Best Car Loans 2022 for Buying, Refinancing, Bad Credit and More

Best car loans of May 2022

When it comes to buying a car, finding the right loan can be just as important as finding the right car.

It’s not as easy as just showing up at the dealership. To get the lowest interest rate, you should look for an auto loan to see what type of financing is available to you. Dealers often mark the interest rates off lenders’ loan offers, and this can make you pay more for the same car.

The good news is that it’s completely avoidable if you’re willing to buy your loan and get pre-approved before you start shopping at the dealership. To get the lowest interest rate, you should look for an auto loan to see what type of financing is available to you. (Remember that the lowest interest rates will typically go to buyers with the best credit.) Once you start getting rate quotes, you have two weeks to gather all the quotes you want without multiple queries crippling your credit score. credit reporting agencies count all such inquiries as one within that period.

Having a pre-approval for a car loan can give you better bargaining power and the peace of mind that you will get the lowest interest rate possible. As you start shopping, keep in mind that your local small bank or credit union can also be a great place to get a loan – these institutions often offer lower car loan interest rates than big banks, but are generally limited to a relatively small geographic area.

Here are some banks to help you start your search for a variety of situations.

Best Overall, Best for Lease Acquisitions: Bank of America

Currently, Bank of America has excellent rates for auto loans. Fees for purchasing a new car start as low as 2.09% APR, and a used car can be as low as 2.29% APR. Bank of America offers fee discounts to existing customers of up to 0.5%.

If you are interested in buying the car you are currently renting but need a loan to do so, Bank of America offers a loan for that. Bank of America offers a variety of auto loans and, like the others, their interest rates are competitive in 2021. Rental purchases may have higher interest rates than a new or used car loan, but APRs Bank of America rental purchase rates start lower than the rates other lenders offer.

Best for excellent credit: LightStream

If you have a good or excellent credit score, consider LightStream in addition to Bank of America. Part of SunTrust Bank, Lightstream focuses on auto loans to customers with good or better credit.

Because it focuses on a narrow subset of customers, its rates aren’t too high – for a 36-month new car loan between $10,000 and $24,999, interest rates range from 2.49% to 6.79%. However, borrowers with lower credit scores can find better rates elsewhere.

Capital One offers easy and reputable auto loans to borrowers with a credit score of 500 or higher. Capital One offers loans as small as $7,500 for used vehicles.

Ally online banking does not offer financing to buy a car. But, if you’re looking to refinance the car you already own, their Clearlane auto loan division offers some competitive rates. As long as your vehicle meets the standards (less than 100,000 miles and less than 10 years), this lender can offer a competitive rate as low as 3.99%, according to NerdWallet. Clearlane also offers car rental purchases.

Best for used car loans: US Bank

US Bank’s best rates are comparable to rates from other competitors, particularly on used car and auto loan refinancing.

The bank will allow you to get your mortgage pre-approved without having your car picked. Once you’ve decided on a car, you can finalize your loan terms. Lender does not specify a minimum

credit score

to get a loan or a deadline for when you will receive your money.

One of the biggest attractions of a Federal Navy auto loan is the credit union’s low interest rates. Navy Federal also has an online Car Buying Center, where the company guides you through the process of financing, purchasing, researching and insuring your next car.

Best for new cars: PNC Bank

PNC offers great rates for borrowers who

good credit

. The bank offers financing for 2014 model year or newer cars – if you want to buy an older car, you cannot get a loan through PNC.

Borrowers with a poorer credit history may find it difficult to qualify or may be saddled with high interest rates.

Which lender is the most reliable?

We review each institution’s Better Business Bureau score to help you make the best decision possible when choosing an auto loan. The BBB measures companies based on factors such as truthfulness in advertising, honesty about business practices, and responsiveness to consumer complaints. Here is the score for each company:

Most of our top picks are rated A or higher by the BBB, with the exception of Ally’s Clearlane. Keep in mind that a high BBB score does not guarantee a good relationship with a lender and that you should continue to research and talk to others who have used the company to get the most useful information you can.

The BBB currently rates Clearlane by Ally as D- because of 53 complaints filed against the company, including one unresolved complaint. Due to lenders’ BBB scores, you may prefer to use a different car loan company on our list.

How we determine the best car loans

These lenders have been chosen based on interest rate (APR) for various credit scores, whether you are buying new or used, and loans for a specific need such as refinancing or lease purchases. Insider collected data from NerdWallet, MagnifyMoney and Credit Karma and from the lenders themselves. This list only considers loans that were available in most parts of the US and does not include captive lenders – lenders owned by auto companies.

Common questions

The dealership I’m buying from offers financing. Should I just use this?

Car dealerships can mark the interest rates on the car loans they offer, and they usually do. The interest rate a seller offers often includes a cut for the dealership, resulting in a higher interest rate for you. While you might qualify for a 6% interest rate from a bank, you might see 6.5% or even 7% from a dealership, for example.

If you’re willing to work a little, you can save money by buying it yourself. The best way to avoid this problem is to get pre-approvals from some banks or lenders when you start shopping for the car and take these pre-approvals to the dealership with you. Then you will have some estimates on what your cost to borrow could be and you can compare the lowest APR.

Does it matter how long my term lasts?

The longer the loan term, the lower the monthly payment. But paying more than 60 months (five years) on your car loan can leave you in debt more than your car is worth.

Cars depreciate quickly, and if you’ve been paying for more than five years on an auto loan, your loan could end up in this situation, also called “upside down”. As auto loans increase in duration, auto loan delinquencies tend to increase as well.

Getting an Auto Loan With Bad Credit? Here’s what you need to know.

If you are purchasing a car loan with

bad credit

, you can greatly benefit from doing your research and shopping when looking for an auto loan. Avoid any type of “buy here, pay here” financing as these loans often come with exorbitant interest rates and high monthly payments, which can cause you to miss payments.

A local credit union might be a good place to start if you have a bad credit score – lenders like these can sometimes be more forgiving and offer lower interest rates than the big banks.

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