Best Car Loans and Lenders in January 2023

Finding the best terms and rates on a car loans can help you save hundreds of dollars or even thousands of interest. With interest rates rising and the cost of car insurance premiums increasing, it’s important to shop around with different lenders to find the most affordable car loan for your new or used car.

An auto loan can be secured installment loanThe vehicle you buy acts as collateral and may be taken away if you fail repay the loan. The trade-off is a lower rate of interest. You can apply for a loan on a car at a bank, credit union, or online lender.

We have taken into account loan amounts, annual percentages, fees, and other features to help us determine the best car loans. All rates assume an “excellent” starting annual percentage rate. credit score800 or higher

Rates as of January 18, 2023

PenFed Credit Union

  • APR: Start at 4.59% for new car loans through PenFed Car Buying Service, 5.54% for used car loans through PenFed Car Buying Service; Loans outside this service start at 5.39% for new car loans or 6.04% in used car loans. 
  • Lenders: From $500 to $150,000
  • Terms of a loan: 36 to 84 month (depending upon loan type)
  • Minimum annual income Not specified
  • Availability: 50 states
  • Prepayment penaltyNo

The PenFed Car Buying Service offers low auto loan rates to both new and used vehicles through Pentagon Federal Credit Union. To access this service, you’ll need to be a member of a credit union. membership is open to everyone, and requires opening a savings account with a minimum $5 deposit. PenFed does not offer a program for buying a car. However, you can still get lower rates on used and new cars that are purchased outside of the service.

PenFed is the leader in the auto loan market with flexible loan terms that can be extended up to seven years, nationwide availability, and no prepayment penalties.

Consumers Credit Union

  • APR: Car loans for 2021 vehicles or older start at 5.24%, 5.49% for 2017-2020 vehicles, and 6.54% for 2016 vehicles and older.
  • Lenders: $250 to $100,000
  • Terms of a loan: 36 to 84 months 
  • Minimum annual income: Not specified
  • Availability: Branches across Illinois, shared branches nationwide
  • Prepayment penalty: No

Consumers Credit Union is an Illinois-based credit union that has recently opened membership nationwide. Though its auto loan rates for vehicles made prior to 2021 are average for the market, their new car loan rates are a great deal. Consumers Credit Union also offers significant flexibility, with the widest range of loan terms and amounts of the providers we evaluated.

You can become a member online with a valid ID, two recent pay stubs, two tax returns from recent years, five references, two utility bills and a one-time $5 fee to the Consumers Cooperative.

Bank of America

  • APR: Starting at 5.39% (new car loans), 5.59% (used car loans), and 8.29% (private party loans)*
  • Loan amounts: $7,500 ($8,000 in Minnesota) to $100,000
  • Loan terms: 48 to 72 months
  • Minimum annual income: Not specified
  • Availability: 50 states
  • Prepayment penalty: No

As one of the world’s largest banks, Bank of America is widely available and offers comepetitive rates. Though you don’t need to be a member of Bank of America to use its auto loan services, members may qualify for special perks. For example, if you qualify for Bank of America’s Preferred Rewards program — based on your qualifying combined balances in your Bank of America deposit and/or Merrill® investment accounts — you can be eligible for up to 0.50% off your APR. 

But Bank of America’s loan policies can lack variety. For example, it offers one of the least flexible loan terms on this list, with the shortest loan term set at 48 months. In addition, the minimum financing amount is $7,500, which rules out Bank of America as a loan financier for more inexpensive used vehicles.

*Rates may vary depending on your location.


  • APR: Starting at 6.49%* with AutoPay and excellent credit (private party car loans). Rate as of Dec. 20, 2022.
  • Loan amounts: $5,000 to $100,000
  • Loan terms: 24 to 84 months (depending on the loan type)
  • Minimum annual income: Not specified
  • Availability: Online
  • Prepayment penalty: No

LightStream is an online lender under Truist Financial that offers low rates for private party car loans. Though its loan amounts and terms are of average flexibility, it offers a variety of auto loan options. It places no restrictions on model year, make or mileage, making it the ideal lender if you plan to purchase an older car. LightStream also offers a simplified ending process that includes same day funding, under certain conditions. 

In order to access LightStream’s best terms, you’ll need to sign up for autopay. LightStream’s loans are also unsecured — so your car won’t be repossessed if you can’t make your payments, though your credit score will suffer. 


  • APR: Starting at 6.85% (used cars only)
  • Loan amounts: Not specified
  • Loan terms: 36 to 72 months
  • Availability: Not available in Alaska or Hawaii
  • Prepayment penalty: No

Though Carvana is mostly known for its online used car shopping experience, it also offers auto loans on vehicles you buy through the site. Carvana’s only requirements are that you’re over 18, make $10,000 annually and have no active bankruptcies, so it’s a great choice for those with poor credit. Furthermore, Carvana’s wholly online model combines the buying and financing experience, making the process of purchasing a used car relatively painless. 

However, though Carvana makes it possible for customers with bad credit to obtain a loan, the best auto loan rates will always be reserved for those with excellent credit – and it’s important to note that it offers, by far, the highest starting APR on our list. 

Best car loan lenders, compared

Lenders PenFed CreditUnion Consumers Credit Union LightStream Bank of America Carvana
Best for New car loans Used car loans Private party car loans Big bank option Those with poor or no credit
APR for new car loans Starting at 4.59% (through PenFed Car Buying Program) Starting at 5.24% (car loans for 2021 or newer vehicles) Starting at 5.99%* with autopay and excellent credit.  Starting at 4.39% N/A
APR for used car loans Starting at 5.54% (through PenFed Car Buying Program) Starting at 5.49% (car loans for 2017-2020 vehicles) Starting at 5.99%* with autopay and excellent credit.  Starting at 5.59% Starting at 6.85%
APR for private party loans N/A N/A Starting at 6.49%* with autopay and excellent credit.  Starting at 8.29% N/A
Loan amount $500 to $150,000 $250 to $100,000 $5,000 to 100,000 $7,500 ($8,000 in Minnesota) to $100,000 Not specified
Repayment terms 36 to 84 month 36 to 84 months 24 to 84 months* 48 to 72 months 36 to 72 months
Credit requirement (estimate) Not specified Not specified Good to Excellent Not specified Accepts all credit, no active bankruptcies
Availability All 50 states Branch locations in Illinois, and shared branches across the country Online All 50 states Not available in Hawaii or Alaska

What to know when applying for an auto loan

While car loans usually have fixed interest rates and loan terms, they can often be negotiated, depending on your lender. Your loan rate will generally depend upon your credit score — the higher your credit score, the lower your annual percentage rate. A higher credit score may also give you access to a larger loan amount or more favorable repayment terms.

Next, you should consider loan terms. Let’s say you qualify for a 2.5% APR loan. You’ll pay less interest over time with a shorter term loan, but your monthly payments will be higher. Similarly, you’ll pay more in interest over time with a longer loan term, but your monthly payments will be lower. Consider your budget and financial goals to determine which loan term will work best for you.

As you consider lenders, find out if they offer a preapproval process. Preapproval allows you to see the rates you qualify for without a hard inquiry — when a creditor pulls your credit history — which can cause your credit score to slightly dip. It also allows you to review options upfront without having to commit to a particular lender.

How to choose an auto lender

Finding the best auto lender comes down to a few factors, including whether you’re buying a new or used vehicle, whether you’re buying from a dealership or private seller and where you qualify for financing. Some lenders only offer new car loans, while others may only offer used car loans. And, though dealerships often offer financing, you can explore outside lender options that may save you money.

Here are some factors to consider when looking for the best car loan:

New vs. used cars

Buying a new car is almost always more expensive than buying a used car. Not all dealerships sell certified pre-owned cars, so if you’re looking for a used vehicle, you may find more options through private sellers. When financing a car, you’ll generally receive a lower interest rate on a new vehicle than a used car.

Loan term

Most care loan terms range from 24 to 84 months, depending on the lender. A longer term gives you more time to pay off your loan and smaller monthly payments — but you’ll end up paying more interest over time. A shorter term comes with higher monthly payments, but will save you in interest. You should weigh how much you can afford each month against when you would like to repay your loan to decide on the right term.

Annual percentage rate

The APR you receive from a lender will depend on your credit history, income, whether you’re buying a new or used vehicle and your loan term. It’s important to shop quotes from different lenders to make sure you’re getting the lowest rate possible. 

Credit score

Your credit score plays a large role in whether you’ll get approved for a car loan and determining your APR. If you have a lower credit score you may qualify for a smaller loan than you originally requested or receive the full amount at a higher interest rate.

Bank vs. dealership loans

You can get financing for a vehicle through a bank, credit union, online lender or directly through the dealership. While both loans work the same way, dealership loans can be more expensive.

That’s because a dealer may offer you a higher interest rate than you might receive by applying directly with a bank. While a dealer will have you apply for the loan and shop around with different lenders on your behalf, some dealers negotiate a higher interest rate with you — and pocket the difference in exchange for helping you navigate the financing process.

This isn’t always the case though. It’s a good idea to shop around with different lenders on your own and compare the rates to dealership financing to make sure you’re getting the best car loan possible.

Buying vs. leasing a car

Whether you buy or lease your car can impact your loan rate and chances for approval. It’s typically easier to get approved for a car lease than a car loan. For instance, you might need a larger down payment or better credit score to get approved for a car loan, while leasing may give you more options if you have less-than perfect credit. 

If you need a car quickly, don’t have time to save for a large down payment or have a lower credit score, a lease might make sense. While leasing a car can be less expensive each month, in the long-term it’s usually more expensive to lease a car than it is to finance and buy one. 

How to get a car loan

  1. Find a vehicle that fits your budget. Take some time to decide if you want a new or used car, weigh your needs and find options that best fit your lifestyle and financial goals.
  2. Shop around for lenders and get preapproved. Next it’s time to find the best car loan rate. Although lenders may advertise similar rates, it’s a good idea to request a personalized quote so you can compare offers between different lenders. Getting pre-approved for an auto loan lets you see the rate and terms you’re likely to be approved for, so you can determine which monthly payment best fits your finances.
  3. Apply for your loan. Once you’ve decided on the right lender and loan terms, it’s time to officially apply. Expect the lender to run a hard credit check during this process. If approved, you’ll move on to the next step.
  4. Get your car. After your loan is approved, you’ll get the keys to your new or used vehicle.
  5. Start loan repayment. Your lender will send you financing information so you can enroll in autopay and make sure you’re set up to start repaying your loan. 

Car loan FAQs

Can you refinance a car loan?

Yes, you can refinance a car loan, though not all lenders offer auto refinancing. It typically only makes sense to refinance your car loan if you can lock in a lower interest rate, or if you need to reduce your monthly payment.

What is a good car loan rate?

Car loan rates vary based on the market, your credit score, whether you’re buying a new or used car and several other factors. The lenders on this list offer some of the best rates available right now, but it’s important to shop around and view offers from a variety of lenders to lock in the best rate for your financial situation.

Can you negotiate a car loan?

You may be able to negotiate a lower rate on your car loan, depending on your lender, income and credit profile. Dealerships often have more wiggle room to negotiate, but it may be possible to negotiate with a bank or credit union in exchange for a bigger down payment.

Lenders reviewed:

  • Autopay
  • Bank of America
  • Capital One
  • Carvana
  • Chase
  • Consumers Credit Union
  • LightStream
  • MyAutoLoan
  • PenFed Credit Union
  • PNC
  • U.S. Bank

*Your loan terms, including APR, may differ based on loan purpose, amount, term length, and your credit profile. Excellent credit is required to qualify for lowest rates. Rates range from 5.99% – 11.99% APR with autopay. Rate is quoted with autopay discount. Autopay discount is only available prior to loan funding. Rates without autopay are 0.50% points higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice.

Payment example: Monthly payments for a $10,000 loan at 5.99% APR with a term of 3 years would result in 36 monthly payments of $304.17. 

© 2023 Truist Financial Corporation. Truist, LightStream, and the LightStream logo are service marks of Truist Financial Corporation. All other trademarks belong to their respective owners. Truist Bank provides lending services

This page’s editorial content is based on objective, independent assessments made by our writers. It is not influenced or influenced by advertising. It was not provided or commissioned by any other party. We may be compensated if you click on links to products and services offered by our partners.

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