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Best vehicle loans for November 2021 in the United States

Other types of car loans

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Interesting and useful articles about finance

Before buying a car you should calculate your monthly vehicle loan payment. Awareness regarding this issue will give confidence in negotiating with a borrower and allow you to choose the most suitable loan terms.

Vehicle Loans

Most car buyers use vehicle loan services. This is a common secured loan provided by a financial institution for a period of 36 to 60 months. The borrower undertakes to pay part of the principal and interest on a monthly basis.

Important! According to the law in case of nonfulfillment of debt obligations the vehicle can be impounded.

What is the Difference between Financing Dealerships and Direct Lending?

Buyers are offered two options for vehicle loans: direct or financing through dealers. Direct lending is an ordinary loan borrowed from a bank, credit union or another financial institution. The funds received in this way will be paid for the car after the contract with the dealer is concluded.

In case of a dealership financing the situation is similar but the difference is that the paperwork for the loan is initiated and completed directly at the dealership. Such financing is usually provided by dependent lenders linked to each car brand.

Note! A dealer is the debt contract holder but the practice of selling contracts to banks or other financial institutions is widespread. When they become legal successors to a debt obligation they end up servicing the loan.

Dealer financing becomes a service of choice if the buyer wants to save time or if it is not possible to utilize direct lending.

Important! Vehicle manufacturers often initiate favorable terms of lending through dealers to increase sales. Those who want to buy a new car should start by searching loans from manufacturers. Thus, you can seek a deal with very low interest rates from 0 to 2.9 %.

How Does the Vehicle Loan Calculator Work?

The buyer can not accurately calculate the monthly payment for a vehicle loan in advance but even a rough estimation will help compare the offers of creditors.

Note! Online calculators on the websites of financial enterprises enable you to determine the monthly payment fairly accurately and compare the amounts in case the loan terms change.

To use the service you need to fill in empty fields of the loan calculator with the following figures:

  • car price;
  • down payment amount;
  • trade-in amount (the cost of a car intended for trade-in), if any;
  • interest rate (you can enter and make calculations with different rates evaluating and comparing monthly payments);
  • payment terms (several payment options with different terms will allow you to choose the best one).

After filling in all the required figures the calculator will show your monthly payment. By changing down payment values, interest rate or the terms of lending you can choose an optimum amount of payments.

How Can I Estimate Interest Rates?

If you know your credit rating you can roughly estimate probable offered interest rates.

Likely interest rates when buying a new car based on average rates:

  • superprime credit score holders (781-850) may claim the rate of 3.65 %;
  • prime (661–780) 7.65 %;
  • nonprime (601–660) 7.65 %;
  • subprime (501–600) 11.92 %;
  • deep subprime (300–500) 14.39 %.

Lower interest rates are offered for new cars rather than for used vehicles.

How Do I Define the Real Cost of a Car?

A price tag (MSRP) is a starting point for the cost of a new vehicle. Almost always a buyer can expect a discount from this amount. Manufacturers' discounts also contribute to price reduction. Payment for options and “destination fee” should be included into the purchase price.

Note! To stimulate consumers demand car manufacturers offer additional discounts. In some states these discounts are taxable and in some states they are not.

In the first case the situation is following: if a car price is $40,000 with a discount of $3,000, the sales tax will be calculated based on $40,000 and not $37,000. But keep in mind that in a significant number of states discounts are not taxed.

How Can I Predict the Cost of a Used Car?

When buying a used vehicle it is more difficult to estimate the real purchase price. You should start with the price set with the seller. In this situation bargaining is appropriate.

Note! To get an idea of the “fair” price use an online price guide or view local ads for similar cars.

How Can I Estimate the Trade-in Price?

To get an idea of the trade-in price you should check websites which offer evaluation services and pricing assistance.

Important! At a price guide it is important to find information about the trade-in price not the retail price (the price at which the dealer offers a car).

At your local Car Max you can get cash deals. Similar services are provided by Vroom and Carvana online services.

Sales Tax and Fees Should Be Taken Into Account When Buying a Car

When purchasing a car the buyer is required to pay state and local sales taxes, documentation fee (which is very variable) and registration services.

Note! To estimate services cost in a particular state you can use an Internet search engine or call a dealership.


The cost of buying a car consists of a purchase price and commissions which are included in the vehicle loan financing or paid in advance. Buyers with low credit ratings have to pay fees in advance.

Commissions related to car purchases in the United States are as follows:

  1. Most states have a sales tax. Five states, namely Alaska, Delaware, Montana, New Hampshire and Oregon do not charge sales tax.
  2. Documentation fee. Dealers set a price for processing documents of title and registration in the range of $150 to $300.
  3. Charge for title and registration fees is $300.
  4. Advertising fee. This is dealer’s expenses for the car promotion. They are often included in the car price and are up to several hundred dollars.
  5. Destination fee is the cost of delivering a car from the factory to the dealership. Ranges from $600 to $1000.
  6. Insurance in the United States is strictly mandatory and is issued before other documents. When buying a car on credit full coverage insurance is obligatory (for the whole loan period). The amount can be more than $1000. Many dealers offer to apply initially for short-term insurance (for 1-2 months).

When using the loan calculator in a situation where the commission will be paid out of the vehicle loan select the option “Include all commissions in the loan”.

If, in addition to the abovementioned, a car dealer requests to pay any other commissions it is reasonable to demand justification of such a necessity.

When deciding to enter into commitments you need to consider the following factors:

  • your monthly payment should not exceed 15 % of your income;
  • an ideal loan term is at least 72 months;
  • it is advisable to make a down payment of 10 % or use GAP insurance.

You should definitely get ready for a meeting with sellers and creditors by evaluating your capabilities and getting a rough estimate of the purchase conditions that are comfortable in each specific situation.

Current rates on auto loans

Financing is one of the major obstacles for a car purchasing. A lot of consumers simply cannot immediately pay a lump sum for a new vehicle. However, getting a car loan can help solve this issue. Thanks to this financial tool a car's cost can be split into affordable monthly instalments.

It is important to make the purchase with a car loan providing a low percentage rate. This allows to save money over the term of the loan and can make negotiations with dealerships easier. If a car is currently owned then monthly instalments can be reduced by refinancing at a lower rate.

Important! Rates in the car loan sector are unstable and need to be tracked.

A rate directly influences on monthly charges, thus, a low percentage rate can result in significant amounts in savings.

The best credit rating to receive a low interest credit

The rating of 719 points for a new car or 655 points for a used one or higher enables qualification for the lowest auto loan percentage rates. Even having a lower credit score an applicant can still qualify for a decent rate.

What is required for a beneficial percentage rate on an auto loan?

Borrowers having low credit ratings may be offered higher rates. Some lenders may provide higher rates of interest if a credit rating is low (that is around 500 points). In this case, taking actions for credit score improvement is of importance in order to get a beneficial percentage rate.

The percentage rates difference for new and used vehicles

Credits for a new vehicle tend to have lower rates than those for used ones.

Note! New cars are not likely to break down and that's why lenders consider them as less risky.

In addition, an approximate depreciation amount can be easily determined and new vehicles' resale value is more predictable rather than used ones and this predictability leads to lower rates of interest.

The best rates on auto lending

Provided a customer has found a proper vehicle that probably required some research and a couple test drives. The only thing for the car purchasing remained and that is funding. Sometimes it takes the same effort and time to find the appropriate auto loan as it was put on the car choosing.

Finding the best option that satisfies your personal needs is very important as a loan repayment will last for several years.

Important! It is worth making a research and comparing lenders in order to get the best rates accessible as it can save substantial amounts. A car credit repayment calculator should also be used to know the total loan amount in advance.


This is an excellent choice for applicants having a bad credit record. Carvana applies no requirements for minimum credit score. Customers with the minimum income of $10,000 a year and not having bankrupt status are able to qualify for an auto loan. However, joint signatures are not allowed which means applicants should count only on themselves in terms of getting approval.

Important! The company grants loans for vehicle purchasing only on its website. For buying a car at another company you need to look for a different lender.

  • Current per annum percentage rate: 3,90%
  • Minimum loan sum: no threshold
  • Features: convenient conditions for credit qualification
  • Benefits: convenient to purchase online

Capital One

Make the transport acquisition easier. This lender affords online application for loan preapproval with the help of Auto Navigator. Thus, customers are able to buy cars without leaving home. Moreover, it allows to save time compared to purchasing at a dealership especially if the specific brand and model have already been chosen. Preapproval of Capital One is a soft way of issuing a loan that doesn't affect credit records. An applicant has just to print preapproval and submit it to dealerships. It enables to make a car reservation with affordable price.

  • Current per annum percentage rate: 3.59%
  • Minimum loan sum: $4,000
  • Features: Auto Navigator simplifies the purchase
  • Benefits: the best option to expedite preapproval.

Consumer Credit Union

They are among the best options for car credits with low interest but most unions require to be a member in order to be eligible for getting a loan.

Note! To join Consumer Credit Union you need to pay $ 5 and this sum will be kept on a savings account. In return, it allows to obtain a credit at a rate starting from 2.69%.

The minimum score for being approved is 640 points but the lowest per annum percentage rate compared to other lenders is applied. Thus, joining CCU may be an appropriate option in case the aim is to get the lowest possible rate.

  • Current per annum percentage rate: 2,69%
  • Minimum loan sum: $250
  • Features: services are available in all states
  • Benefits: suitable for borrowers with reduced credit levels


This is an option for borrowers having a low credit rating and looking for rapid vehicle loans while other banks may not qualify applicants with a low rating. Additionally, OneMain affords cosigning and funding can be received at the day of bargaining. But all these benefits result in higher percentage rates compared to other lenders.

  • Current per annum percentage rate: 18%
  • Minimum loan sum: $1,500
  • Features: funds are transferred within 24 hours
  • Benefits: a proper option for new borrowers


This company is a branch of SunTrust Bank. It provides loans for vehicle purchasing. Low rates are accessible in case an applicant has an excellent credit history. This company will also outperform other lenders' offers by 0.10% provided a customer submits a proposition with the same credit conditions from a competitor. LightStream's requirements are rather strict so an applicant should be prepared to it prior to contacting the lender.

LightStream issues rapid auto lending and it can be funded the same day. In addition, no prepayment penalty is applied, thus, customers can make repayments at any convenient time.

  • Current per annum percentage rate: 3,49%
  • Minimum loan sum: $5,000
  • Features: a minimum credit rating of 660 points. Joint signatures are allowed.
  • Benefits: the best option for borrowers having an excellent credit history

US Bank

This is a good variant provided a customer is searching a traditional bank that is able to offer a convenient combination of auto loan options along with competitive percentage rates. Besides issuing credits for new and used vehicles purchase and auto loans refinancing, this is one of the few banks that grants used cars financing that were purchased from individuals.

Attention! Percentage charges are the same for new as well as used vehicles while most other companies differentiate them.

  • Current per annum percentage rate: 4,56%
  • Minimum loan sum: $3,000
  • Features: no initial instalment
  • Benefits : best suited for purchasing from individuals

Correlation between per annum percentage rates and credit ratings

Despite each lender has own methodology for rates determining, a borrower's credit rating is still an important indicator that is definitely taken into consideration. Low-performing borrowers are likely not to be offered very beneficial rates.

Note! There are companies which set beneficial percentage rates for customers with a negative credit record.

Applicants of top tier normally get better rates but their credit rating shouldn't exceed 800 points in order to qualify for the most profitable offers. Auto lenders' scoring models may differ from those of FICO, thus, it is difficult to predict which one will be applied.

Note! Lenders differentiate borrowers by categories. For example, applicants whose score is in the range of 740-800 points will be offered one rate while those with the score of 700-739 points will get a different one.

In this case, the score of 740 or 780 points doesn't make any significant difference. However, having the score of 739 point can mean a borrower falls into a lower category and will have to redeem a higher APR than those having the score of 740 points.

A low per annum percentage rate is usually the main reason for choosing a specific auto loan lender by many consumers. The wish to save as much funds as possible is normal but when it comes to purchases evaluation, borrowers should still be aware of all the fees and conditions as they may turn a bargain into a financial nightmare. Commissions are a common part of any transaction but if they lead to savings cut then it could be a sign that another loan should be obtained. If an applicant has to settle for an unfavorable rate of interest it is worth trying to improve a credit rating and refinance a car credit in order to secure a lower rate.


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