Auto Loan Rates for 2021

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Maybe you’re a bit of an automotive enthusiast, or maybe you just want something to get you from A to B.

Regardless, buying a new car is up there amongst the most expensive purchases most people make – so it’s essential to get it right.

Always buy a vehicle upfront instead of leasing one if you can afford it. Having such a big financial blow might hurt at first, but you’ll thank yourself later when you’re not paying unnecessary interest.

Of course, realistically, it’s not always possible to buy upfront. If your car breaks beyond repair a week after you bought a big vacation, you might not have enough money in the bank. That’s when auto loans are a lifesaver – so where should you be looking to purchase one?

Best Auto Loan Rates

These are the 11 best auto loan rates in October 2021:

There are a few important factors you should consider when searching for the best auto loan. Depending on whether you want to purchase a car or refinance a current loan, and whether you’re aiming to purchase a new or used car, the best deal might differ.

You may also want to consider how long it takes to get approved, the interest rate offered, and the reputation of the company – or even the support and resources available to guide you through your loan.

Here’s a breakdown of the best auto lenders and marketplaces.


APR Varies
LightStream is a subsidiary of SunTrust Bank that provides car loans at a low APR. Their lowest rates are only offered to those who have the best credit score, and who enable AutoPay (a feature that ensures your payments are automatically taken from your bank account to cover your loan payments while giving a discount of 0.50%).

The rate you received from LightStream is based on the following factors:

  • loan purpose
  • loan amount
  • loan terms
  • payment type
  • customer credit

You can get a loan from $5,000 up to $100,000 for a term of 24 to 84 months.

Unlike Capital One, loans from LightStream can be used for any car and not just with a select group of dealers. The funds will be placed directly into your account – you choose when you want to receive them, which could be within a couple of days.

To prove its commitment to customer satisfaction, if a customer is approved for a lower rate with the same loan terms from a competing lender, then LightStream will offer a rate 0.10% lower than that rate!

Capital One

APR as low as 3.79%

Capital One’s Auto Navigator helps customers find the perfect car loan. You can have a soft pull for multiple vehicles across the country and compare different vehicles’ terms. This makes the process of actually making an application a lot easier. It’s a great tool, but bear in mind that not all dealers participate, so you can’t use the pre-qualification for all cars.

You’re unlikely to be offered their lowest rates unless you have a score of 740 or higher. You’ll also need a minimum income of $1,500 to $1,800 (depending on the loan) and a minimum credit score of 500. The minimum loan amount is $4,000.

Another option is to refinance a car loan you already have with Capital One, as long as your vehicle is no more than seven years old, and you’re up to date on payments. The requirements and terms for this are slightly different. The lowest APR available is 4.15%, you’ll need a credit score of at least 540, and the minimum loan amount available is $7,500.

Capital One auto loans aren’t available in Hawaii or Alaska.

Learn More:


APR as low as 3.99%

LendingTree is an online network that connects borrowers and lenders. Just fill in an online application outlining the type of loan you’re looking for along with your details, and you’ll be matched with a few possibilities.

You can also use LendingTree to learn about your credit score and how to improve it, so you can learn along the way to help yourself achieve the best rates possible in the future.

Due to the nature of the website, the exact terms depend on the lender you end up borrowing from.

Next Steps:

Consumers Credit Union

APR as low as 2.69%

Consumers Credit Union is an Illinois-based credit union that excels when it comes to car loans, although they offer a range of other loan types too. The lowest APR offered are only available to applicants with the best credit scores who are taking out loans of 60 months or fewer for vehicles no more than two years old and use AutoPay.

The rate can go up to 21.99%, although the average is just 5.09%, so you’re unlikely to be charged this much unless your credit score is particularly bad. Another advantage is that members get a rate reduction of up to 0.50% when they automate their payments. You can get a loan an amount as low as $250 for 6 to 84 months, and there are no prepayment penalties.

To obtain a loan, a minimum income of $6,000 a year is required, although an amount closer to $24,000 is preferred. You’ll also need a minimum credit score of 640, which is higher than the average credit union.

Finally, you’ll need to pay a $5 membership fee and deposit at least $5 a month into your savings account with Consumers Credit Union. Although the company is based in Illinois, their loans are available to people in all states.


APR as low as 3.49%

myAutoloan is a loan marketplace rather than an individual lender, which makes it possible to compare proposals from different companies and figure out which is the best option for you – you can compare up to four offers at once.

The site can be used for a used or new car, in which new cars have the lowest interest rates, and it can be used to either obtain a new loan or refinance an old one. They are currently advertising recent refinance rates at 2.09%. Loan amounts start at $8,000.

It only takes two minutes to fill in the questionnaire that will recommend you loan providers, and once you choose, you could get approved in one day only.

To qualify, you need a minimum annual income of $24,000, no open bankruptcy, and a credit score of at least 500. Although the minimum credit score requirement is quite low, you’ll need a score as high as possible to be given an offer with a low-interest rate. The loans also aren’t available to anyone who lives in Alaska or Hawaii. If you’re applying for a used vehicle, it can’t have more than 100,000 miles or be older than eight years.

There are no fees associated with the application.


APR as low as 3.90%

Carvana is an online used-car dealer rather than a loan provider, but it also provides loans. However, it only finances cars it sells itself, which is a serious limitation, although it’s possible to buy a car on Carvana and finance it using a different bank.

There are thousands of cars featured on the website, all of which have been through a 150-point inspection, and most have low mileage. Once you receive your loan pre-qualification, it’s valid for 45 days, so you’ll have plenty of time to make a decision.

There are no credit score requirements, but you’ll need an income of at least $10,000 a year. APR ranges from 3.90% right up to 27.90%.

OneMain Financial

APR as low as 18%

OneMain has been providing loans for over 100 years. They provide both car purchase loans, and auto refinance loans, which can be secured with collateral. Their auto refinance loans include a fixed interest rate, no prepayment fees, and you can get your funds quickly – sometimes the same day as approval.

The loans don’t have the best terms – the lowest APR available is 18% – but for those with a low credit score who struggle to get approved it may be the best option. The loan sizes also aren’t the highest.

There are a few perks though. These include the quick financing, the leniency over credit scores (there’s no hard minimum), and the variety of loans available.

OpenRoad Lending

APR as low as 2.90%

OpenRoad Lending focuses on refinancing auto loans to help customers obtain a lower rate and save money. Rates start at just 2.90% to take out a loan of $10,000 or more.

There are a few restrictions on the vehicles that can be refinanced. They must be no more than eight years old, have no more than 140,000 miles registered, and the maximum loan to value can’t exceed 120% of the wholesale value of the vehicle. You’ll also need a credit score of 500 and a monthly income of $1,500 to be able to take out a loan.

You can be sure of a good experience with OpenRoad, who boasts 98% customer satisfaction and saves the average customer more than $100 a month. They also have an A+ rating with the Better Business Bureau and were named the 37th fastest-growing private company in the USA by Inc. Magazine.

They offer numerous online resources to help you educate yourself about everything related to car loans, ranging from a car loan calculator to an advice center to consult experts.


APR as low as 3.99%

LendingClub is a direct lender but a lending marketplace to match loan providers with borrowers looking for a loan. They have more than 1.5 million customers to date and claim that their average customer manages to decrease their car payments $80 a month thanks to the site. Their car loans are for refinancing current loans rather than taking out a new loan.

Once you enter in details about yourself and your vehicle, you’ll receive offers from different lenders and can then send off an official application. There are no origination fees. APR ranges from 3.99% to 24.99%, and you’ll need a credit score of at least 510 to apply.

There are a few conditions your current car and loan must meet to qualify:

  • Under 120,000 miles on the car
  • Car 10 years old or less
  • Current loan with an outstanding amount of $5,000 to $55,000
  • Loan initiated one month or more ago
  • 24 months or more of remaining payments


APR as low as 3.54%

ClearLane is powered by Ally, an online bank, and is a marketplace where borrowers can compare multiple options.

ClearLane is particularly good for the more complicated process of buying out a lease.

You can loan from $5,000 at an APR of 3.54% to 10.24%. The minimum credit score is 600.

Innovative Funding Services

APR as low as 2.49%

Innovative Funding Services (IFS) is another online marketplace that connects lenders and borrowers together.

They cover refinance loans, auto lease purchases, and even fleet car purchases, and are best-suited to borrowers with average credit scores.

Loans can be between $5,000 and $100,000 and are given at an APR between 2.49% and 23.99%. There are a couple of requirements to be eligible: you’ll need a credit score of at least 500, and you’ll need to earn at least $1,500 a month. However, the average credit score is a much higher 640. Co-borrowers are allowed.

The biggest perk to choosing Innovative Funding Services is that they’ll help you to go through vehicle ownership transfers, so you won’t need to go elsewhere to complete the process.

How Do Car Loans Work?

When it comes to getting a new car, a loan is useful. Although you can often just use a generic personal loan to buy a car, it can be helpful to get a tailor-made car loan to secure the best rate.

New vs. Used Car Loans

Car purchase loans are used to buy a new or used car – although they’re used for other vehicles too, like campervans or minivans. You can get approved for and receive the funds before you buy a car, which means you’ll be able to go into a negotiation knowing your deal.

Purchase vs. Refinancing

Purchase loans are taken out when you’re buying a car for the first time, whether it’s a new or second-hand vehicle. Loan providers may deposit the money straight into your bank account, give you a certificate to show the car dealer, or give you a no-obligation check.

Meanwhile, auto refinancing loans are used to improve an existing loan someone has for a car. If you had to take out a loan while your credit score wasn’t particularly high, but have since been able to make your payments consistently and promptly, then taking out a refinancing loan is a good choice.

When you take out a refinance loan, your new lender will pay off your old lender, and you’ll then send all payments to the new lender.

Is It Better to Finance a Car Through a Bank or Dealership?

It might seem like it makes no sense to go through the hassle of obtaining a loan from a third-party bank or loan provider when most car dealers offer their own loans. However, this convenience comes at a price. The loan offered is likely to be less favorable, and usually results in a hard pull on your credit score too.

Dealers know that anyone interested in taking out a loan at their premises is unlikely to have done their prior research, so they can offer any terms they like within reason. The buyer has minimal negotiating power. In fact, this is how many dealers make the bulk of their money since they often sell cars at a loss and make money in other ways.

When you first make an inquiry about a loan, the loan provider will carry out either a ‘soft pull’ or a ‘hard pull’ on your credit score to figure out if they should approve you. A ‘soft pull’ isn’t registered on your credit score, but a ‘hard pull’ is – having a few ‘hard pulls’ in a short space of time will negatively affect your credit score, so it’s best to avoid them.

Securing Good Terms on Your Auto Loan

There are a few measures you should take to ensure you get the best rate possible. Make sure you compare the offers available so you know what kind of interest rate and loan terms you can expect, and so you can obtain the best deal possible when it comes to negotiation. Sites like Lending Tree or myAutoLoan are good examples of sites that do this all in one place if you don’t want to fill in application forms for loans on multiple sites.

However, the way and terms of auto loans aren’t a complete mystery. There are a few factors that guarantee good terms – some of these are having a good credit score, taking out a short-term loan, and choosing a new car.

Having a Good Credit Score

While it’s not possible to change your credit score overnight, a good first step is to make sure you know what your score is. You can do this easily by checking a website like Credit Sesame, which will let you know yours for free and even give you some tips for improving it. Here’s a general guide of what classifies as good and bad credit scores:

  • Poor credit: <600
  • Fair credit: 600-650
  • Good credit: 660+

If you find yourself with a score lower than 600, you may find it difficult to qualify at all, and to get the best rates, you’ll generally need a score of 700 or more.

Choose a Short-Term Loan

If you choose a shorter term, you may be saddled with a higher monthly repayment, but you’ll be paying less overall since the interest will be concentrated over a lower period. Most companies will also offer you a lower interest rate since borrowers who can repay more quickly are more reliable.

Buying a New Car

Buying new will generally give you a lower interest rate. However, proceed with caution on this one – new cars are expensive, and their value depreciates quicker, so the best financial investment may be to opt for a used car with a higher interest rate. Similarly, by giving a higher down payment, you can reduce the number of repayments and therefore the interest you pay – aim for 20% or more instead of 5%, which is more common.

Finding The Best Car Loan for Your Circumstances

Choosing an auto loan isn’t a decision you should take lightly. It might seem like a good idea to choose the loan term with the lowest monthly repayments, but this could turn out to be more costly in the long run.

Instead, you should carefully consider how large a down payment you can afford, how short a loan term would be possible, and whether it makes more financial sense for you to choose a new or used car. You also need to be realistic about what’s possible with the credit score you have.

Although it’s possible to take out a ‘bad’ loan and refinance it at a later date, this is an expensive mistake to make. If you find yourself in this position, it’s probably best to wait and work on your credit score instead.

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