Best auto loan rates in October 2022

Compare auto loan rates in October 2022

Best auto loan lenders in 2022

LightStream: Best overall

Overview: Lightstream offers unsecured auto loans for drivers online. It covers a range of financing needs including loans for new cars, used cars from a dealer or private seller, lease buyouts and even classic car financing.

Why Lightstream is the best overall: Lightstream offers quick funding for drivers in a pinch and a wide range of loan amounts. 

Pros

• Quick funding
• High loan amount 
• Wide range of repayment options

Cons

• Unsecured loan 
• Good to excellent credit required 
• No prequalification offered 

Who this lender is best for: Lightstream is best for those looking to finance their vehicle as soon as possible and prefer a fully online experience. 

Impact on financial wellness: You will undergo a hard credit check following application submission — you cannot prequalify to check your rates ahead of applying.

Time to receive funds: Funds become available as soon as the day you apply. 

Fees: Lightstream has no fees. 

Additional requirements: While credit requirements are not disclosed, the most competitive rates will only be offered to those with excellent credit.

Special features: Repayment terms ranging from 24 to 84 months and the ability to borrow as much as $100,000.

Bank of America: Best big bank option

Overview: Bank of America offers flexible and convenient auto loans you can apply for directly on its website. Rates are competitive, and you can qualify for additional discounts if you are an eligible Bank of America customer.

Why Bank of America is the best big bank option: With over 4,000 brick-and-mortar locations, Bank of America is perfect for an in-person experience coupled with discounts for account holders. 

Pros

• Good customer service
• Long shopping window

Cons

• No prequalification 
• Discount for members only
• High minimum loan amount 

Who this lender is best for: Best if you intend to finance your vehicle via a dealership rather than fully alone. To receive the most competitive rates, it is also best for those that hold an account with Bank of America.

Impact on financial wellness: Following the application, you can expect a hard credit check. 

Time to receive funds: Funds will become available as soon as the same business day.

Fees: You can expect to pay title and state fees in some states

Additional requirements: Bank of America requires that the car you're financing be no more than 10 years old, with no more than 125,000 miles and valued at no less than $6,000. 

Special features: If you’re a Bank of America Preferred Rewards customer, you can qualify for a rate discount of up to 0.5 percent off.

Capital One: Best for convenience

Overview: Capital One’s financing works as a “one-stop shop” for your auto loan and vehicle purchase. Through one of its partnered dealerships, you can borrow as little as $4,000 with terms from 24 to 84 months.

Why Capital One is the best for convenience: The Capital One Auto Navigator site lets you search for inventory in your area and gives you the ability to see how different makes, models and features will affect your total cost. 

Pros

• Prequalification available
• Auto Navigator lets you shop for your car
• Perfect credit not required 

Cons

• Limited vehicle inventory
• Undisclosed rates
• Two applications required 

Who this lender is best for: Best if you are unsure of the state of your credit and want to check your odds for approval prior to a formal application. 

Impact on financial wellness: You can check your rate with a soft credit pull. There is a hard credit pull following the full application. 

Time to receive funds: You can receive funding as soon as the day you apply. 

Fees: Capital One charges late fees. 

Additional requirements: You can use Capital One auto financing to shop only at one of its participating dealerships, which makes this a poor option if you find a car you love elsewhere.

Special features: Capital One partners with over 12,000 dealerships and you can prequalify online to understand eligibility prior to signing for the loan.

Carvana: Best fully online experience

Overview: ​​Carvana lets you shop for a car online and pick up your purchase from a giant “car vending machine” or choose from its other delivery options. Its process lets you enjoy a unique experience, and Carvana also offers competitive car loan rates and terms.

Why Carvana is the best fully online experience: Carvana offers a streamlined online experience where you can shop for and finance your new vehicle all from the comfort of your own home.

Pros

• Advanced underwriting criteria 
• Money-back guarantee
• Prequalification available

Cons

• Limited vehicle inventory 
• Not available in all states 
• Down payment required

Who this lender is best for: Carvana holds loose requirements, you must be at least 18 years old, make $4,000 in yearly income and have no active bankruptcies — making it great for those with no credit or poor credit.

Impact on financial wellness: Prequalification available, with a hard credit pull expected following application. 

Time to receive funds: Funds can be available as soon as the same day. 

Fees: Fees vary. 

Additional requirements: After you prequalify, you have 45 days to make a purchase from Carvana's inventory and either pick up the car, have it delivered to you or fly to the car and then drive it back.

Special features: Carvana lets you shop for a car online and pick up your purchase from a giant car vending machine. 

myAutoLoan: Best for shopping for multiple loan offers

Overview: With no application fee and convenient online application myAutoLoan works with an expansive network of lenders to enable you to compare offers and find the right lender for your needs. It also offers loans for refinancing and lease buyouts. 

Why myAutoLoan is the best for shopping for multiple loan offers: You can easily compare multiple loan offers all on the myAutoLoan platform with no hard credit pull. This platform lets you enter your information once and receive multiple loan offers in one place.

Pros

• Flexible acceptance criteria 
• Fast funding 
• Transparent rates 

Cons

• Limited state availability
• Only online customer support 

Who this lender is best for: For those who do not have their sights set on a specific lender and want to compare options all in one place. 

Impact on financial wellness: Hard credit pull only following formal application. 

Time to receive funds: Funding is available as soon as the following business day. 

Fees: Fees with myAutoLoan are not specified. 

Additional requirements: If you have poor credit, your interest rate could be on the higher side. Also note that you can use this platform if you live in most states, but not in Alaska or Hawaii.

Special features: One application will present you with up to four quotes from different lenders. By comparing multiple auto loan offers at once, you can pick the one with the interest rate, loan term and conditions that work for you and your budget without having to shop around.

Upstart: Best for fair credit

Overview: Upstart is an online lender that utilizes the intelligence of AI technology to cater to drivers looking to refinance their car loans. It factors a driver's work and education history for its loans that can be refinanced up to $60,000. 

Why Upstart is best for fair credit: Drivers with fair credit scores, 510 to 669, may not receive competitive rates from traditional lenders. But Upstart's smarter rate approach will give any driver a better chance to receive decent rates to save money. 

Pros

• Convenient online application
• Prequalification 
• Smarter rate approach 

Cons

• Limited state availability
• No co-borrowers allowed 

Who this lender is best for: A driver with less than excellent credit looking to refinance fully online. 

Impact on financial wellness: Drivers that accept a loan quote will receive a hard inquiry. 

Time to receive funds: Upstart offers instant approval and funding available within days. 

Fees: Fees are incurred only if the vehicle is repossessed. 

Additional requirements: The refinanced vehicle must be less than 10 years old and have under 140,000 miles. 

Special features: The Upstart website can be fully translated into Spanish and with bilingual loan officers, it can be a great option for Spanish-speaking users.

What are car loans and how do they work?

New car

• 36-month term: 5.04 percent. 
• 48-month term: 5.07 percent. 
• 60-month term: 5.08 percent. 
• 72-month term: 5.28 percent. 

Used car

• 36-month term: 5.11 percent.
• 48-month term: 5.37 percent.
• 60-month term: 6.58 percent.

Types of auto loans

What to know before applying for an auto loan

Auto loan rates by credit score

As mentioned, lenders use credit score as the primary determinant of a potential borrower's ability to pay off a loan. So, the better your credit score is, the more competitive interest rates you will receive. Below are the average APRs for new and used vehicles in the second quarter of 2022 according to Experian.

How the 2022 Fed hikes impact the cost to finance a car

1. Apply for preapproval. By walking into the dealership with financing in hand you garner negotiating power and come equipped with a firm understanding of how much you can afford to spend.  
2. Trade-in your current vehicle. Consider trading in your current vehicle. You can save money on the vehicle down payment and don't have to hassle with selling it yourself. Depending on the state you are buying in, you may also be able to save on taxes.
3. Compare at least three different lenders. Shopping around to different lenders ensures that you are getting the best deal available. It may take time to find the right lender for your needs, so be patient.  
4. Calculate the true cost of ownership. Purchasing a vehicle is made up of more than just the price of the vehicle and monthly payments. So instead, you must do the math so that you only purchase what you can afford.  
5. Consider buying electric. Although EVs can be priced a bit higher than traditional gas vehicles, the cost over the lifetime of the loan tends to be less expensive. Along with this, there are green loans and many states offer tax credits. 

Can I get an auto loan with bad credit?

It is possible to get a car loan with bad credit, although having bad credit will raise the rates you're offered. If you are having trouble getting approved or finding acceptable rates, try taking these steps:

• Make a large down payment: Making a larger down payment will lower your monthly payment, but it could also help you qualify for better rates.
• Consider a co-signer: A co-signer with good credit will take on some responsibility for your loan if you default, but they can also help you qualify.
• Reduce existing debt: Before applying for an auto loan, pay down as much debt as you can and avoid opening new accounts, like credit cards.

Methodology

Bankrate considers 18 different factors when selecting top auto loans. Acceptance criteria, whether rates and fees are available and APR all influence lender scores. These scores are broken up into four categories.

• Availability: Loan amounts, repayment options, dealership requirements and state availability all contribute to this category.
• Affordability: This section houses APR ranges, acceptance criteria, fees and discounts. 
• Customer experience: How long you have to shop, customer service availability, whether there’s an app and autopay availability are accounted for in this section.
• Transparency: This category accounts for the availability of fees and rates along with whether prequalification is available.