A car loan could be the best option for you if you’re looking to purchase a new or used vehicle.
Check out some of these options.
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What am I getting myself into with a car loan?
Car loans are usually secured. This means that the car you buy acts as collateral. It is subject to repossession if you don’t make the necessary payments. Read more about it here.
Rates for car loans are generally pretty low, however it is still important so shop around for the best rate. You can apply for a car loan at a dealership, bank, credit union, or online lender.
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What are some car loan options?
- PenFed Credit Union- best for new and used car loans
- APR varies from 0.99%-2.39% depending on car and buying service
- Loans can be taken $500-$100,000
- Loan terms from 36 to 84 months
- No minimum credit score has been specified
- Minimum annual income is also unspecified
- Available in all 50 states
- No prepayment penalty
- You must be a member of Pentagon Federal Credit Union to get the preferred financing rates
- Consumers Credit Union- runner-up for best new and used car loans
- APR starts at 2.24% but varies on membership and car
- Loans can be taken from $250-$100,000
- Loan terms from 0 to 84 months
- No minimum credit score has been specified
- Minimum annual income is also unspecified
- Branches across Illinois, shared branches nationwide
- No prepayment penalty
- This Illinois-based credit union has recently opened membership nationwide. They offer great rates and flexibility.
- LightStream- best for private party car loans
- APR starts at 2.49%-3.49%
- Loans can be taken from $5,000- $100,000
- Loan terms from 36 to 84 months
- No minimum credit score has been specified
- Minimum annual income is also unspecified
- Available online
- No prepayment penalty
- LightStream is an online lender under SunTrust Bank. They offer low rates for private party car loans. LightStream guarantees a simplified lending process.
- Bank of America- best big bank option
- APR starting at 2.49%-5.69%
- Loans can be taken from $7,500- $100,000
- Loan terms from 48 to 72 months
- No minimum credit score has been specified
- Minimum annual income is also unspecified
- Available in all 50 states
- No prepayment penalty
- Bank of America has great rates and availability but lacks flexibility.
- U.S. Bank- best for longer loan terms
- APR starting at 2.59%-5.49%
- Loans can be taken from $5,000-$100,000
- Loan terms from 12 to 72 months
- No minimum credit score has been specified
- Minimum annual income is also unspecified
- Branches available in 26 states
- Prepayment penalty: 1% of the original loan amount, with a minimum charge of $50 and a maximum of $100
- U.S. Bank offers financing up to 120% of your car’s value with no down payment.
- Carvana- best for people with poor or no credit
- APR starting at 3.9% for used cars
- No specified loan amount
- Loan terms from 36 to 72 months
- No minimum credit score has been specified
- Minimum annual income: $4,000
- Not available in Alaska or Hawaii
- No prepayment penalty
- Carvana allows you to buy and finance right online to make buying a used car fairly easy.
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What else should I know?
Car loans usually have fixed ineptest rates and loan terms. Depending on your lender, they can often be negotiated. Your loan rate generally depends on your credit score.
The higher your credit score, the lower your annual percentage rate. Having a higher credit score may also grant you access to larger loan amounts or better repayment terms.
Generally, you’ll pay less interest overtime with a shorter loan term, but your payments will be higher. With a longer loan term, your monthly payments will be lower, but you will pay more in interest over time.
As you look into lenders, consider if they offer a preapproval process. Preapproval will allow you to see the rates you the rates you qualify for without a “hard inquiry.”
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