Get Affordable Rates with the Best Car Loans Services of 2020

Caroline Banton

Having your own car is liberating. Unfortunately, a car loan that makes your debt load intolerable is not.  Fortunately, with today’s technology at your fingertips, you can get a new or used car loan that works with  your budget in minutes.

If you’re wondering how to get a car loan or how to refinance a car loan you already have, then this guide is for you. Learn about everything from car loan interest rates to the definition of amortization, and check out these reviews to help you find the best place to get a car loan in 2020.

Marketplace
Marketplace
Marketplace
Marketplace
Marketplace
Marketplace
Marketplace
Car loans, auto refinance, RV loans+
Car loans, private party, lease buyout+
Auto refinance
All types of car loans, trade-ins+
New cars, used cars, car refinancing+
New car loan, used car loan+
New car loans, refinancing
$1,000 to $300,000
Minimum of $8,000
Up to 100,000
$500-$100,000
Varies based on lender
Varies based on lender
$2,500-$100,000
12-84 months
24-72 months
25-84 months
90 days to 144 months
Varies based on lender
Varies based on lender
24 months-84 months
Starting at 3.49%
Average: 2.75%
From 1.99%
1.99% - 35.99%
Varies based on lender
Varies based on lender
Refinancing as low as 1.99%
None
575 or higher
600+
Depends on lender
None
None
None
Comparing multiple lenders
Quickly comparing multiple offers
Fast auto loan refinancing
People looking for reputable lenders
People looking for a lot of options with poor credit
Really low credit scores
An easier borrowing process

The Best Car Loans Services - An In-Depth Look

  • 1

    LendingTree

    Industry-leader in auto loan comparisons
    LendingTree
    • Repayment terms12-84 months
    • APRStarting at 3.49%
    • Minimum credit scoreNone

    LendingTree is one of the most well-known comparison tools online today. The provider has been around for over 20 years, and in that time it has connected millions of borrowers and lenders for the purposes of home purchasing and refinancing, personal loans, credit cards, business loans, and, of course, car loans. 

    With a large network of trusted lenders, LendingTree helps borrowers find competitive rates for new and used car loans. By comparing offers side by side, consumers stand a better chance of getting the best car loan rates possible. LendingTree also has tremendous resources to guide consumers through every step of the buying process. For example, the site offers a calculator so that you can see the current new car loan rates on various models. If you’re looking at a specific auto, the calculator will give you a much clearer picture of what to expect.

    Pros
    • Excellent mobile app
    • Trusted name in the industry
    • Extensive educational resources
    Cons
    • Not a direct lender
    • Loans are only available from within the United States
  • 2

    MyAutoLoan

    Compare multiple loan offers instantly
    MyAutoLoan
    • Repayment terms24-72 months
    • APRAverage: 2.75%
    • Minimum credit score575 or higher

    MyAutoloan is another auto loan marketplace that makes comparing loan offers easy and efficient. You can compare up to four offers simultaneously, and with the quick online process, you could have offers in just a few minutes. The service is free, as with all marketplaces, and the online form is totally secure. 

    MyAutoloan has multiple financing options, including new and used car loans, private party loans, auto refinancing, and lease buyouts. What’s more, myAutoloan offers great freebies such as APR charts, a car loan interest rate estimator, and a payments calculator. Each tool gives real-time information to help you secure a car loan that you can handle financially.

    Pros
    • Free tools and calculators
    • Easy and free online comparison tool
    • Low-interest rates
    Cons
    • Not a direct lender
    • Limited to in-network lenders
  • 3

    Gravity Lending

    Auto loans and refinance fast
    Gravity Lending
    • Repayment terms25-84 months
    • APRFrom 1.99%
    • Minimum credit score600+

    Gravity is a lending marketplace that connects people to multiple lenders for quick auto loans or auto loan refinancing. You can get refinancing on the same day through the company's streamlined process, with rates as low as 1.79%.

    If you have fair credit, Gravity will let you choose between offers from multiple lenders competing for your business.

    Pros
    • A+ Better Business Bureau rating
    • Very low starting rates
    • Quick funding
    Cons
    • Must have 600+ credit score
    • Not a direct lender
  • 4

    Monevo

    Professionals handling your auto loan process
    Monevo
    • Repayment terms90 days to 144 months
    • APR1.99% - 35.99%
    • Minimum credit scoreDepends on lender

    Monevo is one of the most trusted names in the lending industry. It offers consumers a quick and easy way to get multiple offers from reputable lenders for everything from personal loans for a vacation to home improvements or debt consolidation. Monevo's auto loan products are flexible and trustworthy, as are all of this lender’s services. 

    Monevo partners with huge names, including Earnest, LightStream, and Upstart, so consumers can rest assured that they are dealing with top-quality lenders. With APRs starting at just 3.99%, Monevo is one of the best places to get a car loan quote. Monevo partners offer flexible repayment terms that range from 90 days to as much as 144 months, and with its extensive network of lenders, Monevo has partners that will work with any credit score.

    Pros
    • Funds as soon as the next day
    • Most trusted names in the industry
    • Low APRs
    Cons
    • Not a direct lender
    • Less information on the website than competitors
  • 5

    CarsDirect

    Bad credit car loans made easy
    CarsDirect
    • Repayment termsVaries based on lender
    • APRVaries based on lender
    • Minimum credit scoreNone

    CarsDirect is a new and used car loan marketplace that has been around since 1998. While anyone can get a loan through this service, CarsDirect is particularly well suited for individuals with bad credit or no credit. With its flexible approval requirements, CarsDirect is an obvious choice for anyone who cannot get approved by other lending marketplaces.

    CarsDirect differentiates itself from other lending portals by adding a more personal touch to the entire lending process. You'll work directly with a designated trusted dealer, and you can always come back to CarsDirect with questions. The service is free, it partners with well-known used and new car loan providers, and CarsDirect walks you through each and every step of the process from A to Z.

    Pros
    • Works with all types of credit
    • Has a network of trusted dealers
    • Works with trade-ins
    Cons
    • Not a direct lender
    • Considerable upselling
  • 6

    car.loan.com

    Easy online comparison of top car loan providers
    car.loan.com
    • Repayment termsVaries based on lender
    • APRVaries based on lender
    • Minimum credit scoreNone

    CarLoan.com is a free service that allows you to find several auto loan rate quotes simultaneously. This means you save time and money by filling out just one application form to determine the most competitive rates around. The application process takes a few seconds, and you can expect to receive rate quotes within 48 hours, usually sooner. 

    Use CarLoan.com's online car loan calculator to figure out exactly how much you can afford to pay each month for your car loan. You can also get a ballpark figure of how much you are likely to have to pay per month based on your credit score. This helps you set a budget and plan ahead. What's more, CarLoan.com partners work with everyone regardless of credit history. So, even if you have bad or no credit whatsoever, you can still get approved for a loan from one of the CarLoan.com partners.

    Pros
    • Useful online tools
    • The credit check will not affect your credit
    • Works with all credit scores
    Cons
    • Not a direct lender
    • Site is outdated
  • 7

    AutoPay

    Easier auto loans for everyone
    AutoPay
    • Repayment terms24 months-84 months
    • APRRefinancing as low as 1.99%
    • Minimum credit scoreNone

    AUTOPAY is all about the modern consumer. The lender wants everyone’s auto loan experience to be fast, easy, and smooth. That’s why the application process is entirely online, there is a network of reliable lenders, and loan terms are transparent. Whoever you are paired with, AUTOPAY has your back.

    A digital marketplace that connects borrowers with potential lenders, AUTOPAY makes it easy to find the most competitive rates for new car loans and car loan refinancing. The company’s core values are impact, optimism, honesty, and growth. AUTOPAY also offers some useful tools, including a blog loaded with helpful articles.

    Pros
    • Easy online process
    • Plenty of educational resources online
    • Straightforward and transparent process
    Cons
    • Only a marketplace, not a lender
    • No direct loan details

What is a Car Loan?

Lenders help customers borrow money for a variety of purposes, one of which is buying a vehicle. If you are looking to buy a car online, you can approach a variety of lenders and receive different terms and rates. Dealers also offer loans, giving people with no other options a way to become mobile and steer their financial situation in the right direction. 

The Difference Between a Car Loan and Other Loans

What sets an auto loan apart from an all-purpose bank loan, a personal loan, or a line of credit?

Security: All auto loans are secured, meaning that the vehicle also serves as the loan’s collateral. While failure to make payments could result in the lender repossessing the vehicle to cover the remainder of the obligation, secured loans also result in more favorable interest rates and loan terms.

Low-Credit Friendly: Generally, because a vehicle represents a smaller investment than a house or small business, and because it is obtained via a secured loan, the bar is set much lower where your credit score is concerned. If you have low or poor credit, you can still obtain a reasonable auto loan, whereas this may not be the case for other types of loans. Car loans are also comparatively short, lasting a maximum of around seven years, making them less risky and thus more favorable for customers.

Flexibility: If you want to purchase a car online, an auto loan is an excellent option because of the flexibility it offers. You can trade in an old car to reduce your obligations to some degree, pay on a more frequent schedule to speed up the loan repayment timeline, or even take a loan that allows you to replace your car mid-term for a different model.

Key Differences Between New and Used Car Loans

The main difference between new car loans and used car loans is that new car loans generally come with a lower interest rate. For people with good credit, the difference might be marginal, but for people with weak credit, there can be a significant difference in interest rate between auto loans for new and used vehicles. 

Some car manufacturers offer special rates and bonus cash on certain models and model-year vehicles, offering another incentive to buy a new vehicle instead of a cheaper used vehicle.

New cars tend to be more expensive than used cars, and therefore new car loans tend to be more expensive. Therefore, even if the interest rate is lower for a new car loan, the new car will have a higher principal and usually higher overall payments.

Refinancing Car Loans

Refinancing a current car loan is a smart choice for many car owners. It could conceivably mean paying less over the lifetime of a loan because you trade the current loan for one with a lower interest rate. You may also be able to renegotiate your repayment terms helping you to lower and spread out the payments or condense the payments to pay off the loan sooner.

While you can technically refinance your car loan whenever you want, if you want to get the most out of the deal, look before you leap. Before you refinance your car loan, make sure of a few things:

  • It is not best practice to try and refinance before three months have passed from the date you originally took out the loan. Your credit score may have taken a slight dip from all the necessary credit checks, and you have not given yourself enough time to build your score back up again or make any improvements. So, it’s not likely that you’ll get a better rate, and you may end up doing more damage than good to your credit score.
  • Six months into a loan is a much more advisable time to consider refinancing a car loan, and after a year is even more reasonable.
  • If this is the first time that you are buying a car, then definitely wait the full year before refinancing. This will give you an opportunity to prove your creditworthiness to lenders who are more likely to give you a much better interest rate the second time around.

Refinancing is also an excellent option if you are looking to either remove or add a cosigner to your current loan. If you cannot get approved for a loan on your own, you may take out a loan with a cosigner. The cosigner, however, does not want to be tied to your loan for its entire lifespan. Refinancing is an easy way for you and your cosigner to part ways. Additionally, losing a cosigner will reflect better on your credit history.

Alternatively, you might want to add a co-borrower to your loan. This might be a business transaction, or it might be your way of dealing with the financial burden of a hefty auto loan. Either way, you can refinance to secure a place at the table for a co-borrower.

Car Loan Amortization

Car loan amortization sounds complex. In simple terms, however, car loan amortization is one way of paying off your auto loan. Each month when you make a payment to your car loan provider, the payment gets divided into three sections:

  • Principal
  • Interest 
  • Fees

The principal is the actual loan amount that you borrowed to buy the car. The interest is the percentage that the lender charged you to provide you with their services, and the fees are any additional charges that might be bundled with your loan.

The way car loan amortization works is that the amount of your payment that is allocated to each area changes gradually over the course of your loan. At the beginning of your loan repayment, when the principal balance is still high, more of your monthly payment will go toward interest. As the principal balance reduces over time, the amount of your monthly payment allocated to interest goes down and the amount allocated to the principal goes up.

How much of a down payment you pay, your interest rate, and the length of your loan will all affect the amortization schedule.

How to Get the Best Car Loan

Optimize Credit: Before attempting to get an auto loan, make sure you know your credit score, and thoroughly explore your credit report. By fixing erroneous entries on a credit report before applying for an auto loan, you can potentially save thousands of dollars over your repayment term.

Avoid a Monthly Payment Mindset: If you are shopping around online for a suitable loan to buy your car, it's best to think in terms of the total obligation and not just the monthly payment. While a monthly payment may be easier to consider, it does not account for maintenance, insurance, or other financial emergencies. Anyone can "afford" a new sports car in monthly payments, but this is unrealistic because, usually, it's only affordable because the duration of the loan has been lengthened to the maximum time available. This heightens the risk of having an underwater loan near the end of the term, when the remaining amount owed is worth more than the car itself. Not to mention that by this time, the car is older and is likely to need repairs.

Deny the Dealer: Another tip is to use dealership loans as a last resort when making an online purchase. Dealers will grant almost anyone a loan and offer less than reasonable terms. In fact, most of the money that dealerships make from the sale of a car is not from the car itself, but from the financing. For this reason, dealership loan offers should be avoided unless you're comparing it to a stack of other offers.

Finding the Best Lender for Your Loan Needs

When applying for loans from a variety of sources, complete the applications within two weeks of one another. Each application is a credit inquiry, which temporarily lowers your credit score. By grouping  applications, they will count as a single inquiry, keeping credit scores healthy.

Before buying a car through an online dealer, make sure to shop around for the best deals and the best loan terms. Lenders might include banks, online lenders, credit unions, peer-to-peer sources, or the dealership itself. 

Stir up the competition by getting proof of your pre-approval, which is basically a blank check from a single lender that illustrates how much it is willing to lend and at what terms. Having these pre-approval papers handy when dealing with another lender will force it to match or eclipse the offer, or risk your walking away. 

Things to Watch Out For

There are a few things to check for in the loan contract before it is finalized. First is prepayment penalties, which restrict your ability to pay back the loan ahead of schedule. These are fees that lenders charge if you make extra payments to reduce the term of your loan. Make sure you know what to expect before signing any contract. 

Another potentially troublesome clause is mandatory binding arbitration, meaning that if you get into a dispute with the lender, it will be settled out of court by an arbitrator. This puts you at a disadvantage.

Variable interest rates might also find their way into an auto loan agreement. These are not all bad but can mean higher interest payments over the life of the loan, depending on how rates evolve over time. Always calculate monthly payments based on the highest rate if this is the case, or risk getting an unaffordable loan.

Last but not least, check that any agreed-upon changes to the contract make it into the final version.

Before making any final decisions, take a moment to review the top auto lenders around. Choose the one that will help you drive away in the car you’ve always wanted with your budget intact.

Caroline Banton
Caroline Banton is a freelance writer of business and finance articles that have been featured in The Huffington Post, The Motley Fool, Time, MSN, PYMNTS.com, GOBankingrates.com, SaleMove, and MyBankTracker.com. Before becoming a writer, Caroline had over fourteen years of experience working at the World Bank. Caroline has an MBA from Johns Hopkins University.