Compare Car Loans, Rates, Terms, and Lenders
Comparing lenders can help you find better rates, lower fees, and more flexible terms. People with higher credit scores usually get more competitive car loan rates and easier approval.
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Written byMandy Sleight
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Mandy SleightInsurance Writer
Mandy Sleight has over 15 years of insurance knowledge and expertise in auto, home, life, health, pet, supplemental benefits, and other insurance products. She’s a sought-after insurance expert, appearing in Bankrate.com, Moneygeek.com, U.S. News & World Report, Reviews.com, CNET, and other publications, and she's been writing for Compare.com since 2023.
Mandy uses her background and experience working for well-known insurance companies like State Farm and Nationwide Insurance to create engaging and easy-to-understand content that helps readers make smarter insurance choices that have a positive effect on their budgets and finances.
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Edited byNick Versaw
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Nick VersawSenior Managing Editor
Nick Versaw leads Compare.com's editorial department, where he and his team specialize in crafting helpful, easy-to-understand content about car insurance and other related topics. With nearly a decade of experience writing and editing insurance and personal finance articles, his work has helped readers discover substantial savings on necessary expenses, including insurance, transportation, health care, and more. As an award-winning writer, Nick has seen his work published in countless renowned publications, such as the Washington Post, Los Angeles Times, and U.S. News & World Report. He graduated with Latin honors from Virginia Commonwealth University, where he earned his Bachelor's Degree in Digital Journalism.
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Reviewed byJohn Leach
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John LeachLicensed P&C Insurance Agent and Expert Reviewer
Licensed property and casualty insurance agent
10+ years editing experience
NPN: 20461358
John Leach is a licensed insurance agent who reviews and fact-checks articles for Compare.com. John has several years of experience reviewing and editing various insurance topics, and he also holds a valid personal lines producer license from the California Department of Insurance (NPN #20461358).
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In This Article
A car loan is money you borrow to buy a new or used vehicle and pay back over time with interest.[1] Lenders offer different rates, fees, and terms, so comparing loan options can help you save money and get the best deal.
Auto loan rates are still higher than they were a few years ago, but they’re trending downward in 2026 as market conditions improve. Your credit score also plays a big role in your approval chances and the rate you get.
This guide covers lender and car loan types, how to compare and qualify, our top lender picks, and tips to save on auto financing.
Key Takeaways
Borrowers with excellent credit may see rates around 4.5%–8%, while poor-credit borrowers often face rates of 16%–20% or higher.
New car loans usually have lower rates than used car loans, and refinancing can help you lower your rate or adjust your loan terms.
Raising your credit score or making a larger down payment can improve your approval chances and lower your rate.
Types of Car Loans
You have multiple car loan types to choose from. Each one serves a different purpose. Choosing the right one and comparing multiple lender offers can help you secure better rates and terms.
New car loans
New vehicle financing is for brand-new vehicles you buy directly from the manufacturer or a dealership. Lenders see new cars as less risky to finance because you’re borrowing a lower percentage of the vehicle’s value and have a lower default risk than if you bought a used car. New vehicles also come with a manufacturer’s warranty.
Dealers and banks may offer promotions or incentives on new-vehicle purchases, which can help lower your purchase price and auto loan payments.
Used car loans
Used auto loans help you finance pre-owned vehicles from a dealership or private seller. These loans often come with higher interest rates because used cars have lower resale value and a higher risk of loan default.
Some lenders may have a vehicle age or mileage limit. Your approval can also depend on the car’s condition, history, and vehicle type.
Auto loan refinancing
Refinancing replaces your current auto loan with a new one, hopefully with better terms. Auto refinance makes sense if you can lower your monthly payment or shorten your term.
But refinancing can sometimes cost more in the long run. Application and other fees for a refinance, or refinancing into a longer term, could increase your total interest cost.
Important auto loan terms to know
Annual percentage rate (APR): The cost of borrowing money, including interest and fees, expressed as a percentage. A high APR means you’ll pay more over the life of the loan.
Loan term: How long you have to repay the loan. Auto loan terms are usually a set number of months. A longer term means you’ll pay more interest over the life of the loan.[2]
Banks, Credit Unions, and the Dealership: How Auto Loan Options Compare
You can get a car loan from banks, credit unions, online lenders, and dealerships. Getting pre-approved before visiting a dealership gives you more control and bargaining power. Dealership financing is convenient, but may not always offer the best rate or terms.[3]
Lender Type  | Pros | Cons |
|---|---|---|
| Traditional banks | May offer rate discounts Usually have longer term options | Stricter eligibility requirements Longer approval process |
| Online lenders | Lower overhead often means lower rates More flexible eligibility requirements | May charge application fee Can’t guarantee better rates |
| Credit unions | Usually lower rates than banks May offer cheaper add-ons | Membership requirement Can restrict buying options |
| Car dealerships | One-stop shop May offer incentives or promotions | Limited lender options Interest rates may be higher |
The Best Auto Loan Lenders
Not every lender is right for all borrowers. The best choice depends on your credit score, income, debts, and the loan type you need. That’s why it’s important to understand loan terms, like APR, fees, and repayment length, so you know the true cost of the loan and whether you’re getting a good deal.
Comparing multiple offers is one of the easiest ways to save money. Even a small APR difference can lower your monthly payment and total interest. Common lender types include traditional banks (like large national banks), credit unions (member-owned nonprofits), and online lenders (digital platforms with fast applications).
We researched some top auto lenders to find which ones offer the best rates and terms for different types of buyers and vehicles.
Capital One Auto Finance: Best for dealership financing
Pros
Prequalification without affecting credit score
Compare loan terms and vehicles before visiting dealership
Cons
Must use participating dealers
May not offer the best rates
Capital One stands out for buyers who plan to finance through a dealership but still want to compare options ahead of time. Its Auto Navigator tool lets you prequalify and view estimated terms and vehicle inventory before visiting a dealer, giving you more control during negotiations.
LightStream: Best for borrowers with excellent credit
Pros
No vehicle age or mileage restrictions
Can fund same day
Cons
Requires good to excellent credit
Doesn’t offer prequalification
LightStream, a division of Truist, offers competitive rates, flexible terms, and no fees for borrowers with strong credit. It’ll deposit funds directly into your bank account as soon as the same day you apply. You can use the loan for almost any vehicle, including private-party purchases and refinancing.
Carvana: Best for all-in-one online buying
Pros
Fully online car buying and financing
Works with all credit profiles
Cons
High average APRs
Limited to vehicles sold on its platform
Carvana combines car shopping and financing in one place. It’s ideal if you want a simple, fully online experience. Carvana will deliver the vehicle to your home, or you can pick it up at a Car Vending Machine.
It also has more lenient financing requirements: $10,000 or more in annual income, no active bankruptcies, and no recent Carvana loan defaults. But its rates are highly dependent on credit score. Excellent-credit buyers see rates as low as 9.1% while those with subpar credit face rates of nearly 16.5%.
Navy Federal Credit Union: Best for military members
Pros
Low interest rates
Offers a variety of loan terms
Cons
Membership required
Restrictions on long-term loans
Navy Federal offers some of the lowest car loan rates, especially for members with strong credit. It offers flexible terms up to 96 months, but not every borrower or vehicle will qualify for a longer term.
Navy Federal will only offer loans of 72 months or longer for vehicles with mileage under 7,500. And you must finance at least $30,000 for terms of 85 months or longer. While you can get pre-approval with a hard credit check that lasts 90 days, Navy Federal doesn’t offer prequalification.
LendingClub: Best for auto refinancing
Pros
Soft credit check to view rates doesn’t affect credit score
Access to multiple lender offers
Cons
Limited to refinancing
Rates may be lower elsewhere
LendingClub is an online lender and marketplace that specializes in auto loan refinancing, especially for borrowers with fair to good credit. It offers a simple online application and lets you check rates and offers from lenders without affecting your credit score. Most borrowers find out they qualify within minutes of applying.
To identify the best lenders for different borrower needs, we compared the average interest rates, credit requirements, loan term flexibility, application process, and online reputation of top lenders.
Typical Auto Loan Rates by Credit Tier
Average vehicle loan rates for new cars range from 3% to nearly 9%. For used cars, the average range is 7% to more than 12%, according to Edmunds data. The rate you get for car financing depends on factors such as your credit history, loan amount, vehicle type, income, and down payment.[4]
Inflation and federal market rates also affect your APR. Vehicle prices are starting to decline, and loan rates are gradually easing, suggesting conditions are improving in 2026. But borrowing costs remain high, so your credit score still plays a major role in your rate and monthly car payment.
The table below shows typical APRs for new and used cars, broken down by credit score tier. Estimated monthly payments are for a $30,000 auto loan with a 60-month term.
Credit Score Range | Typical APR for a New Car | Typical APR for a Used Car | Estimated Monthly Payment |
|---|---|---|---|
| 800-plus (Excellent) | 4.66% | 7.70% | $562/$604 |
| 740–799 (Very good) | 6.27% | 9.98% | $583/$637 |
| 670–739 (Good) | 9.57% | 14.49% | $631/$706 |
| 580–669 (Fair) | 13.17% | 19.42% | $685/$785 |
| <579 (Poor) | 16.01% | 21.85% | $730/$826 |
Even a small difference in APR can add thousands of dollars to your total loan cost over time.
How to Qualify for a Car Loan
Lenders require you to fill out a loan application online or in person to determine if you qualify. They check your income, credit, and debt levels to verify you’re able to pay back the loan, with interest. Specific requirements vary by lender.
First-time buyers or those with poor credit or low income can still qualify, but usually face higher rates or may need a co-signer. Most lenders offer prequalification that doesn’t affect your credit score. It can help you determine eligibility and what terms you qualify for.
You’ll typically need to provide documents for credit approval on your next car, including:
Proof of income (pay stubs or tax returns)
Employment history
Vehicle details (model year, mileage, VIN)
Proof of insurance (ID card or dec page)
Down payment amount
Important auto loan terms to know
Co-signer: A co-signer is someone who agrees to pay off a debt, like an auto loan, if the main borrower defaults. Having a co-signer with good to excellent credit can help borrowers with poor or little credit qualify for a loan.
Debt-to-income (DTI) ratio : DTI is the sum of all your monthly debt payments divided by your gross monthly income. It helps lenders judge whether you’ll be able to pay for additional debt when you apply for a loan.
How Do Lenders Calculate Auto Loan Rates and APR?
Lenders consider multiple factors when setting your rates and APR. Your credit score is the biggest influence, but your DTI ratio, loan term, down payment, and whether you’re buying a new or used car also matter.
You can usually get a lower interest rate with a shorter loan term, but your monthly payment will be higher. A larger down payment or vehicle trade-in can help you negotiate better terms. New-car loans also typically offer better rates than used-car loans.
APR includes both interest and fees, giving you a clearer picture of your total annual loan cost. Advertised rates often go to borrowers with excellent credit, so your actual rate may differ. Rates can also vary significantly by lender and borrower profile.
How to Lower Your Auto Loan Rate and Monthly Payment
While lenders ultimately determine the interest rate for loans, you can take steps to ensure you get the best rate and terms available to you. Here are a few ways you can lower your loan rate and monthly payment:
Pay down debt to improve your credit score.
Save for a larger down payment.
Get prequalified to know where you stand.
Use an auto loan calculator to see how different rates and terms affect your monthly payment and total interest costs over the life of a loan.
Check for manufacturer incentives if buying a new vehicle.
Only include add-ons like service contracts and gap insurance if necessary.
Use online resources like NADA or Kelley Blue Book (KBB) to determine your vehicle trade-in value and help with dealer negotiations.
Choose a shorter loan term if you can afford it.
Consider refinancing if rates drop.
Get quotes from at least three lenders within a 14- to 45-day window to count as one credit inquiry
Car Loan FAQs
Buying a car is a significant financial commitment, but it doesn’t have to be complicated. Here are answers to some common questions about car loans.
What’s the minimum salary to get a car loan?
Lenders typically consider your DTI ratio to determine if you can afford a new loan. Generally, financing companies look for monthly gross income of $1,500–$2,000. KBB recommends you keep car loan payments to 15% or less of your net monthly income.
Which company is the best for car loans?
The best lender depends on your financial profile and loan needs. Some lenders offer lower rates, while others provide easier approval with relaxed qualifications. Comparing multiple lenders can help you find the best fit for your credit and budget.
What do you need to refinance a vehicle?
You’ll need your current loan details, proof of income, credit profile, and vehicle information. Lenders also check your payment history and the car’s value before approving refinancing.
How much does a $30,000 car loan cost each month?
A $30,000 car loan can cost between $560 and $830 per month for a 60-month loan. Your actual monthly payment will vary by your loan term and APR.
What’s a high interest rate for a car loan?
A high interest rate for a car loan is generally more than 13% for a new vehicle and 19% for a used car. Higher rates usually apply to subprime borrowers with lower credit scores.
How does a car loan affect your credit score?
A car loan can help your credit if you make on-time payments. It adds to your credit mix and builds a positive payment history. But late or missed payments can quickly lower your score.
Sources
- Federal Trade Commission. "Financing or Leasing a Car."
- Consumer Financial Protection Bureau. "Auto loans key terms."
- Consumer Financial Protection Bureau. "Am I required to get my auto loan through a dealership?."
- Consumer Financial Protection Bureau. "How does a lender decide what interest rate to offer me on an auto loan?."
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Mandy SleightInsurance Writer
Mandy Sleight has over 15 years of insurance knowledge and expertise in auto, home, life, health, pet, supplemental benefits, and other insurance products. She’s a sought-after insurance expert, appearing in Bankrate.com, Moneygeek.com, U.S. News & World Report, Reviews.com, CNET, and other publications, and she's been writing for Compare.com since 2023.
Mandy uses her background and experience working for well-known insurance companies like State Farm and Nationwide Insurance to create engaging and easy-to-understand content that helps readers make smarter insurance choices that have a positive effect on their budgets and finances.
Nick VersawSenior Managing Editor
Nick Versaw leads Compare.com's editorial department, where he and his team specialize in crafting helpful, easy-to-understand content about car insurance and other related topics. With nearly a decade of experience writing and editing insurance and personal finance articles, his work has helped readers discover substantial savings on necessary expenses, including insurance, transportation, health care, and more. As an award-winning writer, Nick has seen his work published in countless renowned publications, such as the Washington Post, Los Angeles Times, and U.S. News & World Report. He graduated with Latin honors from Virginia Commonwealth University, where he earned his Bachelor's Degree in Digital Journalism.
John LeachLicensed P&C Insurance Agent and Expert Reviewer
Licensed property and casualty insurance agent
10+ years editing experience
NPN: 20461358
John Leach is a licensed insurance agent who reviews and fact-checks articles for Compare.com. John has several years of experience reviewing and editing various insurance topics, and he also holds a valid personal lines producer license from the California Department of Insurance (NPN #20461358).
