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5 Lenders with the Best Auto Loan Rates (2021)

  • PenFed Credit Union tops the list with annual percentage ratings starting at 1.04%.
  • Shorter financing terms of 24 to 36 months generally come with the lowest interest rates.
  • Shop around and get quotes from multiple lenders to find the best auto loan rates for you.

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Lenders compete with one another by offering low interest rates to what they consider dependable borrowers. Currently, the best auto loan rates for new vehicles are about 2.5% and under. Many providers offer rates like this, including credit unions, banks, and online lenders. 

In this article, we’ll talk about the five best providers for low auto loan rates and go over how you can find good financing terms. When shopping around for auto loans, it’s a good idea to compare pre-qualification offers from several top lenders.

5 Providers With the Best Auto Loan Rates

In the table below are five top providers with the best auto loan rates in 2021. Based on our research, PenFed Credit Union currently offers the lowest annual percentage rate (APR) at 1.04%, and Bank of America and myAutoloan.com also offer some of the best rates and financing terms.

Be aware that the lowest rates are available for borrowers with the best credit. In other words, the minimum credit score is the minimum needed to qualify for auto financing from the particular lender, not to get the lowest interest rate. Also, interest rates change frequently. The information presented here is current as of the time of publication. 

Lender With Best Auto Loan Rates Lowest APR Loan Terms Loan Amounts Minimum
Credit Score
PenFed Credit Union 1.04% 36 to 72 months $500 to $100,000 610
Bank of America 2.39% 12 to 75 months $7,500 to $100,000 Not specified
myAutoloan.com 2.49% 24 to 84 months $8,000 to $99,000 575
Consumers Credit Union 2.49% 0 to 84 months $5,000 to $75,000 Good
LightStream 2.49% 24 to 84 months $5,000 to $100,000 Good

PenFed Credit Union

PenFed Credit Union has one of the lowest annual percentage rates of any bank, credit union, or loan company at this time. The advertised rate is 1.04%, but not just anyone can get rates that low. This rate applies to people who use PenFed’s car buying service to purchase a new vehicle with a 36-month loan term. PenFed Credit Union works with TrueCar to show you vehicles in your area, and the low APR is an incentive to use this shopping process. 

If you purchase a vehicle without using this buying service, loan rates start at 1.79%. Used car loans start at 1.64% using the buying service and 2.39% otherwise. These are still the best auto loan rates compared to other lenders’ rates for new and used vehicles. PenFed Credit Union requires membership and a $5 deposit. You can become a member through a variety of organizations or simply by expressing interest in joining.

Bank of America

Bank of America offers a new car loan APR of 2.39% to borrowers with excellent credit, which beats out many other lenders by a tenth of a percent. Used car rates start at 2.59%, and if you’re refinancing an existing loan, refinance loans start at 3.39%. Bank of America Preferred Rewards members can also get an interest rate discount of up to 0.5%. As a national bank, Bank of America works with a huge variety of dealerships across the country, which means you don’t have to limit your options. 

Be aware that Bank of America won’t finance vehicles older than 10 years or with more than 125,000 miles on the odometer. It also won’t finance cars under $6,000 in value or alternative vehicles like motorcycles and RVs. 

MyAutoloan.com

MyAutoloan.com is an internet-based lender that has been around since 2003, and it offers low rates that start at 2.49%. The company has a 4.3 out of 5.0-star rating from over 700 customers on Trustpilot and an A+ rating with accreditation from the Better Business Bureau (BBB). Borrowers need a minimum credit score of 575 to qualify. This is a lower credit score requirement than many other top lenders, making myAutoloan a good option for people who need to secure a bad credit car loan.

One thing that makes myAutoloan different from the previous two companies above is that it’s an online marketplace where you can see rates from multiple lenders at once. It’s always a good idea to do some comparison shopping to find the best auto loan rates, and you can save some time with myAutoloan. Be aware that you need to borrow at least $8,000 when using myAutoloan.

Consumers Credit Union

Consumers Credit Union is another great option for low rates on auto loans. Based out of Illinois, the credit union offers membership for anyone in the country who can pay a $5 fee and keep at least $5 in a savings account. The credit union has an A+ with accreditation from the BBB. Consumers Credit Union’s auto loan products are available for people with good to excellent credit, meaning from the mid-600’s and above. 

Like PenFed Credit Union, Consumers Credit Union partners with TrueCar to help shoppers find vehicles from across the country. One difference is that buyers can still get the same interest rates whether they shop with TrueCar or not. At this time, rates start at 2.49% for new vehicle financing and 2.74% for used vehicle financing. Consumers Credit Union offers a 0.25% discount on the rate for using autopay and an extra 0.25% discount when that autopay is linked to a Consumers Credit Union account. 

LightStream

Founded in 2004, LightStream is the online lending division of Truist Bank (which formed when SunTrust Bank and Branch Banking and Trust Company merged). According to the company’s website, it has a 4.9 out of 5.0-star rating based on 18,000 customer reviews. It also has a rating of A+ with accreditation from the BBB. LightStream provides loans of all kinds to people with good credit or better. With auto loans, there are no restrictions on the age or mileage of the financed vehicle, which means borrowers have plenty of options. However, the starting loan amount is $5,000. 

LightStream auto loans start at 2.49% for both new and used vehicle loans, and these rates include an autopay discount. Without autopay, the rate will be 0.5% higher. One nice feature is LightStream’s Rate Beat Program, where LightStream will beat the interest rate of its competitors under certain conditions. If you were approved for a lower rate with a competing lender for the same terms and can show proof of this, LightStream will offer you a rate of 0.1% below the competitor’s rate.

Click below to compare the best auto loan rates from these providers and more. 

What’s a Good Car Loan Interest Rate?

So, what is a good car loan rate today? According to the National Credit Union Administration (NCUA), the average 60-month new car loan from a credit union has an interest rate of 3.09%. From a bank, the average rate is 4.81%. So, if you find these rates or better, you know you’re getting a fair rate on your car loan. 

What is a Good Used Car Loan Rate?

Loan rates for used cars are higher than rates for new cars. For a 48-month term, a good used auto loan rate from a bank is 5.16% or lower. A good used car rate from a credit union is 3.16% or lower. 

Below is a chart with NCUA data for average credit union and bank rates for both new and used vehicles.

New or Used Vehicle Loan Loan Term Average Credit Union APR Average Bank APR
New vehicle 48 months 2.98% 4.70%
New vehicle 60 months 3.09% 4.81%
Used vehicle 36 months 3.04% 5.10%
Used vehicle 48 months 3.16% 5.16%

What Affects Loan Interest Rates

The rates above are average APRs based on information reported to the NCUA. You may find different rates based on a number of factors, including:

  • Credit score: A low score will require a higher interest rate, and vice versa. Credit score is perhaps the single most important factor lenders use to determine rates. 
  • Loan term: Shorter terms have lower interest rates. Consider making higher monthly payments to get a shorter-term loan with a lower overall cost. 
  • Credit report: Lenders look at your entire credit report, so two people with the exact same score can find different rates based on how their score is calculated. 
  • Income: Lenders can have minimum income requirements for borrowers to qualify and also to secure the best auto loan rates. 
  • Down payment: A higher down payment not only reduces the total amount of the loan, but it shows that you are committed to purchasing the vehicle, and this can also reduce your interest rate.
  • Interview process: If you impress a loan officer with professionalism and supporting documentation in discussing your financial situation, you may have a better chance of getting the best auto loan rates for your situation. 
  • Negotiation: If you get multiple pre-qualification offers, you can use those when negotiating interest rates from lenders. 
  • Autopay: Many lenders offer discounts for making automatic payments. Credit unions can also offer a discount if you pay for the loan with an account at that same credit union. 

Which Bank has the Best Auto Loan Rates?

At this time, Bank of America is the bank with the lowest car loan rates (starting at 2.39%). You can get competitive rates like this if you purchase a new car and have excellent credit. You may also be able to find a lower APR from other banks that do not advertise their best auto loan rates. 

How to Get the Best Auto Loan Rates

There are a few different ways to save money and find the best auto loan rates. First of all, if saving money is your goal, you might look into purchasing a used or certified pre-owned car instead of a new one. A two- or three-year-old model will be significantly cheaper than a brand-new car. Even if your APR is 1 to 2% higher, you can still save money this way. 

You can also do a few things to get a lower interest rate. For example, you can raise your credit score over a few months to a year if you work hard at it. Even 20 or 30 points can move you up a bracket and make a big difference in your auto loan options. You can also make a larger down payment to reduce your APR. 

If your credit score isn’t quite as high as you’d like, you can also see if a family member with an excellent score can cosign on your loan. You can use their good credit to get the best auto loan rates. If you go this route, make sure you’ll be able to make your monthly payments, because if you don’t, both of your credit scores will take a hit. 

On a related note, if you purchase an extended auto warranty through a dealership, the cost can often be rolled into your monthly car payment. However, that will increase your loan amount and the total interest you pay. It can be a better idea to purchase a standalone vehicle service contract a bit later on if you want to save money and keep your car protected. 

Compare Auto Loan Providers

As mentioned, one of the simplest ways to find the best auto loan rates is to shop around. Do this before you get in the room with a loan officer at a car dealership. You can get as many pre-approval offers as you want, as long as you make sure they only require a soft credit check. When you’re ready to go ahead with an offer, you can do a full loan application with the financial institution that gives you the best auto loan rates.