Best Auto Loan Rates for 2020

Unless you’re paying for your car in cold hard cash, you’ll need an auto loan. Last year, the average new car loan reached a record $31,722, making it more important than ever to shop around for a low interest rate. To find the best auto lenders in 2020, we used our proprietary SimpleScore methodology to compare every major lender’s rates, fees, maximum loan size, maximum used car rate and customer satisfaction.

Lending Partner
Min. Loan
APR Range
Term
  • LightStream
    Min. Loan
    $5,000
    APR Range
    2.49% – 9.49% w/AutoPay
    Term
    24–84 months
    LEARN MORE
    on lender’s secure website
  • PenFed
    Min. Loan
    $500
    APR Range
    Starting at 1.39%
    Term
    36–84 months
    LEARN MORE
    on lender’s secure website
  • MyAutoloan
    Min. Loan
    $7,500
    APR Range
    3.49%–21.08%
    Term
    24–72 months
    LEARN MORE
    on lender’s secure website
  • Auto Credit Express
    Min. Loan
    N/A
    APR Range
    N/A
    Term
    24 – 72 months
    LEARN MORE
    on lender’s secure website
  • CarsDirect
    Min. Loan
    N/A
    APR Range
    3.00% – 12.90%
    Term
    24 – 72 months
    LEARN MORE
    on lender’s secure website
  • Auto Credit Express
    Min. Loan
    N/A
    APR Range
    N/A
    Term
    24 – 72 months
    LEARN MORE
    on lender’s secure website
  • CarsDirect
    Min. Loan
    N/A
    APR Range
    3.00% – 12.90%
    Term
    24 – 72 months
    LEARN MORE
    on lender’s secure website
  • LightStream
    Min. Loan
    $5,000
    APR Range
    2.49% – 9.49% w/AutoPay
    Term
    24–84 months
    LEARN MORE
    on lender’s secure website
  • MyAutoloan
    Min. Loan
    $7,500
    APR Range
    3.49%–21.08%
    Term
    24–72 months
    LEARN MORE
    on lender’s secure website
  • Penfed
    Min. Loan
    $500
    APR Range
    Starting at 1.99%
    Term
    36–84 months
    LEARN MORE
    on lender’s secure website
  • LightStream
    Min. Loan
    $5,000
    APR Range
    2.49% – 9.49% w/AutoPay
    Term
    24–84 months
    LEARN MORE
    on lender’s secure website
  • MyAutoloan
    Min. Loan
    $7,500
    APR Range
    3.49%–21.08%
    Term
    24–72 months
    LEARN MORE
    on lender’s secure website
  • LightStream
    Min. Loan
    N/A
    APR Range
    2.49% – 9.49% APR w/AutoPay
    Term
    24–84 months
    LEARN MORE
    on lender’s secure website
  • PenFed
    Min. Loan
    N/A
    APR Range
    N/A
    Term
    N/A
    LEARN MORE
    on lender’s secure website
In this article

    The best auto loan rates for 2020

    The best auto loans at a glance

    LenderAPRLoan AmountTermsKey BenefitSimpleScore
    LightStream2.49% – 9.49% APR w/AutoPay$5,000-$100,00024-84 monthsNo restrictions on age or model of vehicle4.4
    OneMain FinancialVariesVaries by stateVariesSecured and joint loan options1.5
    ClearlaneVaries$5,000-$100,00036-72 monthsCheck offers from multiple lenders4
    Bank of AmericaStarting at 2.69%$7,500-$100,00012-75 monthsInterest rate discount for Preferred Rewards members4.2
    U.S. BankStarting at 2.84%$3,000-$100,00012-72 monthsSame starting interest rates for new- and used-car loans3.2
    Capital OneVaries$4,000 +36-72 monthsDoes not require down payment3.8
    RoadLoansVaries$5,000-$75,00012-72 monthsNo credit requirements2.8
    ChaseVaries$4,000 +48-72 monthsBest Price Program3.4
    BlueSkyVaries$7,500-$30,00024-72 monthsFree dealer match3.6

    Rates accurate as of September 2020.

    The best auto loan companies for 2020

    Best overall – LightStream

    LightStream is confident, like “Mr. Steal Your Girl” confident. If you think you can find a better rate with someone else, LightStream will beat it by 0.10 percent.

    Loan Amount
    N/A
    APR Range
    2.49% – 9.49% w/AutoPay
    Term
    24–84 months
    SimpleScore
    4.2 / 5.0
    close
    SimpleScore LightStream 4.2
    New Car Rates 4
    Loan Size 5
    Used Car Rates 4
    Customer Satisfaction 3
    Fees 5

    LightStream is the online lending division of SunTrust Bank. It offers auto loans for new and used car purchases, private party purchases, lease buyouts, classic cars and unsecured loans (if you have very good credit.)

    LightStream rewards the comparison shopper with its Rate Beat Program. If you find a lower rate with a competing lender, LightStream will offer a rate 0.10 percent lower than that competing rate (excluding secured loans). There are also no restrictions on make, model or mileage of the vehicle. LightStream charges no application fee or late payment fees. If you fill out an online application, you may have funds deposited to your bank account on the same day.

    LightStream Disclosure

    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 for same-day financing – OneMain Financial

    OneMain is a bit old school — you’ll have to go in, like in person, to one of its branch offices to apply for an auto loan. Its generous policies for bad credit borrowers will make it worth the effort for some.

    Loan Amount
    N/A
    APR Range
    18.00%–35.99%
    Term
    2–5 years
    SimpleScore
    1.5 / 5.0
    close
    SimpleScore OneMain Financial 1.5
    New Car Rates 1
    Loan Size 1
    Used Car Rates 1
    Customer Satisfaction N/A
    Fees 3

    OneMain Financial can be an expensive lending option, with a super high starting interest rate (18%) and an origination fee. It also has the lowest maximum loan amount of our recommendations, at $20,000. Depending on the car you plan to purchase, especially if it’s new, OneMain may not be able to lend enough funds to cover it.

    But, if you have poor credit, it can be a great choice for your auto loan. OneMain has no minimum credit score requirement.OneMain offers secured loan options, which may help you qualify for a lower APR. You can also get free access to your credit score.

    Uniquely, OneMain offers joint loans, where multiple borrowers can apply and be responsible for one loan. You can submit your information online for an application, but you’ll have to schedule an appointment to discuss your options at a branch office.

    Best for lease buyouts – Clearlane

    Clearlane is for customers who are ready to take the Financing 202 course. You’ve already got a loan or leased a car, and now it’s time to improve that financing.

    Loan Amount
    N/A
    APR Range
    N/A
    Term
    N/A
    SimpleScore
    3.8 / 5.0
    close
    SimpleScore Clearlane 3.8
    New Car Rates 4
    Max Loan Size 4
    Min. Used Car Rate 5
    Customer Satisfaction 2
    Fees 4

    Clearlane, powered by Ally, is a marketplace for auto lenders. It will connect you to one of its partners for a refinancing loan or a lease buyout loan. Because of this, you can compare a few offers in one place without running a bunch of credit checks. ClearLane’s specific focus is on auto lease buyouts, and it does a pretty impressive job of paying balloon fees — what users pay at the end of their lease if they decide to buy the car.

    Clearlane does accept co-signers, which can help lower your APR and possibly get you approved faster. You can apply either online or over the phone. To qualify, you have to make a salary of at least $2,000 a month and have no history of bankruptcy.

    Best for low rates – Bank of America

    It’s my way or the highway with Bank of America, where you’ll be highly encouraged to shop from one of the dealerships in their network and receive a discount for being an existing customer.

    Loan Amount
    N/A
    APR Range
    Starting at 2.69%
    Term
    12–72 months
    SimpleScore
    4.4 / 5.0
    close
    SimpleScore Bank of America 4.4
    New Car Rates 5
    Loan Size 5
    Used Car Rates 5
    Customer Satisfaction 3
    Fees 4

    Current Bank of America customers could benefit most from an auto loan with the bank, as they’ll receive an up to 0.5% interest rate discount. Bank of America has quite a few options for auto lending — new and used car loans, refinancing, lease buyout and private party loans.

    Bank of America doesn’t disclose the full range of interest rate possibilities, but its starting rates are low compared to the competition. And once you’ve been quoted an offer, it’s locked for 30 days — giving you plenty of time to shop around for the right car. However, that shopping may be a bit restrictive — Bank of America encourages you to shop at one of the dealerships in its network. It’s not a requirement, but the process is streamlined if you do.

    Best for no down payment – U.S. Bank

    U.S. Bank has a specific type of customer in mind. They’ll swipe right on you with the best deal if you are a U.S. Bank customer, set up autopay, buy a new car, choose a short term and finance 80% or less of your car.

    Fixed APR
    Starting at 3.09%
    Variable APR
    N/A
    Term
    12–72 months
    SimpleScore
    3.8 / 5.0
    close
    SimpleScore U.S. Bank 3.8
    New Car Rates 4
    Loan Size 5
    Used Car Rates 4
    Customer Satisfaction 2
    Fees 4

    U.S. Bank has a pretty low starting interest rate (2.84%) and is clear about how to qualify. You’ll need a loan for $10,000 or more, be financing 80% or less of the car’s value, have a credit score of 800+, be buying a vehicle that is less than a year old, choose a term of 36 months or less and pay your monthly payments automatically from a U.S. Bank account. It’s quite the laundry list, but if you match the profile, it’s also a great deal.

    Though U.S. Bank doesn’t disclose the full range of interest rates, it does detail a few things that will raise it. Add 0.50% if you don’t have a U.S. Bank account (or do but don’t have autopay set up), add 1.0% if you purchase a car that is 7-9 years old and add 0.50% if you purchase a car from a private property. It’s also worth noting that if you pay off your loan in less than 12 months, you’ll be charged a fee of one percent of your loan amount ($50 minimum and $100 maximum.)

    Best features and tools – Capital One

    Capital One will tell you where to shop for your car, but at least they’re nice about it. Narrow eligibility requirements and authorized dealers are balanced out by great customer satisfaction score and an integrated shopping option.

    Fixed APR
    Starting at 3.99%
    Variable APR
    N/A
    Term
    36–72 months
    SimpleScore
    4.6 / 5.0
    close
    SimpleScore Capital One 4.6
    New Car Rates 4
    Loan Size 5
    Used Car Rates 5
    Customer Satisfaction 4
    Fees 5

    Capital One received one of the best customer satisfaction ratings from J.D. Power, with a 4/5. One of its most customer-friendly services is Auto Navigator — a feature that allows you to search for cars near you to purchase and become pre-qualified based on that choice. It does display results from dealerships only in the Capital One network, but the network is pretty large (over 12,000 dealerships.)

    The eligibility requirements for an auto loan with Capital One are a bit stringent. Depending on your credit, you must have a monthly income between $1,500 and $1,800. The maximum vehicle mileage must be under 120,000, and the age of your vehicle must be no more than 10 to 12 years depending on the state. Capital One also excludes Oldsmobiles, Daewoos, Saabs, Isuzu and Suzuki vehicles, and its loans are not available in Hawaii or Alaska.

    Best for refinancing – RoadLoans

    RoadLoans doesn’t have one particular feature that stands out, but is average enough across the board that it’s worth checking out.

    Fixed APR
    1.99%–25.00%
    Variable APR
    N/A
    Term
    12–84 months
    SimpleScore
    4.3 / 5.0
    close
    SimpleScore RoadLoans 4.3
    New Car Rates 5
    Loan Size 5
    Used Car Rates N/A
    Customer Satisfaction 2
    Fees 5

    RoadLoans is a pretty straightforward lender. It has no hidden fees, a quick online application and several financing types (new cars, used car, cash-back refinancing and private party purchase.)

    RoadLoans is one of the few lenders to have options for bad and no credit customers. Many institutions won’t loan to poor credit customers. RoadLoans is willing to approve customers who have experienced bankruptcy in the past. You’ll pay the price though — interest rates tend to be high with many customers citing rates at 25% and higher.

    Best for existing customers – Chase

    Though Chase will reward you for being committed, it doesn’t require you to fork over personal information before checking out potential rates for the car you want to buy.

    Fixed APR
    3.09%–15.99%
    Variable APR
    N/A
    Term
    12–75 months
    SimpleScore
    4.2 / 5.0
    close
    SimpleScore Chase 4.2
    New Car Rates 4
    Loan Size 5
    Used Car Rates 4
    Customer Satisfaction 3
    Fees 5

    If you’re looking to finance (or refinance) a new or used car, Chase can be a good option. Available in all 50 states, Chase Bank offers generous terms and competitive rates overall. It requires no down payment on its auto loans, and there are no fees.

    One benefit you’ll see when financing through Chase is a guaranteed discount on new vehicles at participating dealerships, which means less haggling when you’re shopping for your vehicle. On the website you can apply, search for a car with one of its authorized dealers and receive a discount. Chase also has a loan calculator on its website that doesn’t require any personal information to use. You enter a few details about the car, your credit and the loan you’ll need. The calculator will display your loan term options, APR rates and monthly payment.

    Best for bad credit – BlueSky

    BlueSky Embraces the underdog — most of its features are tailored to poor credit customers.

    Fixed APR
    N/A
    Variable APR
    N/A
    Term
    24–72 months
    SimpleScore
    3.3 / 5.0
    close
    SimpleScore BlueSky 3.3
    New Car Rates N/A
    Loan Size 1
    Used Car Rates 4
    Customer Satisfaction N/A
    Fees 5

    With BlueSky, rates and terms aren’t clear and will vary because it’s a marketplace. Rather than lending you the money directly, BlueSky acts as a comparison site for its partners (Transunion, Equifax, LendingTree, and DealerTrack.) After you’ve filled out a quick online application, you could hear back from up to four lenders with offers.

    BlueSky specializes in sourcing options for customers with a poor credit history or who have previously filed for bankruptcy. There are no money down options, a $450 per week income requirement, a maximum loan amount of $30,000 and no fees.

    What is an auto loan?

    An auto loan is money lended to you (by a bank, credit union or dealership) for purchasing a car. Unless you have enough cash to pay in full for your vehicle, you’ll need an auto loan. Based on your credit score and other financial factors, lenders will loan you money to buy your car with a certain percentage of interest. In turn, you make monthly payments until you have repaid the loan. While it can be scary to take on a loan, those on-time monthly payments can help raise your credit score.

    How do auto loans work?

    When you’ve decided you’d like to purchase a car, you begin the process of sourcing funding for that purchase. Typically you can either pay for your car in full or get a loan from one of many lender types (including the dealership). Getting approved for a loan can be as quick as ten minutes or can take a few days. You’ll use the money you’re lent to purchase the car. Then you’ll have a monthly payment (that usually includes a percentage of interest) until you’ve paid off the loan.

    Types of auto loans

    There are a few different types of auto loans:

    • Secured or unsecured loans. Some lenders offer personal loans to use to buy your car. Personal loans are considered an unsecured loan. Most auto loans are secured, with the car as collateral.
    • Direct and indirect auto loans. Refers to whether you work directly with a lender, or find a loan through a third-party or the dealership.
    • In-house loans. Dealerships that sell the car and provide the loan. Typically they sell to customers with bad credit, and you’ll make payments directly to the dealership.
    • Lease buyout loans. If you lease the car, you can get a loan to buy out the remaining amount and own the car.
    • Private party loans. For when you purchase your car from a person or seller instead of a dealership. This may be the best option is the seller still owes money on their own loan for the car.

    Check Your Personal Loan Rates

    Answer a few questions to see which personal loans you pre-qualify for. It’s quick and easy, and it will not impact your credit score.

    Get Started

    with our trusted partners at Bankrate.com

    How is auto loan interest calculated?

    Interest is calculated as either simple interest or as precomputed interest. In a simple interest auto loan, interest is calculated only on the principal still owed on the loan. Instead of paying a locked rate, interest is amortized, meaning that the more you pay down on the principal, the less interest you will be charged each time.

    Precomputed interest loans resemble personal or other fixed-rate loans. Instead of a more dynamic interest-principal ratio, buyers are required to stick to a fixed payment schedule with the same interest amount every month.

    The auto loan pre-approval process

    Pre-approval is when a lender has approved you for an auto loan before you’ve purchased a car — and thus before you know the exact amount you’ll need. The lender will check your credit and other information and determine the loan amount and rate that you’re likely to receive.

    With pre-approval, you can go to the dealership confident you have the financing to walk away with the car you want. It also gives you some power to negotiate now that you’re considered a “cash buyer.” You’re also not obligated to use the lender that pre-approves you. In fact, the dealership may offer you a better deal.

    Refinancing

    Refinancing your existing auto loan with a new one is usually done to save money. Typically, the refinanced loan comes at a lower interest rate. This means you’ll pay less overall in the lifetime of your loan. Refinancing also allows you to extend the length of the loan, and that can lower your monthly payments if they’re too high to keep up on.

    It’s a good idea to refinance if your credit has improved since you took out the original loan. This is especially true if you have a loan from a car dealership that was marked up on interest.

    Why not just finance with the dealership?

    Waiting until you’re at the dealer to finance an auto loan isn’t always the best idea. You may not have as much control over the loan’s terms and, this late in the process, lenders often pull a hard inquiry on your credit history, which can create a short-term drag on your credit score. In most cases, getting pre-approval from your bank or another lender involves a soft inquiry.

    If you get pre-approved for your auto-loan before heading to the car lot, you are in a better position to negotiate prices with the seller, since you’re a potential “cash buyer” who doesn’t need to finance through the dealership.

    Don’t forget about down payments

    Whether they’re buying a new or used car, most consumers pay an average 5% down payment. If possible, we recommend saving up for a more substantial down payment of around 20%.

    The higher your down payment, the lower your monthly payments will be. You’ll likely score a lower APR, too, because lenders may offer more favorable terms if you have a larger down payment.

    How to get the best auto loan rate

    The loan rate can be the most impactful component of an auto loan. It will determine how much it will cost to borrow that money.

    1. Shop around before you go to the dealer. Never assume the dealer will offer you the best rate, especially if your credit isn’t perfect. Compare interest rates from outside lenders and get pre-approved before you head to the dealer. It doesn’t mean you can’t go with dealer financing if they’ve got a great offer — it just means you don’t have to depend on it.By coming in pre-approved, you’ll also have more leverage to negotiate an even better rate with the dealer’s preferred lender. You’ll come in with some research and knowledge about the kind of rates you should be able to get, and it will be easier to tell whether the dealer has added a markup on the interest rate they’re offering through the lender they’ve partnered with.
    2. Know your credit score. Your credit score is the single most important factor in the interest rates you’ll be offered. Excellent credit will likely result in a low rate, and bad credit a high interest rate (if you can qualify at all). Knowing your credit score ahead of time will help you understand what kind of loan terms you can expect to qualify.
    3. Sign up for a shorter loan term. As with any other loan, you’ll pay less in the long run if you can compress your payments into a shorter period. It may seem like a longer term loan is ideal because of the lower monthly payments, but look farther beyond short-term satisfaction if you can afford it in your monthly budget.
    4. Don’t pay for ‘extras’ with your loan. It’s no secret that car dealers will inevitably offer you a bunch of “extras” like extended warranties, rust-proofing, fabric protection and security systems. Most experts warn that purchasing these add-ons rarely makes sense. But rolling them into your loan makes even less sense — the interest means you’ll be paying even more for these extras in the long run.
    5. Exploit interest-rate discounts. Many lenders will knock a little bit off your rate if you sign up for automatic payments or pay your bill online. Others may give you a discount if you have a previous banking relationship with them or you’re purchasing a specific type of car. Don’t assume you’ll be told of these potential savings — always ask.
    6. Consider 0% interest deals, but do your homework. You’re not going to find a 0% interest rate offer at banks or credit unions, but you may find them offered at the dealership by your car manufacturer’s lender. It sounds too good to be true, but if you have excellent credit you may be able to nab such a deal. However, you may have to take a 0% interest deal instead of another promotion, like a $1,500 cash rebate. You’d have to do the math to figure out which would save you more over the life of your loan.

    Auto loan FAQs

    Auto Loan FAQ’s

    Most anyone can get a car loan. Even if you have no credit or a poor score, some lenders will be willing to work with you. Lenders also look at debt-to-income ratio, how long you’ve been employed at your current employer and the details of the car you’re going to purchase when considering your eligibility.

    Most lenders consider your credit score as the most important criteria to approve you, or not approve, you for a car loan. If your credit is bad or you have no credit, you may not qualify for a bank loan. There are lenders who will lend to you if your credit is less than stellar, but keep in mind you may pay a higher interest rate and loan terms may not be the best. Before shopping for a car, do your best to repair your credit score if it’s low.

    Yes. The primary way dealers make money is via dealer-financed auto loans. Unlike a bank or credit union, car dealerships usually aren’t direct lenders. They act as aggregators, pairing your loan with one of their lending partners.

    The impact of COVID-19 on auto loans.

    The Covid-19 pandemic has had a big impact on the auto industry. According to Dino Selita, President of The Debt Relief Company, “Literally every dealership is currently offering 0% APR on auto loans right now and many are offering payment deferrals.” Selita assured us that, “The finance manager of the dealership has the power to get you a 0% interest rate even if you don’t qualify!” If you’re purchasing a car during this time, don’t be afraid to negotiate for the unique terms available right now.

    Some people don’t have the finances right now to purchase a new vehicle, but this is a great time if you do. You may also be able to save on your insurance premiums if you’re feeling the crunch of COVID-19 on your finances.

    We welcome your feedback on this article and would love to hear about your experience with the auto loans we recommend. Contact us at inquiries@thesimpledollar.com with comments or questions.

    Methodology

    SimpleScore

    We’ve created the SimpleScore™ to help you objectively compare products and services here at The Simple Dollar.

    Our editorial team:

    • Identifies five factors to compare across each brand
    • Determines the rating criteria for each factor
    • Calculate an average of those five factor scores to get one SimpleScore™

    We break down each of these five factors and their rating criteria for our review of the best auto loan companies of 2020.

    Why do some brands have different SimpleScores™ on different pages?

    Some brands like Bank of America, Wells Fargo, and Chase have different SimpleScores™ because they offer more than one financial solution — like auto loans, home loans, personal loans and banking.

    For instance, in our Bank of America Mortgage Review, we give the company a 3.8 out 5 based on our five rating factors for mortgages. In our Bank of America Auto Loans Review, we give the company a 4.4 out of 5 based on our rating factors for auto loans. By tailoring our SimpleScore™ to each financial solution, we’re able to give you a more accurate view of their services and how they compare to competitors’ services.

    Minimum new car rate

    Companies that look out for new car buyers with lower rates receive higher scores from us.

    Minimum used car rate

    We also give higher ratings to companies that look out for used car buyers by offering lower rates.

    Maximum loan size

    Having enough money to cover your auto loan is important –– that’s why companies with higher maximum loan amount receive better scores from us.

    Customer satisfaction

    We use the J.D. Power 2019 Consumer Lending Satisfaction Study℠ to find out how customers rate their experience with each company. (If a company is not included in J.D. Power’s study, we skip this rating factor and average the remaining factor scores.)

    Fees

    Fees can add up very fast –– that’s why we give a higher score to companies who have fewer fees.

    Danika Miller

    Personal Finance Reporter

    Danika Miller is a writer at The Simple Dollar. Her work can be found on Reviews.com, Freshome.com, Her Campus, and Jeopardy Magazine. She holds a bachelor’s degree in creative and technical writing from Western Washington University.

    Reviewed by

    • Andrea Perez
      Andrea Perez
      Personal Finance Editor

      Andrea Perez is an editor at The Simple Dollar specializing in personal finance. Prior to that she specialized in digital marketing content for online learning websites. She holds a master’s degree in journalism and media studies from the University of South Florida.