Best Auto Loan Rates & Financing in June 2024 | LendingTree (2024)

Credit union car loans tend to offer the lowest rates, and Southeast Financial Credit Union (SFCU) is no exception. Its rates are especially low on short-term car loans. If you have excellent credit, you could qualify for an annual percentage rate (APR) as low as 4.50% on a 12-month term.

If you like to do business in person, though, SFCU might not be the best choice. That is, unless you live in central Tennessee. That’s where all of SFCU’s brick-and-mortar branches are located.

SFCU has a minimum credit score requirement of 600 but doesn’t offer prequalification. You’ll need to agree to a hard credit hit to see if you’re eligible. You also need to join the credit union before you can borrow.

All SFCU members must open a savings account with a deposit of at least $5. To become a member, you must meet one of the requirements below:

• Make a $5 donation to Autism Tennessee
• Be a current employee or retiree of a Southeast Financial Select Employee Group
• Be related to a current SFCU member
• Live, work, worship or go to school in certain parts of Tenn., Ky., or Miss.

Navy Federal Credit Union (NFCU) gives active-duty and retired military a 0.25% rate discount on auto loans. NFCU offers other unique perks, too. For instance, if you’re on active duty, you can get paid early if you get your paycheck directly deposited into an Active Duty Checking account.

Still, like many other car loan lenders, NFCU doesn’t disclose its minimum credit score requirements. It also has strict membership requirements that not everyone will meet.

Read our full Navy Federal Credit Union auto loan review.

NFCU membership is open to the following groups:

• Active-duty military (any branch)
• Military retirees, veterans and annuitants
• Delayed Entry Program enlistees
• DoD Officer candidates, ROTC or reservists
• A family member or household member of any of the above

You must also open an account with a deposit of $5 or more.

There’s a lot to like about PenFed’s car-buying service. For one, PenFed will give you a discounted 4.74% APR on your new car loan. The service also runs periodic special offers (such as bonus cash) on select vehicles. And thanks to a partnership with TrueCar, it can help you find your next ride at a price you can afford.

Like with any credit union auto loan, PenFed requires you to join before you can borrow. Also, if you don’t use PenFed’s car-buying service, you can’t get its cheapest rates.

Read our full PenFed auto loan review.

Applying for auto financing when you have less-than-perfect credit can be a pain. Autopay is an auto loan marketplace that can make the process easier. Fill out one quick form online and you could have multiple offers to compare, all with no impact to your credit score. Better yet, it works with borrowers with scores as low as 550.

Note that Autopay’s advertised minimum APR won’t apply to you if you have bad credit. Lenders give their lowest rates to those with the highest credit scores. You’ll need to prequalify to see what kind of rates you might get from Autopay’s lending partners.

Read our full Autopay marketplace review.

Auto financing from a large bank can have its perks. Compared to small, regional banks, large banks tend to have more digital presence. Case in point — you can apply for an auto loan through Bank of America’s mobile app.

Bank of America auto loans are open to anyone, but only Preferred Rewards members qualify for APR discounts. To be a Preferred Rewards member, you must have an eligible Bank of America personal checking account.

Read our full Bank of America auto loan review.

Bank of America’s borrower requirements are unclear. It does, however, give some guidelines about the cars eligible to be financed. To get a loan, the car you’re buying must:

• Be less than 10 years old
• Have less than 125,000 miles
• Be worth at least $6,000
• Be for personal use only
• Not be a commercial, heavy-duty truck or van
• Not have a salvage or branded title

Some lenders specialize in excellent credit, others in bad. Capital One, on the other hand, is open to working with most credit scores. While CapitalOne doesn’t share its minimum credit score requirement, according to LendingTree data, it may approve you with a score as low as 510. And if you have exceptional credit (800+), you could get a competitive rate of 6.49%.

That said, Capital One won’t finance a car from just anywhere — you have to buy from a partner dealer. However, its Auto Navigator tool can help you find your perfect ride from an eligible dealership.

Read our full Capital One auto loan review.

Most lenders charge a higher APR on used car loans, but not Digital Federal Credit Union (DCU). Whether you’re buying used or new, you can enjoy the same low rate. If you have excellent credit, you might be able to borrow more than what the car is worth. This could help you cover registration and insurance costs.

Like other credit unions, though, you have to become a member to borrow. You must also take a hard credit pull to check your eligibility since you can’t prequalify.

Read our full DCU auto loan review.

DCU doesn’t specify what credit score it requires for an auto loan. It does provide details about who is eligible for DCU membership. People in the below groups can join DCU:

• Certain relatives of current DCU members
• Employees and retirees of participating employers
• Members of participating organizations
• Those who live, work, worship or go to school in certain Massachusetts communities
• People who live in a participating condo association

Carvana’s unique online car-buying experience could be a great choice for the right person. Just hop onto Carvana’s website, find your desired car and apply for financing — all without leaving your home.

Still, not everyone will feel comfortable buying a car online. Carvana has a seven-day satisfaction guarantee, but you can’t check out the car in person before buying. Also, it’s important to know that Carvana has been the target of several lawsuits, namely due to tag and titling issues.

Read our full Carvana financing review.

Compared to some lenders, Carvana’s eligibility requirements are transparent and easy to meet. To borrow, you must:

• Be at least 18 (19 in Alabama and Georgia)
• Have no active bankruptcies
• Make at least $5,100 a year

Buying a car from a private party instead of a dealership can save you money, but not all lenders fund these types of purchases. PNC might help.

This bank offers several types of loans, including private-party car loans. You might even be able to buy a car that isn’t yet fully paid off. As long as the seller comes with you to your loan closing, PNC can use a portion of your loan to pay off the existing loan. Then, you can transfer ownership.

Read our full PNC auto loan review.

Traditional auto loans use your vehicle as collateral. If you don’t make your payments, your lender can repossess your car. Not with LightStream.

This lender offers unsecured loans, which means it doesn’t require collateral. Instead, your eligibility hinges on factors like your credit score, assets and borrowing history.

Thanks to a lack of vehicle restrictions and same-day funding, LightStream auto loans can come with little hassle for those who qualify. Still, expect to pay extra for the convenience. LightStream’s auto loan APRs are a little higher than others on this list.

Read our full LightStream auto loan review.

LightStream states it only lends to borrowers with good to excellent credit. Below you’ll find some metrics that LightStream says it looks for in approved borrowers:

• At least five years of credit history, with a diverse mix of accounts
• Assets such as retirement savings, investment accounts and liquid bank accounts
• An acceptable DTI ratio
• A track record of making debt payments on time

Chase Bank offers auto loans at dealerships across the country. So even though you can only use Chase at a partner dealer, you can get prequalified. Not all lenders offer this option. Also, Chase doesn’t always require a down payment.

Unfortunately, Chase doesn’t advertise its rates. You must prequalify to see what APR it might offer you.

Read our full Chase auto loan review.

Chase doesn’t specify what it’s looking for in its borrowers. It does shed some light on the types of vehicles it will finance. Eligible vehicles must:

• Be less than 10 years old (or less than five years old, if a Tesla)
• Have less than 120,000 miles
• Not be commercial vehicles
• Not have branded or salvaged titles
• Not be used for ridesharing

You don’t need to be a current Chase customer to get an auto loan.

On the surface, auto financing is simple. You don’t have to pay in full when you buy a car if you finance. Instead, you’ll use an auto loan. Then, you’ll pay off what you borrowed in monthly payments, plus interest and fees. You may or may not need to pay a down payment, but you probably should (more on that later).

Although you are the registered owner while you’re making loan payments, the car technically belongs to your lienholder. This is the company that gave you your loan.

If you have a secured auto loan (the most common kind), your car serves as collateral. That means your lienholder can — and likely will — repossess your car if you fall too far behind on your payments.

When you’ve paid the loan in full, the lienholder will release the car’s title to you. At that point, it officially becomes your property.

Expert insights on auto loan rates for 2024

Jacob Channel, Senior economist

“Auto loan rates may come down as 2024 progresses, but significant declines aren’t guaranteed.”

If you’re looking for the best rate, Jacob suggests shopping around and getting several offers. One lender might give you a better rate than another, just because they use different criteria when determining how creditworthy you are.

Generally, the best place to finance a car is with the lender that offers you the lowest rates. The only way to truly know if a lender is giving you the most competitive rate is to shop around.

• Southeast Financial Credit Union: Best for short-term loans
• Navy Federal Credit Union: Best for those with military connections
• PenFed Credit Union: Best for using a car-buying service
• Autopay: Best for bad-credit car loans
• Bank of America: Best for those who prefer large banks
• Capital One: Best for prime and subprime rates
• PNC Bank: Best for private-party auto loans
• Digital Federal Credit Union: Best for used car loans
• Carvana: Best for an online experience
• LightStream: Best for car loans that don’t require collateral
• Chase Bank: Best for dealership purchases

Auto financing rates fluctuate with the market, so the best auto loan is always changing. At the time of this writing, Southeast Financial Credit Union is offering the lowest rates on this list. Its starting APR is 4.50%.

Shorter loan terms typically carry the lowest rates. At the same time, a shorter term can cause a higher monthly payment (since you’ll have less time to spread your balance across). Use our auto loan calculator to see how different term lengths can impact your monthly payment.

It can be, but only if you are positive you can hold up your end of the deal.

Taking out an auto loan when you don’t currently have one can improve your credit mix. Your credit mix makes up 10% of your FICO score. Your payment history makes up 35% of your score, so on-time payments can give you a boost.

At the same time, if you make late payments, your credit score will likely take a nosedive. And if you take on a loan when you’ve already got a lot of debt, your credit utilization ratio might go up. This can negatively impact your score.

Usually, yes. Along with your credit score, your lender will review things such as your annual income and debt-to-income ratio (DTI). If your debt levels seem to be outpacing your earnings, you will likely have a higher APR (if a lender approves you at all).