Finding the Best Auto Loan Rates in 2023 – With auto loans, you can purchase your dream car sooner than you think, with no stress!
Therefore, if you are a student or a low-income earner struggling to get a car, this is the perfect opportunity for you to become a car owner.
In this article, you will get to learn what auto loan rates are all about, the features, benefits, and the best companies to check out.
Auto Loan | Definition
A car loan is simply that type of loan that allows you to borrow money from a lender and use it to purchase your desired car and repay it in installments over a set period. Additionally, interest will be charged on the money you borrowed.
However, the interest you get differs. If you have a high credit score, you might be able to get a loan with a lower interest rate, which you help you save money faster. But if your credit score is low, you might face high-interest rates.
Features & Benefits of Car Loans
Whenever you visit a bank to acquire a car loan, you will be briefed on the features and benefits of the loan. However, various banks have different policies which make their loans for cars unique, listed below are some of the common features and benefits most banks offer.
- Lower Interest Rate: Compared to other financing options such as home loans, personal loans, etc, car loans are mostly offered with lower rates of interest.
- Fast Loan Processing: Obtaining a car loan requires lenient eligibility criteria and minimal documentation. This enables interested individuals to process their car loans faster.
- No Savings: With a car loan, you don’t need to use your savings to get your dream car.
- Flexibility to Choose the Tenure: unlike other loans, banks that offer loans for cars offer it for a tenure of up to a maximum of 7 years. So, you can choose the time that is convenient for you to pay.
- No Collateral Needed: When getting a car loan, you don’t have to put in any extra collateral. This is because your car will act as a security with the bank so that when you are unable to make the payment, the bank has the right to seize the car and sell it off to recover the loan fee.
- Flexible Mode of Payment: Another benefit of car loans is that you get to choose the mode of payment that is convenient for you. You can choose to pay through an auto-debit facility where a certain portion of the money would be deducted monthly or you use a post-dated cheque. However, you must ensure you have a sufficient balance in your account from which the money will be deducted.
Best Auto Loans Companies with the Best Rates
The best auto loan rates can save you thousands of money throughout your car loan. However, with numerous auto loan providers, finding one that would meet your needs can be a challenge.
This is why we have made a deep research on the best car loan Companies you can approach, comparing industry ratings, interest rates, and customer reviews to help you make an excellent decision about your auto finance.
The following are the recommended companies to consider in search of the best auto loan rates.
myAutoloan is one of the online marketplaces that lets you shop for the best auto loan interest rates. All you need to do is to enter your personal information into the company’s online form on their website and receive loan offers from lenders almost immediately, allowing you to make a side-by-side comparison.
This company is named the best Low-Rate Option because of its availability and fantastic rates.
In the auto loan industry, research justifies that myAutoloan rates are low for the industry. Therefore, borrowers can access car loan rates as low as 3.99% APR for new vehicles through the marketplace. With a minimum credit score requirement of 575, this company is a good option for individuals with below-average credit.
Aside from that, the company’s $8,000 purchase minimum loan amount might make you spend more on a car than you initially planned, to get a loan from the company. Additionally, you won’t be authorized to take car loans on a vehicle that is more than 10 years old or with more than 125,000 miles on it.
Despite that, in the auto financing industry, myAutoloan holds a strong reputation as it bags an A+ rating from the BBB and is accredited by the organization.
Also in overall customer rate myAutoloan got a 4.2 out of 5.0 stars on Trustpilot. Therefore, you can trust this company to take care of all your car loan processes.
- Accepts credit scores that age below average (575 and higher).
- Offers great interest rates.
- Made available easy, smooth, and swift online experience.
- The High minimum for purchase loans is tagged at $8,000 which is a bit high compared to others.
- Comes with quite discouraging vehicle restrictions.
- Not available in all locations.
2. Consumers Credit Union
This company is an Illinois-based credit union that is now open and available for national membership. It provides a wide range of terms and loan amounts while the lender features average rates for the auto industry, which is why the company is awarded as one with the Most Flexible Terms.
The credit union has a lot of car loan options as its best auto loan rates start at 4.09% APR for members. You can borrow any amount with term lengths up to 84 months as much as you qualify.
However, there is a need to know these rates are only for cars that were made in 2019 and above. with rates starting at 4.34% APR, the company offers higher rates for older cars.
Although Consumers Credit Union is a membership-based organization, membership is open to anyone. To register, all you need to do is provide a tax identification number or Social Security number and pay a $5 nonrefundable fee to the Consumers Cooperative Association.
Also, you can rest assured that this company would serve you best as it is accredited by BBB and holds an A + rating from the organization.
- It offers flexible lending terms.
- It provides up to 100% financing.
- Unlike others, this comes with no minimum or maximum loan amount.
- offers are available to members of the organization only.
- It has a few branches.
This is another online lending marketplace that offers you low-interest rates for auto loans and auto loan refinancing.
As a result of its low rates and flexible terms, it was awarded the Most Well-Rounded auto loan companies, according to Marketwatch.
Based on our research and studies, with AutoPay, borrowers with good credit can find APR as low as 2.99% for both new and used vehicles.
Also, individuals with bad credit may still qualify for good rates, as the company sometimes approves car loans for those with a minimum credit score of 575 or greater.
With AutoPay, you also have excellent flexibility with loan terms, which range from 24 to 96 months. This means that you can decide to pay off your car loan quickly either with a shorter term or you space it out over several years.
Among the auto loan industry, AutoPay has a solid reputation as it holds an A+ rating from the BBB, with over 550 customers giving the company a remarkable 4.4-star rating out of 5.0. Also, the lender has an “Excellent” rating on Trustpilot from over 450 customers.
- It offers pre-qualification with soft and easy credit.
- Customers with good credit scores get low APR rates.
- Requires no application fees or prepayment penalties.
- It provides guaranteed asset protection (GAP) insurance for all borrowers.
- Loans for cars can take a while.
4. PenFed Credit Union
Pentagon Federal Credit Union, famously known as PenFed, is a military credit union that provides competitive auto loan rates for its members.
It is tagged as a company with the Most Cohesive Process for auto loans because of its availability and car buying service.
Although PenFed is typically for military members and their families, it is also open to people who work for certain government parastatals and nonprofit organizations. Even if you don’t belong to any of these categories, you can join by donating to an approved charity.
PenFed’s starting APR for new vehicles is one of the lowest of any of the auto loan providers’ offers, as it offers a 4.44% APR. However, to get that rate, you’ll need to buy a brand-new vehicle through PenFed’s car-buying service.
Additionally, a member of this company is eligible for other special deals, such as discounts and reimbursements for shopping at partner dealerships and many more.
Qualifying for a PenFed auto loan might however be hard and complicated for some. The credit union only accepts borrowers that have credit scores of 610 or higher. Also, for late loan payments, PenFed charges $29.
- Offers one of the lowest auto loan rates on the market.
- Made available extra benefits for its members.
- Debt protection is also offered to specific members.
- Only members can enjoy its offers and special deals.
- Charges are high for late loan payments.
- High late payment fee.
- Requires fair or better credit. People with lower credit scores don’t stand a chance.
iLending has over the years built a reputation as a refinance auto loan specialist, making it a viable and recommendable option for individuals looking to get lower interest rates and better terms for their cars.
This company works with a network of credible lenders and financial institutions that offers some of the lowest APR rates in the auto loan industry, as their APR starts at, as low as 2.14% for those with good credit scores.
Since it functions as an auto refinance marketplace, your loan amount and terms will be determined by the lender you choose to refinance with. However, this company does not provide new or used auto loans at this time.
- Offers low APR rates for those with good credits.
- Requires minimum credit score requirements for those with bad credit so that they can get a chance to refinance their car loan.
- As a strong customer service reputation.
- Does not provide new or used car loans at this time.
Auto Loan Rates | Factors to Consider
When you’re looking for auto loan rates, concentrate not on the APR alone. There are other several factors you should consider and they are;
It is important to consider the interest rate attached to your loan. Your interest rate is the percentage the borrower or company charges you for taking a loan. Your APR is then your interest rate plus all loan fees.
However, the interest rate differs from person to person. Only borrowers with excellent credit scores are eligible for lower rates. Therefore, your interest rate will likely be higher than the starting APR a lender advertises.
Among all other factors that affect the total cost of your loan, APR is the most important. Even one-tenth of a percentage point could make a huge difference of hundreds and even thousands of dollars throughout your auto loan.
This is also referred to as the length of loan repayment. Simply put, your loan term is the set time you have to repay your loan. The majority of car loans have term lengths, ranging from 72 or 84 months, but some companies might have an extended time that is even longer.
Note that the longer the length of your loan, the lower your monthly payments will be. But, you’ll pay more in interest rates over the life of your loan. Typically, longer loan terms come with higher interest rates as well.
Some car loan lenders offer discounts on some of their loan products. One common discount is a reduction of your APR when you sign up for an automatic payments system, where reductions have to be done automatically from your bank account or credit card.
Fees and Penalties
You have to consider the fees and penalties that are attached to some loans for cars. This is because most lenders often charge fees or penalties for various things, such as a late payment or a missing car payment.
Some lenders also charge fees for paying your car loan off earlier than expected, it is called a prepayment penalty. These fees and penalties are usually highlighted in a loan contract, therefore, ensure to carefully read before signing.
In all, you can find the best auto loan rates through various online lenders, banks, credit unions, and other dealers. However, take cognizance of the many factors that might affect your interest rates and consider different methods that would get you the lowest rates possible.
It is recommended you shop around and compare as many options as you can before deciding on the best auto loan to choose.
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