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Auto loans
We want this to be a “win-win” situation. So we only want to get paid if we bring you value in the form of finding a personal finance option that works for you. Not by selling your data. Credible receives compensation when we help you find the best product from one of our lending partners. The amount of our compensation does not impact how and where lenders appear on our site, and Credible charges you no fees of any sort. Some lenders may take traffic sources into account when offering credit terms.
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Compare auto loan rates from top lenders
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Calculate your savings with Credible
Use our debt consolidation calculator to see how different terms and interest rates can change what you pay over time.
1. Enter your current loan details
2. Choose a rate to compare
Our lender rates vary from 5.20% to 35.99% APR1
3. Check the results
With an interest rate of 12.00% over 5 years, you will pay per month and in interest over the lifetime of your loan.
Total interest:
New Loan
Current Loan
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Monthly payment:
New Loan
Current Loan
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Checking rates won’t affect your credit score. Calculator results are for illustrative purposes only.
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I was apprehensive when I first started... but the customer service was excellent .. I got a good deal very quickly and they helped me .. totally recommend it
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Editorial disclosure: Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. Credible Operations, Inc. NMLS # 1681276, is referred to here as "Credible."
A car loan is a type of loan that can help you finance a new or used vehicle. When you take out an auto loan, you agree to repay the money you borrow over a set time period, plus any interest and fees. You can use an unsecured personal loan or a vehicle loan secured by the car you’re buying.
Unlike a traditional personal loan, which is typically unsecured, an auto loan from a dealership is a secured loan that uses your car as collateral. This means if you default on your payments, the lender can repossess your vehicle.
If you take out a personal loan to finance your car purchase, the lender won’t use your car as collateral. As a result, you’ll likely pay a higher interest rate than you would with an auto loan from a dealership because the lender will be taking on more risk.
Read More: Different Types of Personal Loans
Follow these steps to get a car loan:
Compare lenders and shop around. Not all auto lenders are created equal. Do your research, find several lenders that meet your needs, and compare their rates, terms, and fees.
Prequalify with multiple lenders. It’s a good idea to apply for prequalification with at least three to five lenders to make sure you’re getting the best car loan for your situation. Use Credible to easily check your prequalified personal loan rates from trusted auto lenders for free.
Close the loan. Once you’ve found the ideal lender and terms for your unique needs, complete the lender’s online application.
Begin making your monthly payments. Your lender should let you know when your first auto loan payment will be due. Consider setting up automatic payments or reminders so that you can stay on top of when your payment is due each month.
You might be able to get an auto loan with bad credit. But you’ll likely have to settle for a higher APR, which can cost you hundreds or thousands of dollars more over the life of your loan.
If you don’t have the best credit score, you can spend some time building your credit before you apply. But if you need an auto loan sooner rather than later, another option is to apply with a cosigner.
If you add a cosigner with good or excellent credit to your car loan, it can help your odds of getting approved and of receiving a lower interest rate. Just keep in mind that if you default on your auto loan, your cosigner will be on the hook for making your payments.
Since an auto loan from a dealership usually uses your car as collateral, you might be able to land a lower interest rate. But if you fail to repay your loan, you could lose your car.
On the flip side, an auto loan from an online lender is typically unsecured, meaning it doesn’t use your car as collateral. If you go with an online lender, you can expect to pay a higher interest rate since they’ll be taking on more risk than a dealer who may have your car as collateral.
You can find auto loan terms ranging from 24 months all the way to 90 months. The average loan term for a new-car purchase is nearly 72 months, according to Experian
While cars do depreciate quickly, a longer term can lead to lower monthly payments. If you have a tight budget, a longer term may give you some peace of mind. But if you’re able to make higher payments, a shorter term is ideal as it can save you more on interest and allow you to own your car free-and-clear sooner.
You can use our personal loan calculator to see what your monthly auto loan payment might be based on your interest rate and loan term.
You may be able to sell your car with an outstanding loan, but the process will involve extra steps.
If your car is worth less than the remaining balance, you’ll need to give the lender all the money from your car sale and pay for the negative equity. On the other hand, if your car is worth more than the loan balance, you might be able to pocket the extra cash.
It’s possible to buy a car without a down payment. But if you’re able to put down at least 20% you won’t need to borrow as much to finance the rest of your purchase, which can lower your monthly payments and save you interest over the life of the loan.
Yes, you can refinance a car loan. With an auto loan refinance, you’ll take out a new loan with the same lender or a different lender. The lender will pay off your current auto loan balance, and you’ll start making payments on the new loan. By refinancing, you may be able to save on interest, lower your monthly payment amount, pay off your auto loan sooner, or even get cash from the equity of your car.
Refinancing your current car loan might make sense if your credit has improved since you first took out your auto loan, you have positive equity in your car, you want to change your loan term, or you’re unhappy with your current lender.
When you’re ready to apply for a car loan online or in-person at a dealership, the lender will ask you to provide some documentation. While the specific requirements vary by lender, you’ll typically need to provide:
Personal identification — Personal loans come with fixed interest rates, which means your payments will stay the same throughout the life of the loan.
Social Security card — A Social Security card can allow the lender or dealer to report your purchase to the IRS if it’s over $10,000.
Income verification — Lenders and dealers will want to see that you’re earning income and can make your car payments. You can prove your income through pay stubs, tax returns, and bank statements.
If you have any questions about the application process, be sure to ask the lender. And if you’re approved for an auto loan, read the fine print before you sign and drive away in your new car.
Every lender has its own methods of evaluating borrowers and determining rates, so it’s a good idea to compare prequalified rates from more than one lender. Generally, the shorter the loan term, the lower the interest rate offered by most lenders; and the better your credit score and credit report, the better the interest rate you can qualify for. Securing low interest rates helps you save over the life of an auto loan.
Many lenders even offer an autopay discount if you authorize your monthly loan payments to be directly withdrawn from your bank account.
Qualifying for the lowest rates offered by a lender is dependent on your online application, credit approval and score, loan terms, and other factors. Through Credible, you can easily compare loan offers, loan terms, origination fees, monthly payment amounts, and repayment terms.
The table below shows the approximate APR for personal loans by credit score:
Credit score | Average interest rate 2-year loan |
|---|---|
780+ | 8.09% |
720-779 | 11.98% |
680-719 | 15.35% |
640-679 | 21.72% |
600-639 | 26.54% |
0-599 | 31.46% |
Actual rates may differ. Annual Percentage Rate will be based on credit history, the amount financed, and the loan term.
Read More: Who Are the Best Personal Loan Lenders?
Yes, you can generally use a personal line of credit to buy a car. However, your credit limit may not be high enough to cover your purchase. For example, Tally — a Credible partner lender — offers personal lines of credit up to $25,000. If the car you’re eyeing costs more than this, you’ll be out of luck. And keep in mind that you’ll have to pay interest on the money you borrow — if you won’t be able to repay this amount on time, it’ll end up costing you more.
It may be a better idea to use a traditional auto loan or personal loan for your purchase, since you’ll have a set repayment schedule. Auto loans typically have lower interest rates than personal loans, so be sure to compare your options before you commit to one.
A personal line of credit is an amount of money that you can borrow from, up to your limit, at any time. It’s similar to a credit card in that you borrow money, then receive a bill each month. You only pay interest on the amount you borrow. However, you’ll typically have a variable interest rate, meaning it could fluctuate. You may also have to pay a fee each time you use your funds — be sure to check with your lender beforehand.
A personal line of credit is usually an unsecured revolving account. This means you don’t have to put up an asset as collateral, and you replenish your credit limit every time you repay what you borrowed. You have the option to make just the minimum payment, but it’s better for your credit to make full, on-time payments.
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