Best auto loan rates in March 2023

Auto loans let you borrow the money you need to purchase a car. Since car loans are typically "secured", they require you to use the automobile you are buying as collateral for the loan. You are typically asked to pay a fixed interest rate and monthly payment for 24 to 84 months, at which point your car will be paid off. Many dealerships offer their own financing, but you can also find auto loans at national banks, local credit unions and online lenders. 

When shopping for an auto loan, compare APRs across multiple lenders to make sure you are getting a competitive rate. Look for lenders that keep fees to a minimum and offer repayment terms that fit your needs. 

Loan details presented here are current as of March 13, 2023. Check the lenders’ websites for more current information. The auto loan lenders listed here are selected based on factors such as APR, loan amounts, fees, credit requirements and more. 

As of March 8, 2023, the average APRs according to a Bankrate study are the following.

Car loan options go beyond just new and used. Each auto loan type has specific uses that cater to certain types of borrowers, and knowing what type you need can make the loan shopping process easier.

While securing an auto loan can be a great way to get behind the wheel of a vehicle, it is important to weigh the advantages and disadvantages that come with financing your next ride.

When looking for a car loan, it is best to shop around with a few lenders before making your decision. Each lender has its own methodology when reviewing your application for a loan and setting your interest rate and terms.  

Generally, your credit score will have the biggest effect on the rates you're offered. The higher your credit score, the lower APR you will receive. Having a higher credit score may also allow you to take out a larger loan or access a broader selection of repayment terms, but there are still ways to finance a car with bad credit. Choosing a longer repayment term will lower your monthly payments, although you will also pay more interest overall.  

If you find a few lenders that you like, see if they offer preapproval — going through this process will let you see which rates you qualify for without affecting your credit score. 

What factors contribute to auto loan interest rates?

While it is true that the interest rate you will receive varies depending on the lender and is somewhat out of your control, there are still choices you can make to increase approval. Consider these aspects and how they will affect loan approval and rates: 

• Your credit history. Lenders use credit scores to measure the risk that borrowers carry. Very simply, the lower your credit score is, the higher your interest rate will be.   
• Vehicle down payment. Putting down a large down payment will not only bode well with lenders but will decrease the amount you are borrowing — saving you more money down the line.  
• Loan term. Typically, a longer-term loan will equate to higher interest rates and more interest paid over the life of the loan. But a longer-term loan will decrease your monthly payment.  
• Education and work history. Many lenders are expanding underwriting criteria outside of the sole measure of your credit score. This means you can still benefit from a competitive rate if you have a strong profession or educational background — with or without a perfect credit score.   
• Vehicle age. An older vehicle can carry additional risk of issues for both you and your lender. So, you can expect an older car to carry higher rates.

FAQs about auto loans