The Best Auto Loans: 2018 New & Used Car Loan Rates
The best auto loan for you depends on your priorities, but two common goals are to get the most competitive rate and the lowest monthly payment. That’s why longer-term loans are so popular right now, with more people stretching out new and used car loans over 60 months or more. Despite that, new and used … Continue reading The Best Auto Loans: 2018 New & Used Car Loan RatesThe post The Best Auto Loans: 2018 New & Used Car Loan Rates appeared first on MagnifyMoney.
Posted — UpdatedThe best auto loan for you depends on your priorities, but two common goals are to get the most competitive rate and the lowest monthly payment. That’s why longer-term loans are so popular right now, with more people stretching out new and used car loans over 60 months or more. Despite that, new and used car payments hit an all-time high in 2017, meaning that people are spending more than ever on their vehicle purchases. That’s why MagnifyMoney has compiled a list of the best auto loans in 2018. We know that with rising rates, you need as much help as you can get finding the best rates to secure the vehicle you want and need.
Overview of the best auto loans in 2018
Lender name
Best for
Loan types offered
LendingTree
Comparison shopping auto loan rates
New, used, refinance, lease-buyout
LightStream
Car buyers with good or excellent credit
New, used, refinance, lease-buyout
Capital One
Car buyers with fair or poor credit
New, used, refinance
SpringboardAuto.com
Car buyers with fair or poor credit
New, used, refinance
Carvana
Buying a used car online
Used
How we picked the best auto loan rates
Using information from LendingTree, MagnifyMoney’s parent company, we compiled auto loan data over a six month period (August 2017 through January 2018) spanning across 22 auto lenders. We analyzed the loan data by applicant credit tier, and whether the loans were to purchase a used or new car to determine 1) the lenders consumers chose most often, and 2) the lowest average APR offered by the lender.
In this review, we’ll cover:
The Best Auto Loans: 2018 New & Used Car Loan Rates
- Overview of the best auto loans in 2018
- A closer look at the best new & used auto loans
- Where people with good credit (680+) get the lowest rates
- Where people with fair (620-679) & bad credit (300-600) get the lowest rates
- Where to buy (and finance) a used car online
- Understanding the auto loans process
- How do auto loans work?
- Tips when shopping for car loans
- How to apply for an auto loan
A closer look at the best new and used auto loans
Start with LendingTree
With LendingTree, you can fill out one short online form, and there are dozens of lenders ready to compete for your business. Upon completing the application, you can see real interest rates and approval information instantly. Some auto lenders will do a hard pull on your credit and this is common with auto lending. It’s important to remember, multiple hard pulls will only count as one pull, so the best strategy is to have all your hard pulls done at one time.
LendingTree is our parent company. LendingTree is unique in that they allow you to compare multiple, personal loan offers within minutes. Everything is done online and you can have your loan pre-approved without impacting your credit score. LendingTree is not a lender, but their service connects you with up to five offers from personal loan lenders.
Where people with good credit (680+) get the lowest rates
LightStream
New auto loan product details
- APR: See table below
- Terms offered: 24 – 84months
- Loan amounts: $5,000 - $100,000
[Chart-LightstreamNewAutoLoanAPRs] Lightstream New Auto Loan APRs
Loan Amount
Loan Term (months) *
24 - 36
37 - 48
49 - 60
61 - 72
73 - 84
$5,000 to $9,999
3.99% - 6.49%
4.84% - 7.09%
5.04% - 7.29%
5.94% - 7.94%
N/A
$10,000 to $24,999
3.09% - 6.19%
3.44% - 6.44%
3.44% - 6.44%
4.29% - 7.29%
N/A
$25,000 to $49,999
3.59% - 6.19%
3.69% - 6.44%
3.69% - 6.44%
4.54% - 7.29%
5.14% - 7.89%
$50,000 to $100,000
3.59% - 6.19%
3.69% - 6.44%
3.69% - 6.44%
4.34% - 7.09%
5.04% - 7.79%
[/Chart-LightstreamNewAutoLoanAPRs]As of 6/02/18. Includes a 0.50 point discount for autopay. Exact rates depend on your credit profile.
Used auto loan product details
- APR: See table below.
- Terms offered: 24 – 84 months
- Loan Amounts: $5,000 - $100,000
[Chart-LightstreamUsedAutoLoanAPRs] LightStream Used Auto Loan APRs
Loan Amount
Loan Term (months) *
24 - 36
37 - 48
49 - 60
61 - 72
73 - 84
$5,000 to $9,999
4.19% - 6.69%
5.04% - 7.29%
5.24% - 7.49%
5.94% - 7.94%
N/A
$10,000 to $24,999
3.09% - 5.69%
3.69% - 6.54%
3.69% - 6.54%
4.54% - 7.04%
N/A
$25,000 to $49,999
3.59% - 5.69%
3.69% - 6.54%
3.69% - 6.54%
4.54% - 7.04%
5.14% - 7.64%
$50,000 to $100,000
3.59% - 5.69%
3.69% - 6.19%
3.69% - 6.19%
4.34% - 6.84%
5.04% - 7.54%
[/Chart-LightstreamUsedAutoLoanAPRs]As of 6/02/18. Includes a 0.50 point discount for autopay. Exact rates are dependent on your credit profile and for purchases made from dealer.
What we like
- Fixed rate, simple interest fully amortizing installment loans. This means you won’t pay interest on your interest, and if you follow the payment schedule, your loan will be fully paid off at the end of the term.
- No fees or prepayment penalties
- No restrictions on the vehicles year, make, model or mileage
- If you’re not 100% satisfied, Lightstream will pay you $100 (conditions apply)
Where it may fall short
- Loans may not be used for a cash-out refinance
- Secured loans may not be used for commercial vehicles
- Vehicle must be classified as automobile, sport-utility vehicle (SUV), light-duty truck, passenger or conversion van
- No phone support for customer service. Everything is handled by email
How to applyBefore you apply, keep in mind that you’ll need to:
- Have good credit
- Have sufficient income and assets
- Agree to electronic records and signatures
Applying is done entirely online. You’ll provide:
- Personal information. Name, address, phone, Social Security number, driver’s license, etc.
- Employment information. Employer name and address, income and other financial assets
- Loan information. Loan purpose, loan amount and term
- Security information. Create a username and password
Where people with fair (620-679) & bad credit (500-619) get the lowest rates
Capital One Auto Finance
Capital One is a Fortune 500 company and a trusted name in banking and other financial services. In the fourth quarter of 2017, Capital One originated $6.215 billion worth of auto loans, making it one of the top five U.S. banks offering auto loans.
Why we chose Capital OneThe most borrowers with fair and bad credit chose a loan with Capital One, and it came in second in terms of lowest average APR.
New auto loan product details
- APR: See table below
- Terms offered: 36 – 72 months
- Loan Amounts: $4,000 - $40,000
[Chart-CapitalOneNewAutoLoanAPRs] Capital One new auto loan APRs
Credit
Loan Term (months) *
36
48
60
72
Rebuilding
8.20%
8.20%
8.20%
8.20%
Average
4.46%
4.52%
4.52%
5.07%
Excellent
3.24%
3.24%
3.24%
3.24%
[/Chart-CapitalOneNewAutoLoanAPRs]As of 6/02/18
Used auto loan product details
- APR: See table below
- Terms offered: 36 – 72 months
- Loan Amounts: $4,000 - $40,000
[Chart-CapitalOneUsedAutoLoanAPRs] Capital One used auto loan APRs
Credit
Loan Term (months) *
36
48
60
72
Rebuilding
8.20%
11.20%
11.20%
11.20%
Average
5.19%
6.69%
6.69%
6.94%
Excellent
4.14%
4.34%
4.34%
4.64%
[/Chart-CapitalOneUsedAutoLoanAPRs]As of 6/02/18
What we like
- Easy to pre-qualify online without a hard inquiry on your credit
- Minimum monthly income required is $1,500 or $1,800, depending on your credit
- 12,000 auto dealers work with Capital One
Where it may fall short
- The best rates require excellent credit with 20% down on the vehicle
- Vehicles must be 2006 or newer
- Vehicles must have less than 120,000 miles
- Dealers may charge additional fees, including document fees, dealer preparation fees and delivery charges
- Maximum loan amount may not cover the cost of the vehicle you desire
How to applyApply using Capital One’s Auto Navigator. Enter your personal information including your Social Security number to get pre-qualified for an auto loan without affecting your credit. Then take your financing certificate to the dealership to shop for cars and make a selection. Once you’ve selected a vehicle, the dealer will have you fill out a credit application and you’ll finalize the paperwork for your vehicle purchase with the dealer.
SpringboardAuto.com
SpringboardAuto was started in order to streamline the auto finance experience online. The company says its online application takes less than a minute to complete. You may upload documents via your computer or mobile device, and online tools allow you to check the status of your loan and move through the auto finance process at your own pace.
Why we chose themFewer people chose Springboard compared with other lenders, but when they did, they were offered the lowest average APR.New auto loan product details
- APR: Starting at 7.00%
- Terms offered: Up to 72 months
- Loan Amounts: $7,500 - $45,000
Used auto loan product details
- APR: Starting at 7.00%
- Terms offered: Up to 72 months
- Loan Amounts: $7,500 - $45,000
What we like
- Get a personalized rate after filling out an online application that doesn’t affect your credit
- Fast and easy online application
- Quick loan decision
- No prepayment penalties
Where it may fall short
- Depending on your state, you may pay an origination fee ($395 for a private party purchase, $395 for a dealer purchase and $295 for a refinance).
- Auto loans are only available in 26 states.
- Vehicle must be 2008 or newer.
- Vehicle must have no more than 138,000 miles.
- Must be one of the eligible makes (see below).
- No loans for commercial vehicles.
- No loans for leased vehicles.
Eligible makes
- Acura
- Audi
- BMW
- Buick
- Cadillac
- Chevrolet
- Chrysler
- Dodge
- FIAT
- Ford
- Genesis
- GMC
- Honda
- Hyundai
- INFINITI
- Jaguar
- Jeep
- Kia
- Land Rover
- Lexus
- Lincoln
- Mazda
- Mercedes-Benz
- MINI
- Mitsubishi
- Nissan
- Ram
- Scion
- Subaru
- Toyota
- Volkswagen
- Volvo
Online experienceSpringboardAuto makes the loan process simple and easy online. After filling out your online application, you may upload the required documentation using a computer or smartphone. At closing, you’ll sign your loan documents electronically.
How to applyFill out the single-page online application, and it determines your eligibility without affecting your credit. You’ll need to provide your personal information, like your name, address, Social Security number and income, along with the vehicle information if you’ve selected a vehicle (VIN, mileage, year, make, model, trim).
Where to buy (and finance) a used car online
Carvana
Carvana specializes in helping you shop for a car online. It uses things such as 360-degree photos, free vehicle history reports, details and specs, ratings and reviews to provide you with the maximum amount of information.
Why we chose themWe looked at the three used auto lenders chosen most often in each credit tier, and Carvana was the only lender in the top three in every tier. That’s why we chose Carvana, even though other lenders offered lower average APRs on used auto loans.
Product details – Used auto loans only
- APR: APR depends on credit history, vehicle type and down payment.
- Terms offered: Up to 72 months.
- Minimum loan amount: None
- Maximum loan amount: Any amount, as long as it’s a vehicle listed on the Carvana website.
What we like
- High level of detail on vehicles makes online shopping easy
- Online application personalizes your shopping experience and doesn’t require a hard pull on your credit
- You can return the vehicle within seven days and get your money back (Make sure you’re familiar with the limits on this policy before you buy)
- All vehicles are certified with a 150-point inspection
Where it may fall short
- Only available for used vehicles
- Carvana is a car dealership, and you must select a vehicle through their website
Online experienceCarvana provides a lot of information about each vehicle. You won’t have to visit other sites to find specs or read reviews
Understanding the auto loans process
How do auto loans work?
For the lenders we detailed above, you may apply for a loan online and receive personalized loan rates without a hard pull to your credit. So while you don’t see rate tables on certain lender websites, don’t be discouraged. If you’re serious, just fill out an application to see what you may qualify for.
Once you’ve completed the initial application, you’ll be able to shop for a vehicle knowing which type of financing you’ll likely qualify for.
Once you’ve selected a vehicle, you’ll need to submit a full application for the loan. This can be done online or with a dealer, if you’re working with one. Once again, most lenders are streamlining this process online, so for the lenders we discussed on this page, you may upload your documents using a computer or mobile device.
Once you’ve purchased the vehicle and completed your loan documents, you’ll just need to make payments. Making payments has moved online as well, and many lenders offer apps to help you manage your payments and loan information using your mobile device.
Tips when shopping for car loans
- Set a budget. Everyone says it, but it’s not always easy to do. If you aren’t keeping a budget, here’s how to start in four easy steps.
- Know how much you can afford. MagnifyMoney suggests you keep your total car expense less than 10% of your monthly budget. This is part of the 20/4/10 rule, which also says you should put down at least 20% and choose a maximum loan term of four years.
- Save for a down payment. The amount of your down payment is likely to affect the interest rate you receive when financing your vehicle. So saving for a larger payment will help save you money and putting more down will lower your monthly payment, too.
- Check your credit. You’re entitled to a free copy of your credit report from each of the three major credit bureaus every 12 months, and it’s easy to get your free credit score from a variety of sources.
- Consider a co-signer. If your credit score is low or you have a limited credit history that needs improvement, having a co-signer with good credit on your auto loan could significantly lower your interest rate.
- Shop around. It’s smart to get multiple rate quotes, so you may compare loans.
- Get pre-approved. Shopping for a vehicle doesn’t make a lot of sense if you don’t know how much money you’ll have to work with. Shoppers have many options for getting auto loan quotes without a hard inquiry on their credit, but if you’re serious about buying a car, doing all your loan shopping in a short period of time will minimize the potential impact on your credit score, if loan applications result in a hard pull.
- Talk to local credit unions. While banks and online auto loan companies offer easy-to-use online tools, don’t forget to talk to your local credit union to see if it has a more competitive rate.
- Beware of extra fees. Keep in mind you’ll need to pay state taxes and title fees. In addition, dealers may charge fees, including document fees, dealer preparation fees and delivery charges. These fees will affect your APR if you finance them into your loan.
- Check your paperwork. Everyone makes mistakes. When you get the final copy of your auto loan, check to make sure you got everything you were promised and there are no extra fees.
How to apply for an auto loan
When you apply for an auto loan, it will help to have your documentation ready. This will include proof of identity, proof of income, credit and banking history and proof of residence. If you’ve selected a vehicle, you also want that information, including VIN, mileage, year, make and model.
While many online lenders advertise the loan process as being quick, be prepared for roadblocks. Sometimes a lender may request additional information or take time to verify information, and that may delay the process.
Be proactive! Once you’ve started the auto loan process, the lender will walk you through what’s needed. But that doesn’t mean you have to wait for your lender to get back to you. If the loan process has stalled, make a call or send an email to your lender asking what’s needed. In many cases, you’ll have an online login that will allow you to see your loan status, or take the next step online.
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