Lender Scores by Category

Here’s how each lender above scored in our f🌞ive main criteria categories. Each score is out of a ♚possible total of 5 points.

Why You Can Trust Us

Investopedia was founded in 1999 and has been helping readers find the best auto loans since 2020. Investopedia’s research and editorial teams conducted independent, unbiased research into the auto loan industry, collecting nearly 1,000 data points on 16 auto lenders. That included information on interest rates, loan terms, borrower and vehicle requiౠrements, and customer satisfaction. This information was used to objectively score and rank each lender to provide the best recommendations above.

Military Lenders Provide Grea🦩t Rates, If You’re Eligibꦜle

Some lenders are exclusively available to people in the military or affiliated with the military. These lenders often offer excellent rates and terms, and if you’re eligible they should be near the top of your list when 澳洲幸运5开奖号码历史查询:rate shopping for a new car. 

USAA and Navy Federal Credit Union are two popular options. Their membership req🌳uirements are mostly the same, although slight differ🍃ences may exist. In general, you’re eligible to join if you fit into any of these categories:

• Active duty, guard, reserve, or veteran military servicemember
• Officer candidate in ROTC
• Department of Defense civilian employee, contractor, or retiree
• Have family members who are either in the military or a member of the bank or credit union

How Does An Auto Loan Work?

Whenever you purchase a new or used car, you have many ways to finance that purchase including purchasing it in cash or, if you don’t have enough money to buy it outright, taking out a personal or 澳洲幸运5开奖号码历史查询:auto loan. 

Typically, you can get a better deal on financing your car with an auto loan because these loans are secured—unlike personal loans. With an auto loan, the car itself serves as collateral, so lenders take on less risk when extending an auto loan compared to a 澳洲幸运5开奖号码历史查询:personal loan. 

You can get a car loan through a bank, 澳洲幸运5开奖号码历史查询:credit union, or an online lender or you can rely on your dealer to arrange a loan through a lender. Financing your car with an auto loan tꦫhrough a dealership may be more convenient, but it can also be pri🎀cier. 

To determine the terms of a loan, a lender will look at factors like your 澳洲幸运5开奖号码历史查询:credit score and credit history. A lender will typically provide you with more favorable terms if you have a higher credit score and a long history of making pay💧ments on-time and in full. 

You can understand the total cost of your new purchase by look🌜ing at details like the annual percentage rate (APR), the down payment, and the loan term. The APR refers to the annual interest rate in addition to any fees. 𒈔Lenders will generally offer a lower APR to borrowers with strong credit scores. 

And while car loans are a type of installment loan where you make monthly payments that go towards 🃏paying down the principal and interest, some car loans will require an upfront down payment, too, which is usually 10% to 20% of the car’s valuꦗe. 

Although not everyone can afford a large down payment, it can help save you money in the long run. More money down reduces the risℱk to the lender, so they may charge lower interest rates.

Common Auto Loan Terms to Understand

• Secured loan: Auto loans are a type of 澳洲幸运5开奖号码历史查询:secured loan, which means that the car itself serves as 澳洲幸运5开奖号码历史查询:collateral that can be seized in the event of a default or missed payments.
• Down payment: A 澳洲幸运5开奖号码历史查询:down payment refers to the amount of money you pay upfront for a major purchase like a home or a car. The down payment is usually expressed as a percentage of the total cost of a purchase. Not all auto loans require down payments, but generally, the greater the down payment, the less you borrow and the more you save.
• Interest rate: The 澳洲幸运5开奖号码历史查询:interest rate is the cost charged to borrowers for a loan. It’s represented as a percentage.
• Annual percentage rate (APR): The APR is the interest rate plus fees. The interest rate and the APR may be the same if the lender doesn’t charge fees.
• Principal: The 澳洲幸运5开奖号码历史查询:principal is the original amount of money you agree to borrow for a loan. 
• Loan term: This is how long you’ll have to pay off a loan—loan term lengths typically range from 24 months to 84 months with shorter terms generally offering lower interest rates than longer ones.
• Credit score: A credit score is a three digit number that indicates a borrowers’ 澳洲幸运5开奖号码历史查询:creditworthiness. A credit score is calculated from information in your 澳洲幸运5开奖号码历史查询:credit report. Factors like your payment history, 澳洲幸运5开奖号码历史查询:credit utilization ratio, and your new credit applications are used to calculate your credit score. Generally, higher scores signal greater creditworthiness.
  

Types of Auto Loans

• New car loan: New car loans are for financing purchases of new cars. New cars are typically more expensive than old cars and, therefore, may require higher monthly payments than used car loans. Lenders typically offer lower interest rates on these loans because new cars are lower risk than used cars.
• Used car loan: Lenders will generally charge higher interest rates on used car loans compared to new car loans. This is because lenders consider used cars higher risk and charge a higher interest rate to compensate for that risk.
• Auto loan refinance loan: An 澳洲幸运5开奖号码历史查询:auto refinance loan is an auto loan that replaces an existing auto loan. Borrowers may consider refinancing if interest rates have dropped, if they believe they can qualify for a lower rate, or they simply want different terms on their loan.
• Lease buyout loan: If you’re not ready to purchase a car, you may consider leasing one. With a lease buyout loan, you rent a car for an extended period of time. Some car leases will offer you the option of purchasing the car at the end of the lease for a certain buyout price. If you don’t have enough money to buy the car outright, you can get a lease buyout loan to finance the purchase.

How to Apply for an Auto Loan

1. Understand your budget: To calculate how much you can spend on a monthly car payment, determine your monthly net income.Generally, experts suggest spending roughly 10% to 15% of your income on transportation costs. Note that this is a rule-of-thumb so it may not apply to everyone.
2. Figure out your credit score: Lenders will evaluate your credit score to determine the terms of your loan. Before applying for a loan, try boosting your score to qualify for a lower APR. For example, try paying off your credit card payments on-time and in full and keep your credit utilization ratio low—or the ratio of the amount of credit you use to the total amount you’re extended.
3. Shop around for loans: While it may be tempting to just opt for an auto loan through your dealer, try exploring what other loan options are available—other lenders may offer lower rates. Some lenders may also offer a prequalification option, which means you can see whether you qualify for a loan and what the terms of the loan are. (Note that even if you’re pre-qualified for a loan, you can still be denied). Additionally, try negotiating more favorable terms with the lender.
4. Apply: Once you’re ready to apply, collect all the necessary documents and information. You’ll typically be required to provide your name, income, a valid form of identification, your Social Security number (SSN), and more.
   

How We Find the Best Auto Loans

Investopedia’s full-time research and editorial teams conducted independent, comprehensive research into auto lend✅ers from November 2024 into February 2025. 16 popular auto lenders were included, 🌃and each one was evaluated on 63 criteria. Information was collected from lender websites, customer support, and media representatives. Each lender was scored and ranked objectively. Information not used for scoring was collected for background.

Evaluation criteria were broken down into the folloꦕwing categories and given the accompanying weights:

• Cost of Loans: 34.0%
• Loan Terms: 28.0%
• Borrowing Requirements: 22.0%
• Customer Experience: 10.0%
• Additional Features: 6.0%

Investopedia’s full-tim෴e compliance team maintains the accuracy of information on this page to ensure our recommendations remain the best choices for their respective categories.