-payed.
  • Total cost: A common mistake with car loans is to focus on the monthly cost of the car payment and lose sight of the overall total cost of the loan. Make sure you know the total you are willing to pay for the car before you focus on monthly rates. That will prevent you from spending more than you want, or worse, more than the car is worth.

Locality

Depending on where you live, it is a good idea to find an auto loan that has rates that are both locally competitive and competitive with the national average.

  • Local banks: Big banks usually have very specific and conservative loan policies, and might only cater to those with better credit scores. They sometimes won't be able to offer loan rates that are as competitive as local banks that you already have a good relationship with. This also gives the advantage of being able to stop by a local bank office and talk with an actual person to improve your chances of securing a good deal on a loan.
  • Local credit unions: Credit Unions only lend money to their members. They are non-profit, so they can have very competitive lending rates and it is always an advantage to have a personal relationship and history of being part of the credit union.
  • Dealer Financing: Manufacturers may have their own credit companies or relationships with banks that can offer better rates. Make sure to compare all offers before deciding.
  • Financing elsewhere: Financing can be offered by government offices, military banks and other outlets. If you have a relationship with these outlets, consult with them on car loans and special offers.

Network

Depending on the company, it may have certain car dealerships that it works within order to secure loans.

  • Large scale: Sometimes, car loan companies work with giant networks of dealerships to provide loans. With a large-scale network, the lender will work in conjunction with car retailers throughout the country to provide customers loans.
  • Particular dealerships: Some car loan companies only work with a handful of very particular car dealerships to provide only their customers loans. Some car lots will even self-finance for customers with poor credit, however the interest rate will be very high.

Clients

Companies target different types of clients, so it's important for consumers to work with a company that caters to the type of loan they need.

  • Poor credit: Some companies particularly target consumers with poor credit to help them get loans despite their credit history.
  • No credit: Some companies work with clients who don't have a poor credit history but who simply haven't built a credit history yet because they haven't taken out credit cards or loans.
  • Good credit: Some companies love working with clients with a high credit score, because they can negotiate lower interest rates and monthly payments for them.
  • Consumer preference: There is no right answer here. You should get a loan wherever you find the best deal that suits your needs and comfort level. Some people prefer to shop online for a new auto loan. Others want to sit in front of a person—at a dealership, bank, or credit union—and negotiate. No matter where you prefer to get a loan, you should compare prices with different lenders, even if they're all local banks or all online lenders.

What are different types of auto loans and loan companies?

Poor credit specialists

Many auto-loan companies specialize in working with consumers with poor credit or those who have just gone through a bankruptcy. These companies can often help to negotiate loans and secure better terms rather than if consumers go straight through a car dealership.

Banks

Many banks and large financial institutions double as lenders and have specialists that work on auto loans. Instead of working with other lending institutions, these companies typically supply the loan money themselves.

Refinancers

Many auto-loan companies work with other lenders, refinancing those lenders' existing loans and taking on their debt for the benefit of interest and borrowers' payments. Refinancers can usually negotiate lower fees and better terms, which is beneficial to both the lender and the borrower.

Dealer partners

Some companies partner with dealerships directly in order to connect with consumers, check lenders credit history and set them up with a new or used car and a special loan repayment schedule. These are different from companies that actually offer the loan money and approve it themselves, they actually work with dealerships to help consumers get approved for the loan, through the dealership.

A pre-computed loan

This is a basic principal and interest loan. The interest and principal payments are pre-calculated before a borrower and lender agree and sign the financial paperwork. A big disadvantage of this loan type is that you cannot make car-payments in advance and expect to forego interest payments.

A simple interest loan

This is similar to the pre-computed loan, but with one major difference. Interest is charged every day on the basis of the balance you currently owe. Therefore, the faster you pay the balance off, the less interest you'll pay overall. A simple interest loan with no prepayment penalties will be beneficial for those people who pay in advance.

A secured loan

A secured loan is a loan in which you offer collateral against the loan. The collateral is usually another vehicle or the house of the borrower. Note that if you don't pay off the loan, the lender can take possession of the property you put up as collateral.

Unsecured loans

Unsecured loans are usually the most preferred type of auto-loans. Here, the lender provides the loan on mere faith that you will keep your word. Given the risk involved, these loans are accompanied with high interest rates. A high credit rating will be required.

A lease buyout loan

A lease buyout loan is an option for borrowers who are not going to be able to buy out the remaining amount on their car lease. A commercial lender will pay out the remainder of the balance on their lease, and the borrower will need to make regular payments to the lender.

Car refinance loan

This type of loan can be considered as a loan upon a loan. It helps borrowers who cannot afford to pay the high installment loans amounts. Note that while a car refinance loan may lower the installment amount, the lender may slightly raise the borrower's interest rate and it will take longer to pay off the loan.

Who's it for?

Consumers with good credit

Consumers that have a high credit score and good credit history can benefit from taking out a loan with a very low APR and low monthly payments if they don't have the money to pay for the car up front.

Consumers with poor credit

Consumers with poor credit or who have recently gone through bankruptcy can work with certain auto loan companies to negotiate a loan, or the dealer directly. No matter how bad their credit is, some companies specialize in working with this specific group.

Refinancers

Many consumers are already making payments on a car, but want the option of refinancing in order to lower their monthly payments or negotiate a better rate on their loan. Consumers in need of refinancing help can often get free advice from auto loan companies or pay for their services in helping to renegotiate the terms of their existing loan.

Consumers who need advice

Many customers simply need to talk to loan specialists in order to figure out what their options are in terms of taking out a car loan as opposed to paying up front or finding another way of purchasing a new or used car from a dealer or private seller.

Company reviews

  • RoadLoans.com

    RoadLoans offers loans on new and used cars from dealers, as well as purchases from individuals. The company also offers cash-back refinancing options and specialize in providing great rates for customers with poor credit history. This online financing company works with online sales and offers pre-approved auto financing.

    • Low credit applicants: Applicants who have a hard time getting a loan from other lenders because of low credit scores can work with RoadLoans.com to get approved for a loan.
    • Easy payment options: Customers of RoadLoans can pay their loan repayments in a myriad of ways, including phone, mail, MoneyGram, Western Union and ACH, making it convenient for any customer.
    • Instant application: The company allows applicants to apply instantly online and get a loan decision by e-mail in less than 30 seconds.
    • Apps: They have a convenient app that offers users a complete resource center to manage their loans. Customers can easily log in from their mobile devices to check on the balance of their loans, make payments and contact support.
    • Fees: There are no application fees when you apply. When your application is approved, you download the loan documents and instructions online and return the required signed documents to RoadLoans. There is no obligation to activate the loan.
    • Competitive rates: They offer competitive rates and make it easier for borrowers to pay back their loans with low interest. The rates depend on a borrower's credit history and income level but it can be as low as 3 perfect.
    • Best for Customers with low credit scores who have had trouble getting approved by other lenders.
  • Chase Auto

    Chase is one of the leading providers of auto loans in the country. They provide loans at competitive interest rates for a variety of automobile purchases.

    • Best for Customers with a Chase Bank or JP Morgan accounts and customers looking for a low APR loan on a car.
  • Auto Credit Express

    Auto Credit Express offers loans and dealer connections, and it caters particularly to borrowers with bad credit. The company works in both the U.S. and Canada. They also have special financing programs for people with credit problems.

    • Best for Individuals with bad credit or who have just gone through bankruptcy, and want to repair their credit rating at the same time.
  • CarsDirect

    CarsDirect has been in business since 1998 and has helped millions of customers get approved for car loans on new and used automobiles. The company also provides free advice to potential borrowers.

    • Best for Those who need advice on getting a car loan for a new or used vehicle or have a poor credit history.
  • BlueSky Auto Finance

    BlueSky Auto Finance is a lending and refinancing company that has been in business since 2004. They work with customers to help them understand their auto loan options and achieve the best available rates.

    • Best for Consumers who want to refinance their loans or want to learn about the best loan options.
  • Wells Fargo Auto Loans

    Wells Fargo is one of the most widely recognized names in the finance and lending world. They have been in business for over 20 years and have a large, nationwide team.

    • Best for Consumers with good credit, those looking to refinance their loan or those who want to consolidate their auto loan debt.
  • Capital One Auto Financing

    Capital One Bank is a well-known financial institution that provides auto loans and financing for new and used cars. The company was founded in Richmond, VA in 1988. 

    • Best for Customers with good credit ratings who want the best deal on auto loans.
  • USAA Auto Circle Program

    USAA Auto Circle Program is known financial institution that provides auto loans and financing for new and used cars. They are a bank and insurance company. They were founded in 1922, in San Antonio, Texas, when 25 Army officers come together and decide to insure each other's automobiles. USAA provides a full range of highly competitive financial products and services to the military community and their families. And our world-class employees are personally committed to delivering excellent service and great guidance,

    • Low rates: USAA can provide low rates with no hidden fees. No prepayment penalties, no application fees, no hidden closing costs and no payments for up to 60 days.
    • Apply online: Apply online in as little as 5 minutes. In most cases, you'll get your decision instantly. You can E-sign your approved loan immediately. They can even store your documents online for 24/7 access. You must be a member of USAA. Open to all branches of the military and their families who are currently enlisted or retired from all ranks.
    • Resources: The Auto Circle program offer research information and a car buying service.
    • Variety of loan options: The company provides a huge range of auto loan options, whether buyers are purchasing used vehicles, new vehicles or refinancing.
    • Best for Customers with a military relationship from all ranks, looking for discounts on autos, insurance and financing on auto loans.

  • PNC

    PNC Auto Loans customized to suit your needs – they can help you shop for new or used cars with one of our auto loans. PNC Bank was founded in 1852, they are an American Financial corporation.

    • Low rates: PNC offers competitive rates for loans between $7500 and up. Current customers of the bank can earn better rates.
    • Apply online: PNC Check Ready Auto Loan can help you shop like a cash buyer, putting you in the driver seat. Get pre-approved in dealer, online or on app before you purchase.
    • Resources: Back Seat Driver videos and research resources shows how much car you can afford by reviewing rates and estimating a monthly payment. They use the NADA guides to look up the value of new and used cars.
    • Variety of loan options: The company provides a huge range of auto loan options, whether buyers are purchasing used vehicles, new vehicles or refinancing.
    • Best for Customers with good credit ratings who want the best deal on auto loans.

Auto loan negotiation

 

Negotiating your auto loan

Kate WilliamsAuthor: Kate Williams, Ph.D.

 

You know you can negotiate the price of your vehicle, but what about the loan and its terms? How should you shop for an auto loan, and what can you do to negotiate terms you are comfortable with? Here’s everything you need to know about why and how you should successfully negotiate your auto loan so you can get the interest rate and payment amounts you want.

 

Why negotiate?

An auto loan is a long-term commitment, so you want to make sure you are only agreeing to terms you can actually afford. The reality is a lot of consumers are afraid of negotiating. In fact, a recent survey done by Auto Trader found that of 1,000 car buyers, deal negotiations was one of the top two points of concern with 33 percent of participants citing it as one of the most painful parts of car shopping. The survey also found, however, that once car buyers had actually gone through the process only 17 percent of them said they had a negative experience negotiating.

What this means is negotiating is not as bad as you might think it is. Lenders and car dealers who offer financing aren’t necessarily out to price-gouge consumers. They want your business, and if they happen to make a few extra dollars in the process, well, so much the better for them. If you negotiate, however, you and the lender can both come out ahead--you with a better interest rate and the lender with a happy, paying customer.

Note that negotiating the terms of your auto loan doesn’t always work with every lender. Banks and credit unions tend to be more firm in their offers than dealerships. If you have access to a credit union, be sure to check their rates compared with your bank since they tend to offer .5 percent to 1.5 percent lower rates than banks.

In addition, realize you only have so much room to negotiate. If you have a fair credit score, for instance, you aren’t going to be able to negotiate for a 0 percent Annual Percentage Rate (APR). Spend some time researching loans based on your credit score so you can enter negotiations with a clear understanding of what you can reasonably ask for.

 

How to negotiate your auto loan

You’ve done your loan shopping, found the car you want and are ready to finalize things and get back on the road. Now what?

The first step is to shop around at a variety of lending institutions. Talk with your local credit unions and banks as well as reputable online lenders to find the best rate. While you’re talking, make sure to mention you are shopping around for rates. Lenders don’t necessarily offer the best rate available to you unless they know they’re competing with other financial institutions.

Take the best offer you’ve received with you to the dealership when you meet with them to buy the car and discuss financing. While banks and credit unions typically are firm with their offers, car dealerships tend to have more breathing room and can negotiate with you to ensure their sale. Tell the financing officer you have already been pre-approved and see what they can do to beat your current offer.

 

Auto loan

 

Fact and fiction about auto loan negotiation

Are you still feeling nervous about negotiating for your next auto loan? I’ve busted some common misconceptions about auto loans to help you with your next car buying experience:

 

Fiction

Shopping around for the best auto loan rate will sink your credit score.

Fact

It’s true your credit score might take a small hit when you’re shopping around for a loan, but the hit is not going to make the difference between having good credit and bad credit. Even better, the credit reporting agencies generally view any inquiry into your credit score for a car loan as just one event when it’s done within a two-week time span. This means you can shop around for a loan without ruining your credit. Just make sure you’re only shopping for a loan when you’re actually ready to buy a car, otherwise you really do risk damaging your credit score unnecessarily.

 

Fiction

Lenders don’t have any room to negotiate when it comes to auto loans.

Fact

You aren’t going to be able to negotiate a lender down drastically, say from 10 percent interest to 3 percent. You might, however, be able to negotiate from 3.5 percent down to 3.1 percent--a relatively small difference, but enough to add up over the length of your loan. The key is finding lenders who do negotiate. Some stick to their first offers firmly, while others are willing to work with you in order to keep your business (i.e. dealerships). Your best chances for negotiating a loan are to go in knowing what your credit score is and what type of loan you should qualify for.

 

Fiction

Getting a loan from the dealership is always the best way to go.

Fact

Sometimes getting a loan from the dealership will give you the best interest rate, and other times you’ll have better luck with online or local banks or credit unions. It’s important to shop around at a variety of lenders before stepping foot into the dealership. Use the best interest rate you have been offered as leverage when you talk to the dealership about financing, and you just might walk out of there with the lowest interest rate you can get with your credit score.

 

Fiction

Dealership financing comes from their own bank.

Fact

Dealerships are not financial institutions and therefore are not the ones actually financing your vehicle. What happens when you get dealer financing is that your dealer shops your credit score around to a bunch of lenders to offer you a rate. Because they are looking at multiple lenders, dealerships have room to negotiate more than a traditional bank does. This means they should be able to find you the lowest interest rate for your credit score, but that doesn’t necessarily mean you should work with the dealership. In addition, some dealerships actually tack on a fee when they sell your loan to a lender, meaning you might end up paying more going through dealership financing even though they offered you the best interest rate. Check dealer reviews, and ask up front if you are going to be charged additionally when your loan period begins.

 

Fiction

It’s always easier to work with your dealership.

Fact

Well, sometimes it is, but sometimes working with your local bank is easier if you qualify for the same loan rate at both places. Working with dealership financing might make buying your car easier, but over the course of your loan you might prefer working with your local bank who can answer questions and talk to you in person whenever you have questions or problems with your loan. Because dealerships work with multiple lenders, you might end up with a bank all the way across the country that is more difficult to reach out to when you need help with your loan.

 

Dealerships

 

Conclusion

When it comes to negotiating your auto loan, knowledge is your best resource. Know your credit score as well as the general range of APR you should expect to get based on your credit score. Talk to local banks and credit unions before you head to the dealership, and recognize that getting a loan through your dealership might not be your best option, even if they offer a comparable interest rate. Make sure to read through our consumer reviews to find an auto lender that will work for you.

 

11 – 22 Best Rated Auto Loans

Chrysler Financial was establish in 2013 to offer financing to consumers shopping for vehicles at Chrysler dealerships. Consumers can apply online and shop for a vehicle the same day. Borrowers can manage their accounts online.
Lexus offers auto financing to consumers through Lexus Financial Services. Consumers can use the lender to purchase or lease a new of used Lexus from a Lexus dealer. Interested consumers can apply for credit online.
Honda Financial Services has provided financing for autos, motorcycles, power sport vehicles, marine engines and power equipment since 1980. Borrowers can calculate payments, apply for credit and manage their accounts online.
Citizens Financial Group has roots going back to 1828, and is headquartered in Providence, R.I. It offers banking services to residential and businesses consumers in 11 states. Auto financing is available in additional markets.
GMAC, General Motors’ lending company, was established in 1992 as AmeriCapital. It offers financing for new and used vehicles from GM dealers. Consumers can apply for financing online and view resources about buys a car.
Delaware Title Loans is a car title lender. Interested borrowers can apply in stores or online and receive immediate approvals. Loans are available up to the amount of $15,000. The company has locations across Delaware.
Mercedes-Benz Financial offers financial for customers of Mercedes-Benz dealers in the United States, Canada, Mexico, Argentina and Brazil. Consumers can apply for credit, compare purchasing options and estimate payments online.
Auto Credit Express is an auto-loan company that offers customers with good or bad credit the ability to get pre-qualified for an auto loan. Special financing for the military and people with bad credit histories is available.
By partnering with select lenders and auto dealers, BlueSky Auto Finance provides auto financing to people with less-than-perfect credit. Online approvals are completed within minutes, and auto refinancing is available.
Out of Business