M&T Bank vs. USAA: Which offers better auto loans?

Based in Texas, USAA offers banking and financing solutions to active-duty military members, veterans, pre-commissioned officers and qualifying relatives in all 50 states. M&T Bank is a financial institution headquartered in Buffalo, New York, that serves 14 states and Washington, DC.

M&T Bank auto loans are ideal for individuals who want to borrow a small amount or don’t meet the membership criteria for USAA. But if the latter doesn’t apply, you’ll likely find that USAA car loans are the better deal.

M&T Bank vs. USAA at a glance

USAA and M&T Bank are reputable options for auto loans. Both offer loans with generous terms and competitive rates, but you should compare the two to decide which works best for your financial situation.

M&T Bank auto loans

M&T Bank offers auto loans for new and used vehicles, or you can refinance your current vehicle. The minimum loan amount is just $2,000, which can benefit borrowers looking to purchase a lower-priced car or make a hefty down payment.

You’ll get a repayment term of up to 84 months, which is on the higher end but not out of the ordinary. Rates start at 7.24 percent for current banking customers who opt to have monthly payments deducted from their M&T checking account. Multiple other big banks, such as Bank of America, offer starting rates at least a percentage point lower.

Loan offers are valid for 30 days. However, M&T Bank doesn’t offer prequalification, so you’ll need to formally apply and agree to a hard credit check to see your rates. The upside is the application process is simple, and you can apply online in minutes. Plus, the lender claims to issue quick lending decisions.

Keep in mind that the lender only offers loans in 14 states and Washington, D.C. M&T Bank also requires you to select the vehicle before applying for a loan. So, if you want to know how much car you can afford before shopping, this lender may not be a good fit for you.

USAA auto loans

USAA also offers purchase and refinance auto loans to U.S. military service members, veterans, pre-commissioned officers, and their spouses and children. New car loans come with a highly competitive starting APR of 5.99 percent and a loan term between 36 to 84 months.

Or you can select a used car loan if the model was manufactured from 2016 to 2021. Used car loans also come with a repayment period between 36 and 84 months, but the starting APR is slightly higher at 6.09 percent. And if you choose to refinance, you can make monthly or biweekly payments that work for your budget. Lastly, unlike M&T Bank, USAA offers lease buyout loans.

Like M&T Bank, you can apply in minutes and get a quick lending decision; funds arrive in one to three days. Loan approvals are valid for 45 days, which is relatively lengthy compared to the industry standard of just 30 days. Plus, this extended timeframe gives you more time to find a vehicle that works for you. Still, USAA does not offer online pre-qualification if you prefer to explore loan offers without impacting your credit score.

How to choose between M&T Bank and USAA

Both lenders come with limitations in terms of accessibility. M&T Bank only serves borrowers in 14 states, and USAA loans are reserved for service members, veterans and qualifying relatives.

Choose M&T Bank if you’re seeking a small auto loan

M&T Bank is a better fit if you don’t meet USAA’s membership guidelines or need a small auto loan. Most lenders require you to take out a loan of at least $4,000 and $5,000. But with M&T Bank, you could get a loan for as little as $2,000.

As mentioned above, a smaller minimum loan amount works if you’re purchasing an older used vehicle or your first ride. Or it could work if you want to make a sizeable down payment on a vehicle and only need to finance a small amount.

Choose USAA for competitive rates

USAA has some of the lowest rates in the auto lending industry. As of 2023’s third quarter, the national average interest rate for a new car is 7.03 percent. USAA’s starting rate on a comparable loan is 5.99 percent. Even if you choose not to enroll in autopay and receive the 0.25 percent discount, you can still access an attractive rate. The same applies to used car loans — USAA offers an APR as low as 6.09 percent, but the industry average is 11.35 percent.

Be mindful that the lowest rates on auto loans are generally available to well-qualified borrowers. USAA doesn’t disclose specific eligibility guidelines, but you’ll likely need a strong credit score; a consistent, verifiable source of income and a reasonable debt-to-income ratio to qualify for the best loan terms.

Compare more lenders before applying

Both USAA and M&T Bank are reputable options if you’re in the market for an auto purchase or refinance loan with competitive terms. Still, it’s worth shopping around with other lenders before securing a loan. Many lenders offer online prequalification tools that let you view loan quotes, including monthly payments, terms and rates, without impacting your credit score. If possible, compare at least three other lenders before moving forward to find the best deal.