8 Best Car Loan Rates of 2023

*Rates and APYs are subject to change. All information provided here is accurate as of June 8, 2023.

No one wants to pay more for their new car than necessary. Identifying the best car loan rates for your budget will keep your monthly payments affordable and may even allow you to purchase that dream car you once thought was too expensive.

We’ve exhaustively researched the topic to identify the best auto loan rates for 2023. Keep reading for our top picks of the best auto loan interest rates, and learn how to choose the best auto loan for you.

Our Top Picks for Best Car Loan Rates

• PenFed Credit Union — Best for Flexible Options
• Consumers Credit Union — Best for Used Cars
• Lightstream — Best for New Cars
• Autopay — Best for Refinancing Options
• Capital One — Best for Personalization
• CarsDirect — Best for Easy Online Quotes
• Bank of America — Best for Private Parties
• Carvana — Best for Bad Credit

Best Car Loan Rates Reviews

Why we chose it: PenFed Credit Union offers flexible auto financing options tailored to meet any budget.

PenFed Credit Union is our choice for anyone who wants partial or complete financing and a comfortable repayment plan. With loans between $500 to $150,000, you can borrow a smaller amount if you don’t need to finance your car purchase entirely.

Members who purchase a new car through the PenFed Car Buying Service can receive the credit union’s best new auto loan rates and discounts on vehicle pricing. PenFed members also earn bonus cash when purchasing certain brands using the program.

Repayment plans vary depending on the amount borrowed. For example, the minimum loan amount for a 36-month term is $500, while an 84-month term requires a loan of at least $20,000. PenFed allows you to borrow up to 125% of the car’s total value, which can help you pay incidental costs without going out-of-pocket.

The application process is fully online, and anyone is eligible to apply. However, to process the loan, you must become a PenFed member by opening a savings account with a minimum $5 deposit.

PenFed doesn’t disclose the minimum credit score needed to secure an auto loan. It won’t hurt your credit to try: To prequalify, the credit union only requires a soft credit pull.

Why we chose it: Consumers Credit Union offers a large selection of used cars online through its own car buying service and also partners with Rent-A-Car and TrueCar.

Consumers Credit Union doesn’t limit how much you can borrow on your auto loan purchase. Available financing depends on your credit score and how much you qualify to borrow, but you can only finance up to 100% of the car’s value.

Funds can be sent directly to a dealership, or you can shop for cars through Enterprise Rent-A-Car and TrueCar. Consumers Credit Union also offers an online car buying service, where you’ll find additional savings.

While anyone can apply for an auto loan, a Consumers Credit Union membership is required for loan approval. You can join by paying a one-time fee of $5 to the Consumers Cooperative Association.

Members who authorize Consumers Credit Union to make automatic payments will receive a discount of 0.25% on their loan's interest rate. Funds must be deducted from your Consumers Credit Union account.

Why we chose it: Lightstream requires no down payment and offers loan amounts that range from $5,000 to $100,000.

Lightstream may not offer the best auto loan rates for new cars, but for buyers with excellent credit, the company makes it possible to borrow a large amount with nothing down.

Lightstream offers unsecured loans, hence the higher credit score requirement and higher interest rates. Additionally, Lightstream has no pre-approval process, so you must complete the loan application — which includes a hard credit pull — to determine if you qualify.

Loan terms range between 36 months to 84 months, and financing is available for purchasing new, used and classic cars.

Why we chose it: Autopay’s three types of auto loan refinancing let you find the right plan to meet your financial goals.

Autopay works with a network of online auto lenders so you can find the best auto loan refinance rates to meet your budget. It only takes a few minutes to fill out the online application, or you can call to complete the process with a representative over the phone.

Autopay offers three types of financing:

1. Auto refinance - Allows you to lower your monthly car payments, decrease the length of your loan or remove co-signers from a loan.
2. Cash-out refinance - Refinancing options enable you to receive up to $12,000 cash back from your loan amount. These funds can help to consolidate debt or pay off high-interest loans.
3. Lease buyout - These plans make it possible to purchase a vehicle before the end of your lease. An early buyout prevents you from paying any mileage or usage obligations a dealer may charge at the end of a lease.

Autopay claims it helps users save $105 a month on average by linking them to lenders with loan rates up to 50% less than what they’re currently paying.

Why we chose it: With Capital One’s Auto Navigator program, you can find the right new or used car for your budget.

Capital One makes it easy to shop and buy a car online from the comfort of your home. You don’t need to search for the “best auto loan rates near me” because Capital One has partnered with nearly 12,000 dealerships nationwide. Using Capital One’s Auto Navigator, you can search for the exact make, model and color to find the perfect car.

The pre-qualification process doesn't affect your credit score, allowing you to determine how much you can borrow before getting ready to buy. Once you’ve found the right vehicle, you can adjust factors like down payment and term length until you find the right deal.

Adjustable loan terms range between 36 - 72 months. Pre-qualification depends on your income, credit score and the vehicle you want to purchase. The minimum loan amount is $4,000, and you can borrow 100% of the vehicle’s value plus any optional dealer products, such as an extended warranty.

Loans are only available when purchasing a car from participating dealers. Capital One doesn't offer financing on purchases from unaffiliated dealerships or private sellers.

Why we chose it: CarsDirect easily enables buyers with poor or no credit to find willing lenders online.

CarsDirect offers an easy-to-use online system that lets users quickly input their information and potentially receive a loan offer within 24 hours. Additionally, CarsDirect considers all borrowers, regardless of their credit score.

Through the company’s network of dealerships, borrowers who have had their private-party loan applications denied due to low credit scores or a history of bankruptcies can find specialized programs for car loans. CarsDirect also helps those with no credit history find customized car loans so they can start building the foundation of a strong credit report.

CarsDirect is not a direct lender, which means they only act as an intermediary that matches borrowers with willing lenders. They have no impact on the approval process or the loan term and APR offered by the lender.

Depending on the terms of the offer, you may be limited to only purchasing a vehicle available through the lender. Most lenders offer new and used vehicles, but you may not find the exact car you want.

Why we chose it: Bank of America makes buying a vehicle from a private seller as easy as buying a car from a dealership.

Unlike many lenders, Bank of America offers private-party auto loans, so you don’t have to pay out-of-pocket when buying a car directly from another person. However, to apply for this type of auto loan online, you must be enrolled in online banking with Bank of America. If you aren’t a Bank of America customer, you can visit a branch or schedule a virtual appointment to discuss your options.

Like with most auto loans, there are some restrictions on private-party car loans through Bank of America.

• Car value must be $6,000 or greater, according to an official used car guide, such as J.D. Power

• Auto cannot be more than 10 years old

• Mileage must be less than 125,000

• Seller’s name and name on the car title must be the same

Bank of America does not provide its starting APR for private-party loans. Loan terms are 48, 60 and 72 months. Credit history, loan term, age, mileage and condition of the car will all determine the interest rate on the auto loan.

Why we chose it: Carvana guarantees borrowers will qualify for a loan in minutes, regardless of their credit history.

Carvana may not offer the best auto loan rates, but they’re willing to provide financing to individuals with bad credit and no active bankruptcies.

The company’s only requirement for auto loan financing is that borrowers be 18 years or older with an income of at least $4,000 per year. Additionally, the car must be purchased through Carvana’s online marketplace of vehicles.

After completing the pre-qualifying process online, you’ll have the option to see the available financing options and which cars you can afford. Interest rates vary depending on your credit score with loan terms from 12 - 72 months. You must have an annual income of at least $4,000 to qualify.

Carvana’s 7-Day Money-Back Guarantee gives you the freedom to change your mind after driving the car for a few days, and a 100-day limited warranty provides some protection on your purchase.

Other auto loan rates loans we considered

The best of the rest that didn’t make our list:

Caribou

Caribou’s claims that on average, borrowers who refinance an auto loan through its network of lenders save an average of $116 monthly on their car payments. Rates and savings vary according to factors such as creditworthiness, loan terms and loan amounts.

Why Caribou didn’t make the cut: Caribou charges a $399 processing fee on its auto refinance loans, which is higher than other companies we evaluated.

Vroom

Vroom offers a selection of quality used cars, and partners with a network of lenders to help find you the best financing possible. You can prequalify for a used car loan without negatively impacting your credit score.

Why Vroom didn’t make the cut: Vroom claims to stock thousands of vehicles, but doesn’t provide more details regarding the size of its marketplace. Meanwhile, Carvana, which also offers financing plus shopping, claims to have more than 55,000 autos available.

myAutoLoan

MyAutoLoan provides up to four immediate loan offers from lenders within minutes of completing their online application. Through its network, borrowers can find new car loans, used car loans, auto refinance loans, private party loans and financing for lease buyouts.

Why myAutoloan didn’t make the cut: myAutoloan’s minimum loan amount is slightly higher than some other companies we evaluated.

Gravity Lending

Gravity Lending claims customers save an average of 26% after refinancing their car loans. For some borrowers, savings add up to $121 monthly. Gravity Lending also sells various add-on products, such as GAP protection and a vehicle service contract.

Why Gravity Lending didn’t make the cut: The current starting APR at Gravity Lending is slightly higher than Autopay, our top pick for auto loan refinance.

CarMax

CarMax claims its financing decisions are made in about five minutes for most borrowers. Most credit profiles are accepted, according to the site. Additionally, if you’re just beginning your car search, you can browse available vehicles on the CarMax site without applying.

Why CarMax didn’t make the cut: CarMax doesn’t provide any information on its site about loan amounts or terms. You have to submit personal information to get details.

Best Auto Loan Rates Guide

It’s important to understand the basics of how auto loans work before committing to an auto loan.Read on to learn the fundamentals of auto loan financing, from loan types to how annual percentage rates are calculated.

What is a car loan?

Unless you’re buying a car with cash, you need to secure financing to go through with the purchase. A car loan is when a bank, credit union, online lender or other financial institution finances your vehicle purchase.

Like with a credit card, the financial institution that lends you the money to buy the car will charge you an interest on your loan. The annual percentage rate (APR) is the yearly cost, expressed as a rate, which you agree to pay to the lender on the borrowed amount. The APR includes the interest rate as well as any fees the loan might carry.

Your monthly loan payment will depend on factors including the amount you borrow, the length of the loan (also known as the loan terms or the life of the loan) and the annual percentage rate of the loan.

How do car loans work?

Your lender will calculate the value of the loan and any service fees, additional costs and interest to determine the total amount you need to borrow. Next, they will look at the term, or length of time, you have agreed to pay off the loan. By dividing the total amount borrowed by the term, you can determine the APR of your car loan.

For more on this, see our guide to how car loans work.

Car loan types

There are several kinds of car loans that serve different purposes. Below you’ll find descriptions for each.

• New car loans - This type of loan is used to purchase a brand new auto through a dealership or online car buying service.

• Used car loans - You can buy a used car from a dealership or online car buying service with this kind of auto loan. Note that these loans often come with restrictions on maximum mileage and the age of the car.

• Auto refinance loans - An auto refinance loan is a new loan, ideally with a better interest rate or lower monthly payment, that replaces your existing car loan.

• Cash-out auto refinance loans - This type of loan covers your existing loan balance plus some extra funds. Monthly payments with this type of loan may be higher than with other kinds of loans.

• Bad credit car loans - A bad credit car loan is specifically designed for borrowers with poor credit, or who lack credit altogether. Interest rates and monthly payments are typically very high with these types of loans.

• Private party car loans - This kind of loan is meant to finance the purchase of a car from another person. Generally, financial institutions require that the seller is the person whose name is on the title of the car.

• Lease buyouts - You can use a lease buyout loan to purchase a car you are currently leasing from a dealership.

What to look for before applying for a car loan

Agreeing to the wrong car loan can cost you money and damage your credit score if you can’t make payments on time. Before signing for a loan, you need to consider a few critical details.

Type of car loan

Do you want to purchase a brand new vehicle or are you in the market for a used car? Are you dissatisfied with your current loan and want to refinance? You should know the type of auto loan you’re looking for before starting your search for companies that offer new car loans, used car loans or auto refinancing companies.

Estimated loan interest payment

Calculating how much interest you will pay on a car loan will help determine whether it’s worth purchasing. If you end up paying more in interest than the car’s value, you may want to reconsider if the purchase makes financial sense.

Many lenders offer an auto loan calculator on their site. However, here’s a sample calculation that will help you determine the interest payment on your car loan:

• Interest rate ÷ 12 months x the loan balance = Monthly interest

For example, the monthly interest payment on a $10,000 loan with a 7% APR is calculated as follows:

• 0.07 ÷ 12 x $10,000 = Monthly interest payment of $58.33

Using this example, you would pay nearly $700 in interest over the first year of your loan.

Auto loan pre-approval

Pre-approval means that a lender has examined factors like your credit history and income and determined your eligibility to receive a loan.

Getting pre-approved for a loan offers several advantages:

• Lenders will provide you with a dollar amount you’re pre-approved to borrow. This allows you to search for a car within your budget without wondering if you can afford it.

• With pre-approval, you will know the interest rate and term of the loan before making a purchase.

• You can easily calculate your monthly payment to ensure you can afford the loan.

If you're uncertain about how much you can borrow or don't know what type of interest rate your credit history entitles you to, you should consider getting a pre-approved loan before beginning the car-buying process. This can remove much of the stress and uncertainty when buying a car online or at a dealership.

Flexible loan terms

Loan repayment term flexibility is an important factor when selecting a lender. Customers looking for the best auto loan rates for 72 months may not be interested in a shorter 36-month term or vice-versa.

Auto loan term length also determines the amount of interest a borrower will need to repay on their loan. Longer loan terms generally carry interest rates several points higher when compared to shorter loans.

Credit history and credit score requirements

Lenders will often check your credit history to determine the risk of lending you money. Your credit report will show the lender your history of repaying debts on time and whether you’ve defaulted on a loan or failed to pay a debt.

Your credit history has a numeric value between 300 to 850. The lower your credit score, the higher the risk of loaning to you represents to the lender. Individuals with low credit scores may find it difficult to receive financing or have high-interest rates on the loans they’re eligible to receive.

Certain types of lenders specialize in providing loans to those with low credit scores. Most lenders require a minimum credit score before securing a loan.

How to apply for a car loan

The process of applying for a car loan can vary depending on whether you’ve already selected a car or you’re still shopping for the right one.

• Browse car loan lenders - You have tons of options to choose from. Pick a marketplace or direct lender that offers the type of loan you want. Also consider the lender’s credit score requirements. (Be sure to check your credit score ahead of your search.)

• Prequalify for a loan - Fill out an auto loan application online, by phone or in person. Use a lender that only requires a soft credit check to avoid a negative impact to your credit score.

• Evaluate your auto loan offers - Once you’ve prequalified, you’ll receive your offers either online or by phone. Remember that just because you’ve prequalified for an auto loan does not mean you must accept it. If you don’t like the rate and terms offered, try applying elsewhere.

• Choose an auto loan and submit required information - Lenders will ask for more personal information once you commit to an auto loan. They’ll also do a hard credit pull at this point.

• Receive funding - Depending on your car loan type and lender you’re using, funding may be directed to the dealership or to your bank account. Be sure to ask about this detail when evaluating your loan offers.

Latest News on Car Loan Rates

Inflation has been slow to improve, and interest rates for virtually every kind of loan remain high. Inventory shortages for both new and used cars also negatively impacts affordability. For those looking to buy a car, it means shopping for the best auto loan rate is critical.

In fact, about 60% of potential new car shoppers are worried that they can’t finance a new car with the market as it is. The average price for a new car has reached nearly $50,000, and the average monthly car payment is more than $700. Used car prices dropped slightly early in 2023 but are now back on the rise, up $145 on average from February to March.

Customers should evaluate loan options carefully before committing to an auto loan. Rates and terms vary among lenders. Researching your options thoroughly could mean significant savings.

If your credit score is low, you may not receive the best offers. Consider working to improve your credit score to secure better rates.

Once you’ve purchased a car, be sure to shop for the best car insurance. We’ve also reviewed the best extended car warranties to help you further protect your investment.

How we chose the best car loan rates

We considered several essential factors when creating our list of auto loan best rates and the providers with the most flexible options.

Types of loans

We started by considering the types of loans each lender offers and whether they specialize in certain types of loans.

For this article, we examined loan types that included:

• New car loans
• Used car loans
• Refinancing loans

We looked at lenders who specialized in these areas and created our list based on their available financing options, interest rates and other convenient features.

Car loan term length

For our list, we wanted to highlight lenders who offered a range of loan terms to better appeal to our readers. By highlighting lenders who offer a wide range of loan terms, we sought to provide the most value to our readers.

The best loans offer the right combination of term and rate, and we sought to identify lenders who offer different loan terms so that our readers would find an option that best met their financial goals.

APR

Interest rate is the essential factor for the majority of buyers. A high APR can mean the difference between getting your dream car or settling on a more affordable option.

Auto loan providers should offer borrowers a competitive APR that matches their credit score. It’s vital that lenders provide credit to borrowers with both high and low credit scores, but identifying lenders that only offer above-market rates helps our readers avoid dealing with less-than-reputable businesses. By only listing lenders who offer reasonable interest rates, we sought to help save our readers time and money.

Ease of application

As part of our criteria, we examined how easily each lender made applying for a loan and whether a borrower’s credit score would take a hit as part of the application process.

Lenders on our list offer a fast and easy application process that only takes a few minutes to complete. Most lenders listed above also offer pre-qualification that doesn’t impact the lender’s credit score.

Summary of Best Car Loan Rates

• PenFed Credit Union – Best for Flexible Options
• Consumers Credit Union – Best for Used Cars
• Lightstream – Best for New Cars
• Autopay – Best for Refinancing Options
• Capital One – Best for Personalization
• CarsDirect – Best for Easy Online Quotes
• Bank of America – Best for Private Parties
• Carvana – Best for Bad Credit