When you’re ready to buy a new car, you typically have two options: pay in cash or take out a car loan to cover the bill. While we’d all like to have the funds to cover this purchase without a loan, that’s simply not a reality for most people in need of a vehicle. This is especially true if you want reliable transportation that lasts for more than just a few years.
If you’re looking for an auto loan in the coming months, there are countless options available to choose from. You can find online lenders, traditional lenders, and even lenders that specialize in bad credit borrowers. To get started, check out our up-to-date top picks for the best auto loans in 2017.
Table of Contents
- 1 Best Online Auto Lenders for Good Credit
- 2 Best Traditional Auto Lenders for Good Credit
- 3 How to Pick the Best Auto Lender
Best Online Auto Lenders for Good Credit
CarsDirect accepts borrowers of all credit types, so it’s an easy one-stop shop for anyone looking for an auto loan. They’ve been in the business for nearly 20 years and have helped 5 million customers in that time. The application takes as little as 60 seconds, and once you submit it, you’ll receive multiple offers from various lenders. That’s a bonus for some people because you can compare loan products without filling out countless applications.
On the downside, however, you may have to deal with many lenders trying to contact you about a loan. The good news is that there’s no limit to how much you can borrow through CarsDirect. Because they partner with multiple lenders, you can find a loan matching your exact criteria for as large or small a loan as you’d like. You can also shop for cars directly on the CarsDirect website.
MyAutoLoan provides multiple loan product types, so it’s an ideal option if you need something beyond a straightforward car loan. For example, you can refinance an existing loan, get a lease buyout, or even get a loan for a third party purchase. MyAutoLoan also gives you access to several handy tools to help you decide on the best loan product. There’s an interest rate chart that’s updated daily so you can see where rates are headed.
You can also get a customized interest rate estimated by providing your desired loan amount, credit score or category, and zip code. That’s extremely helpful information when determining how much car you can afford. Once you’ve got your ballpark interest rate, you can use the auto payment calculator to figure out your estimated monthly payment. However, your minimum loan amount must be $8,000 and you must earn at least $1,800 each month.
Blue Harbor is best known for its competitive refinance rates, but you can also get loans for a new or used vehicle. When refinancing, the company says that customers on average lower their monthly car payments by $101. In fact, their refinancing rates start at just 2.49% APR. However, this doesn’t take into account whether or not the loan term is lengthened.
After all, even with a lower payment each month, you could end up paying more in interest if the repayment period is longer than your original term. But if you’re having trouble meeting your monthly payments, it could be a better option than defaulting on your car loan or any other financial obligations. Blue Harbor also offers lease buyouts and private party loans, giving you plenty of options for purchasing your next car.
Best Traditional Auto Lenders for Good Credit
If you have excellent credit and prefer borrowing from a traditional financial institution, LightStream could be the perfect fit for you. The online lending arm of SunTrust, LightStream offers new car loans, used car loans, and auto refinances. For a new car, you could qualify for a 2.19% APR when you sign up for autopay.
You can also get funds as quickly as the same day, so if you need a new car as soon as possible, this is a quick way to get one. And with loan amounts ranging between $5,000 and $100,000 you have plenty of room to get the exact car you’re looking for. LightStream also offers a customer satisfaction guarantee on all loans. If you’re not happy with the loan process after receiving your loan, you can complete a questionnaire and receive $100.
Bank of America
Bank of America is also a large financial institution advertising low rates. Of course, your specific rate depends on your credit history, where you live, and other factors, but it’s a good place to begin. New car loan rates start at 2.74% APR, used car loan rates start at 3.04% APR, and auto loan refinances also start at 3.04%.
If you bank with Bank of America and are enrolled in their Preferred Rewards program, you can receive rate discounts ranging from 0.25% to 0.50% depending on your membership level. Another great feature from B of A is that you can get a 30-day rate lock. So if you know you need a car but want to take your time and shop around, this gives you the flexibility to do so without stressing about rising interest rates.
Wells Fargo is another bank providing relationship discounts for existing customers seeking a car loan. But even if you don’t currently bank with Wells Fargo, you may still find competitive rates and a fast decision on your application. Rates start as low as 3.12% APR. You also get a variety of options, including private party loans and lease buyouts.
Plus, loans can be closed within 24 hours. Just have some basic information on hand, including your social security number and information to verify your employment and income details. You can also add on a co-applicant who has better credit than you if you want to qualify for better terms and lower your monthly payment.
Chase Bank is unique in that it provides both loans and a car buying service by partnering with TrueCars. In fact, customers save an average of $3,106 off the MSRP. You also get to see what other people paid for the same car, to give you an idea of what kind of deal you’re getting. If you don’t want to shop online for a car, you can just get a straightforward auto loan for a new or used vehicle.
Chase’s online portal lets you calculate payments and check on the status of your application. One thing to note is that the credit decision and closing processes differ depending on whether or not you’re currently a Chase customer. Look into those details before making a decision, particularly if you don’t have a Chase account of some sort.
U.S. Bank boasts car loans with rates as low as 2.87% APR. This exact rate may not last forever, but it gives you an idea of the type of deal you can get with this lender. You can get a loan for either a new or used vehicle, and can also refinance your current auto loan. A major bonus is that there is no down payment required, which is helpful if you’re cash-strapped at the moment.
You can also get a discount when you take out a green auto loan, covering any new or used car that is an EPA-certified SmartWay vehicle. For any vehicle you choose, it must be no more than six years old with a maximum of 100,000 miles logged. One of the convenient things about U.S. Bank is that you can apply online, over the phone, or in person.
Best Auto Lenders for Bad Credit
Auto Credit Express
Not only can you qualify with poor credit at Auto Credit Express, you also face fewer restrictions on the type of care you can finance. For instance, there aren’t any age or mileage requirements, so you can get a car as old as you want. You may also qualify for a $0 or low down payment amount, unlike many other lenders. However, you do need to meet a few basic qualifications, including a pre-tax monthly income of at least $1,500. You’ll also need to answer a few questions about your employment so they can confirm your income is steady enough to cover your monthly payments.
Capital One accepts borrowers with less than perfect credit, but there are some standards your new car must meet. Mileage cannot exceed 120,000 and it must be no older than a 2007 model. Loan amounts range from $4,000 to $40,000 so this is not the place for expensive luxury purchases or an extremely cheap deal. Additionally, Capital One only provides loans for new or used cars. If you want to buyout your lease or finance a purchase from a private party, you’ll need to look elsewhere.
Blue Sky Auto Finance
Rather than serving as a direct lender, Blue Sky Auto Finance aggregates multiple loan offers after you complete a single application. All of their partnering lenders work with bad credit borrowers, so more than likely, you’ll find at least one match, especially if your credit score is at least a 550.
If your credit is under 652, you are required to show proof of income totalling at least $1,800 per month. In addition to relatively lax credit requirements, Blue Sky finds lenders who don’t require any money down for a loan. The maximum loan amount is $30,000, giving you a variety of options when it comes time to pick a car.
How to Pick the Best Auto Lender
Even if you’re in a rush to purchase a car, don’t automatically accept the first loan offer you receive. Take some time to sit down and thoughtfully weigh all of your options. After all, this is a decision that will impact your finances for the next several years. There’s no need to go so fast that you end up missing out on the best loan experience. Here are a few tips to get you started with the loan process.
Set a Timeframe to Search
Whether your last car broke down yesterday or you’re simply looking for an upgrade in the next few months, give yourself a set timeframe to get a new car loan. Depending on how a lender’s decision process works, your pre-qualification or pre-approval may require a hard inquiry on your credit report.
If you’re shopping for the same loan type over the course of a month or so, each inquiry will most likely be lumped together as one since you’re clearly comparison shopping. If it’s spread out too long, however, your score could take a big hit, with each inquiry costing you around five points.
Another reason you want to give yourself a timeline is because of interest rates. If you get an estimate on your interest rate in the spring but wait until the fall to make a purchase, you may be in for an ugly surprise.
Interest rates are on the rise for all loan types, and while there’s no way to predict their exact trajectory, you likely won’t qualify for the same rate if you wait too long. That means you’ll either have to pay a higher monthly payment for the same car, or purchase a less expensive vehicle just to keep your payment at the original price.
Select Your Loan Type
When searching for auto lenders, you can first narrow them down by the type of loan you need. You can tell after reading the reviews above that some lenders only offer loans for new and used vehicles from dealers. If you want to finance a vehicle from a private party, make sure you’re comparing a pool of lenders that actually offer that service.
The same holds true for refinancing an existing car loan and for buying out a leased vehicle. There’s no sense in getting quotes from a lender that doesn’t even provide your loan type, no matter how low their interest rates seem.
Compare Interest Rates and Fees
Speaking of interest rates, no two lenders are likely to offer you the exact same terms. You need to not only compare the interest rate, but also the APR, which incorporates any type of fee, such as an origination fee. Not only that, think about the length of the loan. One loan might offer a lower interest rate but last two years longer than another loan.
If you can afford both payments, which one will save you the most money over time? Does a lender charge any other fees, such as a check processing fee? How are origination fees paid for? These are all questions you need to ask to avoid any unpleasant surprises once the loan is fully processed.
Consider the Application Decision Timeline
Finally, remember to consider how long the application decision takes and how long it takes to get your funds in the bank. Even if you don’t need a car right away, this information is vital for you to plan when you can actually get the keys to your new vehicle. Most online lenders boast a quick application process, so delve a little deeper to get the actual details.
Even if you get a credit decision within moments, find out how long the underwriting process takes. If the lender boasts same day or next day funding, figure out what you need to do on your end to make that happen. In most cases, you’re responsible for providing income verification documents and signing a loan agreement before any funds can be released.