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Best Car Loan Companies

  • Bank of America
  • Pentagon Federal Credit Union Auto Loans
  • Carvana
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By: Emma Simon
+2 more
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Edited by: Justin Martino
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Reviewed by: Lauren Fix

Best Car Loan Companies

Car dealerships provide financing, but you can often find better rates through third-party lenders. Our research team vetted 23 auto lenders that are rated by more than 5,166 consumers. Read our guide to choose the best car loan company by comparing credit score requirements, application processes and special financing options.

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Our top picks for car lenders

Best bank car lender

Bank of America

Bank of America
1.6
5,784 reviews
Maximum loan amount
$100,000
Loan term lengths
12 to 75 months
Read Reviews
Bank of America is a nationwide lender that offers in-person and online services, making it a solid option for both kinds of shoppers. Its car loans are ideal for new and used car purchases, and it has specialized financing options for small business vehicles.
Headquartered in Charlotte, North Carolina, Bank of America is one of the largest banks in the U.S. and offers a range of banking products, such as checking and savings accounts and certificates of deposit (CDs). Customers can also use Bank of America for financing through various cash-back credit cards, personal loans and home and auto loans.
Pros
  • Savings, checking and investing options
  • Accounts for students
  • AI virtual assistant
Cons
  • Account fees might apply
  • Low APYs
  • Required account minimums for checking accounts
Best credit union car lender

Pentagon Federal Credit Union Auto Loans

Pentagon Federal Credit Union Auto Loans
1.5
50 reviews
Maximum loan amount
$100,000
Loan term lengths
36 to 84 months
Read Reviews
Pentagon Federal Credit Union, also known as PenFed, has financing for new and used cars as well as a car buying service powered by TrueCar. Its online car loan rate calculator gives you an estimate of your monthly payments based on your vehicle’s purchase price, down payment amount, loan term and interest rate. PenFed also offers great add-ons for car buyers, including an extended warranty program and gap protection for qualifying car purchases.
Pentagon Federal Credit Union (PenFed) is a not-for-profit organization that provides a range of financial products and services, including checking and savings accounts, credit cards, loans and investment services. In general, it has lower fees and better interest rates than most traditional banks. Anyone can become a member of PenFed.
Pros
  • Anyone can join
  • Over 85,000 ATMs
  • Low fees
  • Competitive rates
Cons
  • Must open savings account to establish membership
  • Some minimums required to avoid fees
Best for used car loans

Carvana

Carvana
3.2
5,230 reviews
Maximum loan amount
Varies
Loan term lengths
36 to 72 months
Read Reviews
Carvana combines used car lending and purchasing on its website, which lets you shop and finance your vehicle on one platform. Carvana has an efficient tool that lets you calculate how much car you can afford and determine what your monthly car payments will be based on your desired loan amount.
Carvana is an online vehicle retailer that sells used cars, trucks and SUVs. Customers can browse its vast inventory, purchase a car with cash, receive financing or trade in their existing vehicles. Carvana certifies all of its vehicles and provides a guarantee for 100 days or 4,189 miles, whichever comes first. CarvanaCare and Carvana Gap Coverage provide additional protection against damage and theft.
Pros
  • Seven-day money-back guarantee
  • Convenient online process
  • Wide selection
Cons
  • No delivery to Alaska or Hawaii
  • No price negotiation
Best online experience

LightStream

LightStream
2.9
39 reviews
Maximum loan amount
$100,000
Loan term lengths
2 to 20 years
Compare Offers Read Reviews
Disclosures
LightStream markets its online car loan process as simple and quick. Some borrowers are eligible for same-day loan funding. LightStream offers loans from as low as $5,000 up to $100,000, making it a solid option for borrowers with a variety of needs. LightStream also has a “Lending Uncomplicated” program that simplifies the lending process and lets you apply from your smartphone or tablet. Borrowing $10,000 at 8.99% APR with a term of five years would result in 60 monthly payments of $207.54.

LightStream is an online lender that helps people get personal loans for major purchases, home remodeling and debt consolidation, among other purposes. It offers competitive rates on loans, and there are no fees or penalties for early payments. LightStream is a division of Truist, a bank formed by the merger of SunTrust Bank and BB&T.

Pros
  • Competitive rates and terms
  • Potential for same-day funding
  • Easy online application
  • Rate discounts
Cons
  • $5,000 minimum loan amount
  • Requires good to excellent credit
Best for comparing car loans

LendingTree

LendingTree
1.1
1,583 reviews
Maximum loan amount
$50,000
Loan term lengths
Varies
Read Reviews
LendingTree’s online loan marketplace lets you compare car loan rates from multiple lenders. Fill out its online form, and you’ll be matched with up to five lenders. Its service is completely free for borrowers, making it a great and easy tool to compare rates and fees.
LendingTree is an online marketplace that matches you with one of its lending partners based on a questionnaire. LendingTree is free to use, and it offers users the chance to compare a range of financial products like personal loans, business loans, mortgages, insurance and credit cards.
Pros
  • Free, quick product matches
  • Network of more than 300 lenders
  • Easily compare loans, credit cards and insurance
  • Helpful resources
Cons
  • Not a direct lender, only a marketplace
  • Not all lenders shown will be a good fit
  • Can lead to spam
Best for bad credit

Auto Credit Express

Auto Credit Express
2.9
16 reviews
Maximum loan amount
Varies by lender
Loan term lengths
Varies by lender
Read Reviews
If you have a less-than-ideal credit history, Auto Credit Express may be the right lending platform for you. It specializes in helping consumers with bad credit find car loans by working with dealerships nationwide that provide special financing options. Auto Credit Express walks you through the bad credit loan application process and provides resources to help you improve your credit score.
Auto Credit Express is an online auto loan matching company that helps you find car loans and dealerships to fit your budget and qualifications. The website offers services for borrowers with bad credit and works with a nationwide dealer network to provide lots of options. It also accepts automobile trade-ins.
Pros
  • Easier approval for bad credit
  • Nationwide availability
  • Large network of dealers and lenders
Cons
  • It’s difficult to know rates in advance before getting matched
  • Your information is shared with network partners

Methodology

We chose our top picks car lenders by comparing possible loan amounts, credit score requirements and overall loan experience. In order to be chosen for a feature, the loan company had to offer the specified services and provide transparent information about its lending processes on its website or through its customer service department. All information is accurate as of publishing.

Auto Loan Companies Buyers Guide

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In this guide

Top Picks

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Bank of America logo
Pentagon Federal Credit Union Auto Loans logo
Carvana logo
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Whether you’re buying your first car or upgrading to a new model, understanding how auto loans work can help you make confident financial decisions. This guide covers everything you need to know about auto loans—from the types of loans available and how to qualify, to where to find the best rates and what loan terms to look out for.

How auto loans work

Auto loans are a type of installment loan used to finance the purchase of a new or used vehicle. When you take out an auto loan, a lender gives you the funds to purchase a car, and in return, you agree to repay the loan amount plus interest over a set period of time. Most auto loans are secured loans, meaning the vehicle you buy acts as collateral. If you default on the loan, the lender can repossess the car to recoup its losses.

Auto loans typically come with fixed interest rates and repayment terms ranging from 24 to 84 months. Your credit score, income and the vehicle's price all play a role in determining the interest rate and terms you're offered. Making consistent, on-time payments not only helps you pay off the vehicle but can also improve your credit score over time.

» LEARN MORE: Personal loans vs. auto loans

Types of car loans

There are a few different types of car loans available. Read about the available loan types below to see which one is right for you.

  • Secured auto loans: Most auto loans are secured loans that use the car being purchased as collateral. Secured auto loans tend to have lower interest rates, but the lender can take possession of the vehicle or property you put up as collateral if you stop making payments.
  • Unsecured auto loans: Unsecured loans don’t involve collateral. Given the risk involved, these loans normally have higher interest rates than secured auto loans and require a good credit score.
  • Precomputed interest loans: Precomputed interest loans have precalculated interest and principals that are determined before a borrower and lender agree and sign the financial paperwork.
  • Simple interest loans: Most car loans are simple interest loans. These loans use the amount you owe at the time of payment to determine how much interest your lender charges.
  • Lease buyout loans: A lease buyout loan is an option for borrowers that are unable 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 loans: Car refinancing is a great option for car owners who want a lower interest rate on an existing car loan. If you’ve recently raised your credit score, refinancing can be a great way to lower your monthly car payments.

Car loan requirements

Before committing to work with a car lender, be sure you're familiar with the company’s lending requirements. Lending requirements differ depending on the auto financing company you choose to work with but can include:

  • Minimum loan amount
  • Minimum income amount
  • Minimum down payment percentage
  • Minimum credit score

If you’re currently working with a car lender, be sure to ask about the requirements above in order to avoid any extra fees or charges.

» RELATED: Best online car sites

How to get a car loan

Getting a car loan is similar to other lending processes. While comparing car loan companies can seem overwhelming, finding a lender who offers competitive rates and terms saves you money over the course of your loan.

1. Determine how much you can afford

Before searching for financing, it’s important to determine how much car you can afford. The right car loan amount for you varies based on the stage of life you’re in, your financial situation and how large of a down payment you can make. Take some time to examine your current financial responsibilities. If you’re repaying student debts or making other loan payments, borrowing a smaller amount with a shorter loan term and lower interest rate may be the right choice for you.

» MORE: RV loan terms

2. Check your credit score

Your credit score is a significant factor in determining your rates for a car loan. You can check your credit score by using a variety of online credit reporting services, and many credit card providers have free credit score monitoring services. Also, everyone is allowed one free copy of their credit report each year, which gives an in-depth look at what’s on your credit report but does not provide a credit score.

Generally, consumers with high credit scores tend to receive lower car loan rates and better terms from auto lenders, while consumers with lower credit scores can have a difficult time finding a lender that offers affordable payment options. While buying a car with bad credit is possible, we recommend taking time to improve your credit score before purchasing a vehicle if you can.

3. Compare rates from multiple auto lenders

With so many car lenders out there, researching and comparing rates can seem like an overwhelming task. Start by applying for a car loan from each of the four types of lenders (banks, credit unions, online lenders and dealership financers) and comparing available interest rates and loan terms. Even if you plan to use a specific lender, it’s worth it to apply with multiple auto loan companies so you can negotiate your car loan rate with your preferred lender.

Auto loan rates

Auto loan rates vary depending on a few factors, including income and desired loan amount, but one of the most important factors in determining your car loan rate is your credit score.

Know the terms of the car loan

Before you dive into the financing process, take some time to familiarize yourself with the language used in car lending.

  • Annual percentage rate (APR): Loan companies offer different annual percentage rates based on an applicant's credit history, financial background and other factors. The lower your APR, the less you’ll pay over the life of the loan.
  • Monthly payments: Your monthly payment is the amount you’ll be billed each month. Generally, if your monthly payment is higher, you’ll be able to pay off your car 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 repaid.
  • Total cost: The total cost of a vehicle is calculated by knowing the loan amount, interest rate and length. 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.

Where to get a car loan

Many different loan providers offer car loans, and you may need to do some research to discover which is best for you. Be sure to apply for loans at a few different types of lenders to understand what each type is willing to offer.

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.

Dealership partners

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

Poor credit specialists

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

Refinancers

Many auto loan companies work with other lenders to refinance those lenders' existing loans. Refinancers can usually offer lower fees and better terms. Depending on where you live, it is a good idea to find an auto loan that has rates that are both locally competitive and nationally competitive.

Credit unions

Credit unions only lend money to their members. They are nonprofit organizations, so they often have very competitive lending rates. It’s 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 choosing one.

FAQ

What is a good APR for a car loan?

Interest rates and APRs on car loans vary based on your desired loan amount, credit score and income. For someone with excellent credit, a good APR on a new car is around 3.65% or lower, depending on the lender. APRs for used cars may be closer to 4%, though.

Is it better to finance a car through a bank or dealership?

Bank and dealership financing have their own advantages and disadvantages. If you’re buying a new car and have great credit, dealerships sometimes offer 0% annual percentage rate (APR) loans. However, getting preapproved by a bank or financial institution has several advantages, including:

  • Letting you shop around for the best APR
  • Providing more flexibility for people with bad credit
  • Giving you leverage when negotiating the price of your car

Remember that banks or other financial institutions may place limitations on the type of vehicle you can buy, including age and mileage.

Is a 72-month car loan bad?

While a lower monthly payment is tempting, we don’t recommend 72-month car loans because they:

  • Dramatically increase the overall cost of your loan
  • Quickly put you in a position where you owe more than the car is worth
  • Often leave consumers trading in their cars with negative equity

A 72-month car loan might be worth it if you have no other option, but do your research first to ensure you’re making an informed decision. Check to see if the lender has prepayment penalties in case you’re able to pay off the loan more quickly.

How can I get an auto loan with poor credit?

If you need to buy a car with bad credit, consider:

  • Finding a co-signer
  • Shopping around for preapproved loans
  • Improving your credit
  • Saving to make a more substantial down payment
Can you apply for auto loans online?

Yes, many banks and financing companies let you apply online, and looking for online lenders lets you find more options than what’s available in your local area. Having more choices is useful if you have bad credit.

How do you buy a car from a private seller?

When buying a car from a private seller, you’ll generally need to pay the full price of the car upfront (though this money can still be obtained through a bank or credit union loan). Be sure to have the seller or their lender sign the title over to you. You’ll also need to register the car in your name.

To register the car, you may need to provide documentation, such as the title and a bill of sale, and pay taxes and fees to your state government.

Disclaimer

Information in this guide is general in nature and is intended for informational purposes only; it is not legal, health, investment or tax advice. ConsumerAffairs.com makes no representation as to the accuracy of the information provided and assumes no liability for any damages or loss arising from its use.

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