Best Auto Loans in 2023 online

We’ve compiled a list of seven lenders offering the best auto loan rates for new and used cars. The lenders were evaluated on factors including the minimum annual percentage rates (APRs) of their loans, eligibility requirements and customer reviews. The exact loan terms and pricing you receive will depend on your personal financial profile.

Best Auto Loans offers

LightStream provides an attractive option for personal loans, especially if you have a strong credit history. With competitive interest rates and a lack of fees, it's a borrower-friendly choice.

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Pros and cons

Pros

No charges or fees.
Enjoy an interest rate reduction when you sign up for automatic payments.
Home improvement loans offer extended repayment terms.
Benefit from the Rate Beat program and Experience Guarantee.

Cons

The website does not offer a pre-qualification option.
A few years of established credit history are required.
Debt consolidation loans do not facilitate direct payments to creditors.

myAutoloan.com, established in 2003, operates as a direct lending marketplace that serves as an intermediary, gathering loan offers from up to four lenders on behalf of loan applicants.

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Pros and cons

Pros

Pre-qualification Options: Certain lending partners within the network offer pre-qualification using a soft credit check, allowing applicants to gauge their eligibility and potential loan terms without affecting their credit score.
Rate Discounts with Auto Payments: Some network lenders extend rate discounts to borrowers who set up automatic payments, potentially reducing the overall cost of the loan.
No Origination Fees: Applicants benefit from the absence of origination fees, eliminating an additional upfront cost often associated with loans.
Online Application: The platform offers a fully online application process, catering to applicants who prefer the convenience and accessibility of digital submissions.
Co-Borrower or Co-Signer Options: In nearly all cases, myAutoloan.com permits the inclusion of co-borrowers or co-signers, which can enhance eligibility and potentially secure more favorable loan terms.

Cons

Limited Geographic Availability: The service is not available to residents of Hawaii or Alaska, limiting access for individuals residing in these states.
Weekend Customer Service: Customer service is not accessible on weekends, which may inconvenience applicants or borrowers seeking assistance during these days.
Lack of Spanish Website: The platform does not provide a Spanish-language version of its website, potentially excluding Spanish-speaking individuals or those more comfortable navigating in Spanish.

PenFed's car buying service enables applicants to find a car online, request member pricing from a dealer, apply for financing online, receive approval, and then visit the dealership.

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Pros and cons

Pros

Multiple Pre-Qualified Offers: PenFed offers up to six pre-qualified loan options, each specifying the interest rate and payment amount for various loan terms. These pre-qualified offers are determined through a soft credit check.
Rate and Offer Consistency: The pre-qualified loan terms provided by PenFed remain consistent throughout the preapproval and approval stages, unless there are changes to the selected vehicle.
Online Car Buying Service: PenFed provides an online car buying service that streamlines the process of finding, financing, and purchasing a vehicle. This service may also offer potential rate reductions or cash bonuses.
Convenient Online Application: Borrowers can complete the entire loan application process online, from submission to document upload.
Seven-Day Customer Service: PenFed offers customer service assistance seven days a week, providing support when needed.

Cons

Credit Union Membership Required: To obtain a PenFed auto loan, individuals must be members of the credit union. Although membership is accessible, it is still a prerequisite.
No Automatic Payment Rate Discounts: PenFed does not offer rate discounts for borrowers who set up automatic payments, which some other lenders provide as an incentive for automatic payment scheduling.
Initial Application Requires Social Security Number: Applicants are required to provide their Social Security number as part of the initial application process, which may be considered sensitive information by some individuals.

HSBC offers Personal, Premier, Car, Home Improvement, and Debt Consolidation loans with competitive rates and exclusive Premier benefits.

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Pros and cons

Pros

Diverse loan options
Flexible repayment terms
Competitive interest rates
Instant funding provided to HSBC customers
Premier account holder benefits

Cons

Instant credit decision and same-day funds for existing customers only
Good credit required for low rates

Sainsbury's Bank, a subsidiary of the esteemed UK supermarket, offers a diverse range of financial services, including loans, credit cards, insurance, and savings accounts, with a focus on customer convenience and competitive solutions.

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Pros and cons

Pros

Diverse loan options
Flexible repayment terms
Competitive interest rates
Fixed monthly payments
Nectar Cardholder benefits
Same-day funding

Cons

Specific usage restrictions
High criteria for loan approval
Good credit required for low rates
No payment holidays are offered
Minimum annual income requirement is £7,500

Halifax's personal loans are tailored for various purposes, such as major purchases or consolidating debts, without the requirement of collateral.

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Pros and cons

Pros

Diverse loan options
Flexible repayment terms
Halifax Account Holder benefits
Payment holidays
Joint loan option
Fixed monthly payments
Option to pay extra to reduce interest
Online application benefits

Cons

High criteria for loan approval
High APR for smaller loans
Restrictions for Non-Account Holders
No specific products for bad credit
Joint loans limited to current customers

Zopa Bank, renowned for its tech-savvy approach combined with financial acumen, is committed to offering simple, transparent, and customer-focused financial products.

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Pros and cons

Pros

Diverse loan options
Flexible repayment terms
High customer satisfaction ratings
Fixed monthly payments
No charges for early repayments

Cons

High interest rates
Joint applications are unavailable
High criteria for loan approval
No specific products for bad credit
No payment holidays are offered

Oakbrook Loans, a dynamic and FCA-regulated institution in Nottingham, provides versatile loans for homes, debt, weddings, and cars.

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Pros and cons

Pros

Diverse loan options
Same-day funding
Rapid Decision-Making
No fees for the loan service
Fixed monthly payments
No charges for early repayments

Cons

High interest rates
No payment holidays are offered
Joint applications are unavailable

TSB Bank personal loans offer flexible borrowing from £300 to £50,000, competitive APRs, repayment holidays, and options for diverse financial needs.

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Pros and cons

Pros

Diverse loan options
Small loans
Flexible repayment terms
Account Holder benefits
Payment holidays
Joint loan option
Same-day funding
Rapid Decision-Making
Fixed monthly payments
Option to pay extra to reduce interest

Cons

High APR for smaller loans
Restrictions for Non-Account Holders
No specific products for bad credit

Novuna offers a range of loans including car, home, debt consolidation, and leisure, all with flexible terms and competitive rates.

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Pros and cons

Pros

Diverse loan options
Flexible repayment terms
Payment holidays
Joint loan option
Fixed monthly payments
Option to pay extra to reduce interest
No charges for early repayments

Cons

High APR for smaller loans
No specific products for bad credit
Soft-search facility is unavailable
Good credit required for low rates
Funding on the same day is not an option

How To Apply for an Auto Loan?

Follow these general steps to apply for an auto loan:

Determine your budget. Before applying for an auto loan, it’s essential to know how much you can afford to pay. Use an auto loan payment calculator to understand how much your estimated monthly payment would be depending on your loan amount.
Check your credit. To get the best rates, you will need an excellent credit score. But many lenders approve loans for people with less-than-perfect credit histories. Before applying, check your credit score so you know where you fall.
Shop around for the best loan. Prequalification and preapproval can help you understand what loan terms you may be eligible for. This information allows you to compare offers and negotiate. Taking the time to compare loan options and offers from several lenders can help you secure the best terms for your situation.
Get your documents in order. Lender requirements vary, but most will ask you for paycheck stubs, proof of residence and proof of a valid driver’s license.
Submit your application. Once you have chosen your preferred lender, whether a direct or dealership lender, submit your formal application online or in person

FAQ

What is the most popular auto loan term?

The most common terms are 24 to 60 months, but 72- and 84-month terms are becoming more common. There is no perfect term, and it is instead specific to your budget and needs. A longer term means lower monthly payments, but a higher cost overall.

What is a good APR for 72 months?

The average interest rate on a new car loan with a credit score of 650 is 7.25%, while the average interest rate on a used car loan is 9.81%. What is a good interest rate for a 72-month car loan? An interest rate below 4.07% for a new and 8.62% for a used car can be considered good for a 72-month car loan.

Key terms to know how car loans work

Understanding key terms related to car loans is crucial before applying for financing. Here's a breakdown of essential terms:

Annual Percentage Rate (APR): The yearly cost of borrowing money, expressed as a percentage. It includes lender fees and is based on factors like credit history.
Loan Term: The duration for repaying the loan, typically in 12-month increments (e.g., 24, 36, 48 months). Longer terms mean more interest paid over time.
Interest Rate: The cost of borrowing, excluding fees. Use APR for a more accurate comparison between lenders.
Principal Amount: The original borrowed sum, excluding interest.
Amortization: The loan repayment process allocating payments to principal and interest. Early payments go more to interest, shifting to principal later.
Down Payment: Upfront payment, reducing the loan amount.
Taxes and Fees: Additional costs like sales tax, documentation fees, and other charges included in the total car price.
Total Car Cost: The entire loan amount, covering principal, interest, down payment, or trade-in, paid over the loan term.
Car Financing: Paying for a car over time, involving various options like loans, leases, or refinancing.
Loan-to-Value Ratio (LTV): The car's value compared to the loan amount, indicating lender risk. Calculated as (Loan amount / Car value) x 100 = LTV. It influences loan rates and approval.

Being familiar with these terms equips you to apply for loans, compare offers, and make informed decisions.