The Best Used Car Loans of 2020
Buying a used car allows you to get a ride that’s new to you without taking the value hit that happens the second a new car is driven off the lot. To finance your purchase, you will need to find the used car loan option that fits your needs. Some of the best used car loans have low APR rates, flexible repayment terms, limited restrictions and come from a lender you trust.
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The 6 best used car loans of 2020
- LightStream – Best overall
- Carvana – Best direct dealer
- Chase – Largest dealer network
- PNC Bank – Best for private party financing
- Capital One – Best online portal
- Truliant Federal Credit Union – Best credit union lender
|LightStream||$5,000 – $100,000||From 3.49%||24 – 84 months||None listed|
|Carvana||Not listed||From 3.90%||12 – 72 months||Must be purchased from Carvana|
|Chase||$4,000 – $600,000||Starting at approximately 3.14%||48 – 72 months||Vehicles can’t be older than 10 years, have more than 120,000 miles, be a commercial vehicle or have a salvaged or branded title|
|PNC Bank||Undisclosed||Varies||Undisclosed||None listed|
|Capital One||As low as $4,000||Variable||36 – 72 months||Car must be part of the Auto Navigator network, 2010 or newer and less than 120,000 miles|
|Truliant Federal Credit Union||Up to 100% of cost||From 3.74%||36 – 84 months||None listed|
The 6 best used car loans of 2020
LightStream – Best overall
Used car auto loans from Lightstream are available for purchases from a dealer or from a private party. Rates will vary based on where you are buying from, with APRs starting at 3.49% for dealer purchases and 4.99% for private party purchases. No worries if you find better rates elsewhere because LightStream has its Rate Beat Program. The company will beat any comparable rate you find by 0.10%.
Additionally, LightStream guarantees a positive loan experience and will give you $100 if you are not 100% satisfied within the first 30 days after securing your loan. On top of all this, LightStream moves fast. If you get your application in and your loan signed by no later than 2 p.m. EST, you can receive your funds the same day.
Carvana – Best direct dealer
Famous for the car vending machine, Carvana has brought ingenuity and efficiency to the used car buying process. If you’re looking to get your car and your financing from the same company, Carvana’s direct dealer approach may work for you. Additionally, all cars come with a 7-Day Money Back Guarantee in case you change your mind in the first week.
What’s nice about Carvana is the company says it’s willing to work with just about anyone, including people that don’t have the best credit. According to the company, as long as you are over the age of 18, have no active bankruptcies and make at least $4,000 per year (about $334 monthly), you can finance a car through Carvana. If you’re interested in seeing what you can be approved for, Carvana financing terms are good for 45 days after you submit your loan application.
Chase – Largest dealer network
Used car loans from Chase Bank are available regardless of whether you are a customer with the bank already or not. APY rates are quite varied based on what you’re buying, where you live, the price of the car and your credit score. If you are interested in getting an estimate of your rates and payments, the Chase Bank website has a very helpful auto loan rate and payment calculator you can use.
If you want some help picking out a car, Chase Bank offers a free service called the Chase Auto Preferred program. The program is a concierge car buying service that is connected with one of the largest dealer networks in the country. If you really want to take advantage of an easy car-buying experience, give this program a look.
PNC Bank – Best for private party financing
You can get a used car auto loan from PNC bank that is good at a dealership, used car lot or a private party purchase (buying from another individual). For people that want to buy from a private seller, the process is super simple. You can pick up a check from a branch location or have it sent to you overnight to make the purchase. There is no need to carry cash or get banking information from the seller.
The PNC website also has a ton of helpful tools and calculators tucked into the FAQ section of the website. The resources can help you compare new and used cars, see what you can afford, estimate payments and even look at the differences in leasing vs. purchasing. Whether you borrow through PNC Bank or not, these tools are super helpful.
Capital One – Best online portal
Used car loans from Capital One can be secured right through the company’s impressively helpful online portal. All loans through Capital One work through the Auto Navigator program. With this, you are able to find your car and secure financing before you even step foot on the lot to look at the car. All you have to do is walk into the dealership with your offer summary, and you are good to go.
Bear in mind that you will have to pick out a car that is part of the Auto Navigator network. You will not be able to purchase a car outside of the network with used car financing from Capital One. The network is extensive, though. If you’d like to see participating dealers in your area, you can use the online tool through Capital One’s web portal.
Truliant Federal Credit Union – Best credit union lender
Used car loans are also available through credit unions, and the best option out there may be Truliant Federal Credit Union. The credit union offers highly competitive APR rates, flexible repayment terms that extend all the way out to seven years and you can even get your money after hours on the weekend.
What stands out the most about Truliant, though, are the little perks that really aren’t that little. First, you can defer your first payment up to three months if that is better for you. Second, you can skip a payment one month each year without any penalty whatsoever. And third, you get access to the credit union’s buying service that can help you find the car you want and the price you want without the need to haggle.
What is a used car loan?
Sometimes when you want to buy a large-ticket item like a used car, you might not have all of the money to complete the purchase. As many people fall into this category, banks and financial institutions are willing to lend you the money upfront to make the purchase. In return, you pay back the loan over time with a few extra bucks on top (interest) as the cost of getting the money early. The mechanism you use to make this happen is a used car loan.
Unlike an unsecured loan (like a personal loan), your used car loan is a secured loan that uses the car you are purchasing as collateral. This means that if you fail to keep up with your payments, the lender can take back the car instead.
Used car loans vs. refinancing a car loan
When shopping for a used car, you may also be considering keeping the car you have. Often, people get in the market for a car when their financial situation improves (like your income or credit score going up). When this happens, you do have an additional option if your current car is working just fine — refinancing.
Refinancing is the process of changing the terms on an existing loan. Usually, this helps the borrower (you) to save on interest or get more favorable repayment terms. A used car loan, on the other hand, is a brand new loan for a different car than the one you already own. If you’re going back and forth between buying or keeping your existing car, at least explore the savings you might get through refinancing and waiting on the purchase.
What to know when looking for an auto loan
Finding the right lender for your used car loan can seem like a daunting task with so many options and things to consider. However, if you take a systematic approach and start by determining what is most important to your situation, you can logically find the best used car loan for you. The factors you need to consider are the APR rate, any offered discounts or buyer perks, any additional costs, repayment terms and any limitations on the types of cars you can purchase. Additionally, you will want to look at eligibility requirements, especially if you have less-than-great or no credit.
The bottom line
When you find the right car, and you get the financing done the right way, the buying experience can be exciting. Whether this is your first car or a replacement of an existing car, the process should be treated with the care it deserves. The best used car loans can help deliver the financial help you need to make your driving dreams come to fruition.