The best auto loans of January 2023

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When it comes to car shopping, finding the right loan can be just as important as finding the right car. 

It’s not as easy as simply showing up to the dealership. To get the lowest interest rate, you’ll want to shop around for an auto loan to see what kind of financing is available to you. Dealerships often mark up the interest rates on loan offers from lenders, and that can leave you paying more for the same car. 

As you start shopping, keep in mind that your local small bank or credit union could also be a great place to get a loan — these institutions often offer lower car loan interest rates than big banks, but are usually limited to a relatively small geographic area.

Here are a few places to help you start your search for a variety of situations.

Best overall, best for lease buyouts: Bank of America

Bank of America has excellent rates for auto loans currently. Rates for a new car purchase start as low as 2.09% APR, and a used car could be as low as 2.29% APR. Bank of America offers rate discounts for current customers, up to 0.5%.

If you’re interested in buying the car you’re currently leasing but need a loan to do so, Bank of America offers a loan for that. Bank of America offers a variety of auto loans, and like the others, its interest rates are competitive in 2021. Lease buyouts can have higher interest rates than a new or used car loan, but Bank of America’s lease buyout APRs start lower than the rates other lenders offer.

Best for excellent credit: LightStream

If you have a good or excellent credit score, you might want to consider LightStream in addition to Bank of America. A part of SunTrust Bank, Lightstream focuses on auto loans to customers with good or better credit.

Because it focuses on a narrow subset of customers, its rates don’t go too high — For a 36-month loan for a new car purchase between $10,000 and $24,999, interest rates range from 2.49% to 6.79%. However, borrowers with lower credit scores may find better rates elsewhere. 

Capital One offers easy and reputable auto loans for borrowers with credit scores of 500 or higher. Capital One offers loans as small as $7,500 for used vehicles.

Online bank Ally doesn’t offer financing to purchase a car. But, if you’re looking to refinance the car you already have, its auto lending division Clearlane offers some competitive rates. As long as your vehicle meet the standards (less than 100,000 miles, and fewer than 10 years old), this lender could offer a competitive rate as low as 3.99% according to NerdWallet. Clearlane also offers auto lease buyouts.

Best for used car loans: US Bank

US Bank’s top rates are comparable to other competitors’ rates, particularly on used cars and auto loan refinancing.

The bank will allow you to get your financing preapproved without having your car picked out. Once you decide on a car, you can finalize your loan terms. The lender doesn’t specify a minimum credit score to get a loan or a timeframe for when you’ll receive your money. 

One of the biggest attractions of a Navy Federal auto loan is the credit union’s low interest rates. Navy Federal also features an online Car Buying Center, where the company walks you through the process of financing, buying, researching, and insuring your next car. 

Best for new cars: PNC Bank

PNC offers great rates for borrowers who have good credit. The bank offers financing for cars model year 2014 or newer — if you want to buy an older car, you won’t be able to get a loan through PNC.

Borrowers with a poorer credit history may find it hard to qualify at all or might be saddled with high interest rates. 

Which lender is the most trustworthy?

We’ve reviewed each institution’s Better Business Bureau score to help you make the best decision possible when choosing an auto loan. The BBB measures businesses based on factors like truthfulness in advertising, honesty about business practices, and responsiveness to consumer complaints. Here is each company’s score:

A majority of our top picks are rated A or higher by the BBB, with the exception of Clearlane by Ally. Keep in mind that a high BBB score does not guarantee a good relationship with a lender, and that you should keep doing research and talking to others who have used the company to get the most helpful information you can.

The BBB currently rates Clearlane by Ally a D- because of 53 complaints filed against the business, including one unresolved complaint. Due to the lenders’ BBB scores, you might prefer to use a different auto loan company on our list.

How we determined the best car loans

These lenders were chosen based on interest rate (APR) for various credit scores, whether you’re buying new or used, and loans for a specific need like refinancing or lease buyouts. This list only considers loans that were available in most of the US, and does not include captive lenders — lenders owned by auto companies. We weighed factors including:

• Interest rate. We prioritized lenders with good range of interest rates for both borrowers with poor and excellent credit scores.
• Fees. Lenders might charge a variety of fees, from origination fees to late payment penalties. We prioritize lenders that charge minimal or no fees. 
• Term lengths and loan amounts. We looked for companies with a variety of repayment term lengths, offering options for borrowers who want to pay off their loans quickly and save on interest, as well as those who want to spread their costs over more years. We also picked companies that allowed you to finance loan amounts among a spectrum of need. 
• Borrower accessibility. We chose lenders that are available in all states and have minimal or nonexistent credit requirements
• Variety of loans. We tried to pick lenders that offer loans for new and used cars, refinancing, and lease buyouts.

See our full ratings methodology for auto loans >>

Auto loan credit score requirements

Of all the lenders on our list, only Lightstream and Capital One disclose their minimum credit score requirements. Lightstream’s is 660 and Capital One has a floor of 500 (though you won’t qualify for great rates from Capital One with those scores).

The credit score you’ll need to qualify for a loan will depend on the particular lender, though you’ll likely qualify for a better rate with a higher score.

You can find your credit report for free on annualcreditreport.com from any of the three major credit bureaus weekly through the end of 2022. While this report won’t give you your credit score, it will show you information about your credit and payment history, which lenders use to decide whether to give you a loan. Reviewing your credit report can help you know what you need to improve. 

You can get your score at no cost on your credit card statement or online account. You can also pay for it from a credit reporting agency. 

Credit scores range between 300 and 850. Here’s how scores break down, according to FICO: 

• Very poor: 300 to 579
• Fair: 580 to 669
• Good: 670 to 739 
• Very good: 740 to 799 
• Exceptional: 800 to 850

Checking your rates with most companies will not impact your credit score because a majority of lenders will only generate a soft credit inquiry when showing you personalized rates. However, if you choose to accept a loan, lenders will likely conduct a hard credit inquiry, which may negatively affect your credit score. A hard inquiry offers a lender a comprehensive look at your credit history.

How do I choose the best auto loan for me?

To find the best auto loan for your personal situation, look at several key factors. Many borrowers prioritize the lowest interest rate, but also consider any fees, the minimum credit score needed, and the accessibility of the lender’s customer service.

You also need to take into account what type of cars the dealer will finance, how much money they will finance, and the loan term length.

Guides like this one will help you compare multiple lenders in the same place to weigh their pros and cons. Make sure to also read individual reviews of any lenders you’re considering. 

Frequently asked questions

Liz Knueven

Personal Finance Reporter

Ryan Wangman, CEPF

Loans Reporter

Ryan Wangman is a reporter at Personal Finance Insider reporting on personal loans, student loans, student loan refinancing, debt consolidation, auto loans, RV loans, and boat loans. He is also a Certified Educator in Personal Finance (CEPF).
In his past experience writing about personal finance, he has written about credit scores, financial literacy, and homeownership. He graduated from Northwestern University and has previously written for The Boston Globe. 
Learn more about how Personal Finance Insider chooses, rates, and covers financial products and services here >>

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