Finding a vehicle loan with the lowest rates and conditions may help you save hundreds, or even thousands, of dollars in interest over the life of the loan. It is crucial to shop around with several lenders in order to obtain the most cheap car loan for your new or used vehicle given the current economic climate, in which interest rates are rising and the cost of auto insurance premiums is increasing as well.
An auto loan is a kind of secured installment loan, which means that the vehicle you buy serves as collateral and may be vulnerable to seizure if you are unable to repay the debt. If you choose to finance your vehicle, you should carefully consider your ability to repay the loan. The interest rate, however, will be reduced as a result of this trade-off. You may submit an application for a vehicle loan via a bank, credit union, or internet lender. A car dealership is another option.
When compiling our list of recommendations for the best auto loans, we considered a number of factors, including annual percentage rates, loan amounts, availability, fees, and other features and perks. Take note that all beginning annual percentage rates are based on the assumption that the borrower has a “excellent” credit score of at least 800.
PenFed Credit Union Best for New Cars 2023
- APR: Starting at 4.59% (new car loans through PenFed Car Buying Service), 5.54% (used car loans through PenFed Car Buying Service); Loans outside of this service start at 5.39% (new car loans) or 6.04% (used car loans)
- Loan amounts: $500 to $150,000
- Loan terms: 36 to 84 months (depending on loan type)
- Minimum annual income: Not specified
- Availability: 50 states
- Prepayment penalty: No
Pentagon Federal Credit Union is a credit union that offers low auto loan rates for both new and used cars, through the PenFed Car Buying Service. You’ll need to become a credit union member to use this service, but membership is open to everyone, and requires opening a savings account with a minimum $5 deposit. If you’re not interested in using PenFed’s program to buy a car, you can still secure lower-than-average rates on new and used cars purchased outside of the service.
With flexible loan terms extending up to seven years, nationwide availability and no prepayment penalties, PenFed is the contender to beat in the auto loan industry.
Consumers Credit Union Best For Used Cars
- APR: Starting at 5.24% (car loans for 2021 or newer vehicles), 5.49% (car loans for 2017-2020 vehicles) and 6.54% (car loans for 2016 vehicles and older)
- Loan amounts: $250 to $100,000
- Loan terms: 36 to 84 months
- Minimum annual income: Not specified
- Availability: Branches across Illinois, shared branches nationwide
- Prepayment penalty: No
Consumers Credit Union is a cooperative financial institution founded in Illinois that is expanding its membership offerings nationally. Although the company’s interest rates for auto loans for vehicles produced before 2021 are on par with the industry average, the company’s rates for loans on new cars are much lower. The Consumers Credit Union provides a substantial level of loan flexibility, including the broadest choice of periods and amounts available among the companies we researched and reviewed.
An active photo identification, two recent pay stubs, two tax returns from the most recent two years, five references, two utility bills, and a one-time payment of $5 to the Consumers Cooperative are all that are required to join the organization as a member.