Finding the best rates and terms on a car loan can help you save hundreds or even thousands in interest. With interest rates rising and the cost of car insurance premiums increasing, it’s important to shop around with different lenders to find the most affordable car loan for your new or used car.
An auto loan is a secured installment loan, which means the vehicle you purchase acts as collateral and can be subject to repossession if you fail to repay the loan. But the trade-off is a lower interest rate. You can apply for a car loan at a car dealership, bank, credit union or online lender.
We’ve weighed annual percentage rates, loan amounts, availability, fees and other features and benefits to compile our recommendations for the best car loans. Note that all starting annual percentage rates assume an “excellent” credit score of 800 or above.
PenFed Credit Union Best for New Cars
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 an Illinois-based credit union that has recently opened membership nationwide. Though its auto loan rates for vehicles made prior to 2021 are average for the market, their new car loan rates are a great deal. Consumers Credit Union also offers significant flexibility, with the widest range of loan terms and amounts of the providers we evaluated.
You can become a member online with a valid ID, two recent pay stubs, two tax returns from recent years, five references, two utility bills and a one-time $5 fee to the Consumers Cooperative.
