Best auto loans of 2025

Our top auto loan picks

How we picked: We compared interest rates, loan terms, eligibility requirements, customer service, and special features for different credit profiles.

Best overall: PenFed Credit Union

Why it stands out: Consistently offers some of the lowest auto loan rates in the market with flexible terms and excellent member service. Easy membership requirements make it accessible to most borrowers.

• Competitive rates: Starting as low as 5.24% APR for new cars, 5.49% for used.
• Flexible terms: 36 to 84 months for new cars, up to 72 months for used cars.
• Easy membership: Open to anyone with a small donation to military charity.
• No fees: No application, origination, or prepayment penalties.
• Rate discounts: Additional 0.50% discount for existing checking account holders.
• Loan amounts: $500 to $150,000 depending on vehicle and creditworthiness.

Best for new cars: LightStream

Why it stands out: Truist Bank's online lending division offers excellent rates for new car purchases with a streamlined application process and no fees. Strong option for borrowers with good credit.

• Low rates: Competitive rates starting around 6.99% APR for qualified borrowers.
• No fees: No origination, application, prepayment, or late fees.
• Fast funding: Same-day funding available for approved loans.
• Rate beat program: Will beat qualifying competitor rates by 0.10%.
• Loan terms: 24 to 84 months for new vehicle financing.
• Credit requirements: Good to excellent credit typically required.

Best for used cars: Auto Approve

Why it stands out: Specializes in used car financing with a network of lenders to find competitive rates. Particularly good for older vehicles that other lenders might not finance.

• Used car specialist: Finances vehicles up to 10+ years old.
• Lender network: Works with multiple lenders to find best rates.
• No dealer markup: Direct lending eliminates dealer finance markup.
• Quick pre-approval: Get approved before shopping with rate certainty.
• Flexible credit: Works with borrowers across credit spectrum.
• Loan amounts: $8,000 to $100,000 for qualified borrowers.

Best for bad credit: Capital One Auto Finance

Why it stands out: Major lender with programs specifically designed for borrowers with challenged credit. Pre-qualification available without affecting credit scores.

• Credit flexibility: Works with borrowers with fair to poor credit scores.
• Pre-qualification: Check rates without hard credit inquiry.
• Auto Navigator: Online tool to search inventory at participating dealers.
• Dealer network: Works with thousands of dealers nationwide.
• Rate transparency: Clear rate information upfront, no surprises.
• Refinancing available: Can refinance existing auto loans for better terms.

Best bank: Bank of America

Why it stands out: Large national bank offering competitive auto loans with relationship discounts and convenient branch access. Good option for existing customers.

• Relationship discounts: Rate reductions for Preferred Rewards members.
• Branch network: In-person service at thousands of locations.
• Online tools: Digital application and account management.
• Flexible terms: 12 to 75 months depending on loan amount and vehicle.
• Refinancing: Competitive rates for refinancing existing auto loans.
• Pre-approval: Get approved before shopping to know your budget.

Best online: myAutoLoan

Why it stands out: Purely online lender with streamlined digital process and competitive rates. Good option for borrowers who prefer digital-first lending experience.

• Digital-first: Completely online application and approval process.
• Quick decisions: Often provides instant pre-approval decisions.
• Rate shopping: Connects you with multiple lenders for comparison.
• No dealer markup: Direct lending eliminates dealer finance fees.
• Flexible credit: Works with various credit profiles.
• Educational resources: Helpful tools and calculators for car buyers.

Auto loan rates by credit score

Interest rates vary significantly based on your credit score. Here are typical rate ranges for 60-month auto loans:

Rates are national averages and vary by lender, loan term, and vehicle age. Your actual rate may differ.

How we picked these auto loan lenders

We evaluated dozens of auto lenders based on interest rates, loan terms, fees, eligibility requirements, customer service quality, online tools, and special programs for different credit profiles and vehicle types.

What you should know about auto loans

Auto loans are secured by the vehicle itself, which typically results in lower interest rates than unsecured loans. Shopping around can save you thousands over the life of the loan.

Before applying for an auto loan

• Check your credit score: Know where you stand to understand what rates to expect.
• Determine your budget: Consider total monthly expenses, not just the car payment.
• Get pre-approved: Secure financing before shopping to know your budget limits.
• Consider the total cost: Factor in insurance, maintenance, fuel, and registration costs.
• Shop around: Compare rates from banks, credit unions, and online lenders.

Auto loan terms to compare

Interest rates (APR)

The Annual Percentage Rate includes interest and fees. Even small rate differences can save thousands over the loan term.

Loan terms

• Shorter terms (36-48 months): Higher payments but less interest overall.
• Medium terms (60 months): Balance of reasonable payments and total cost.
• Longer terms (72-84 months): Lower payments but more interest and potential negative equity.

Fees to watch

• Origination fees: Upfront costs to process the loan.
• Documentation fees: Charges for paperwork processing.
• Prepayment penalties: Fees for paying off the loan early (uncommon but worth checking).

Down payment requirements

Larger down payments reduce monthly payments and total interest. Aim for at least 10-20% down for new cars, 10% for used cars.

Tips for getting the best auto loan

• Improve your credit first: Even small credit score improvements can lower your rate significantly.
• Shop during promotional periods: Many lenders offer special rates during certain times of year.
• Consider shorter terms: You'll pay less interest overall, even with higher monthly payments.
• Make a larger down payment: Reduces the loan amount and shows lenders lower risk.
• Get multiple quotes: Rates can vary significantly between lenders.
• Negotiate the car price first: Separate the purchase price negotiation from financing discussions.

Dealer financing vs. independent financing

Dealer financing pros

• Convenience: Handle the car purchase and financing in one location.
• Special offers: Manufacturers sometimes offer promotional rates.
• Negotiation leverage: Dealers may accept lower prices if they can make money on financing.

Dealer financing cons

• Markup potential: Dealers may add percentage points to the lender's rate.
• Limited options: May not offer the best rate available to you.
• Pressure tactics: May push longer terms or unnecessary add-ons.

Independent financing pros

• Rate shopping: Compare multiple lenders for the best terms.
• No markup: Deal directly with lenders for their actual rates.
• Negotiating power: Act as a cash buyer when negotiating car price.

Auto loan red flags

• Lenders who don't check your credit or income thoroughly.
• Extremely long loan terms (90+ months) that create negative equity risk.
• High-pressure tactics or requirements to decide immediately.
• Fees that seem excessive or aren't clearly explained.
• Rates significantly above market rates for your credit profile.
• Requirements to purchase expensive add-ons or insurance products.
• Dealers who won't let you arrange your own financing.

Types of auto loans explained

New car loans

Typically offer the lowest rates due to lower risk for lenders. Vehicles serve as collateral and retain value better initially.

Used car loans

Slightly higher rates due to increased depreciation risk. Age and mileage limits vary by lender.

Certified pre-owned loans

Manufacturer-certified used vehicles often qualify for rates closer to new car loans due to warranties and inspections.

Refinance loans

Replace existing auto loans with better terms. Worth considering if rates have dropped or your credit has improved.

Lease buyout loans

Finance the purchase of your leased vehicle. Rates typically similar to used car loans.

Understanding auto loan calculations

Monthly payment factors

• Loan amount: Purchase price minus down payment and trade-in value.
• Interest rate: Annual percentage rate divided by 12 months.
• Loan term: Number of months to repay the loan.

Total cost calculation

Multiply your monthly payment by the number of payments, then add any fees and your down payment. This gives you the total cost of the vehicle.

Negative equity risk

With long loan terms, you may owe more than the car is worth. This is especially risky if you need to sell or trade the vehicle early.

Questions about auto loans

Should I get pre-approved for an auto loan?

Yes, pre-approval helps you understand your budget, gives you negotiating power, and protects you from dealer markups. You can always compare the dealer's offer to your pre-approved rate.

What's a good interest rate for an auto loan?

Rates vary by credit score, but excellent credit borrowers can get rates around 5-7% for new cars. Check current market rates and compare multiple lenders to ensure you're getting competitive terms.

How much should I put down on a car?

Aim for at least 10-20% down for new cars and 10% for used cars. Larger down payments reduce monthly payments, total interest, and negative equity risk.

What's the best loan term for an auto loan?

60 months (5 years) is often the sweet spot balancing reasonable monthly payments with total cost. Avoid terms longer than 72 months unless absolutely necessary.

Can I refinance my auto loan?

Yes, refinancing can lower your rate or payment if rates have dropped or your credit has improved. Most lenders allow refinancing, though some have minimum loan amounts or restrictions.

Do I need full coverage insurance for a financed car?

Yes, lenders require comprehensive and collision coverage to protect their investment. You'll need to maintain this coverage until the loan is paid off.

What happens if I can't make my car payments?

Contact your lender immediately if you're having trouble. They may offer forbearance or modification options. Defaulting can result in repossession and damage to your credit score.