How do Loans for New and Used Vehicles Differ?
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.
The 5 Best Auto Loan Providers
- See options from nationally recognized lenders with no credit score impact
- Get pre-qualification and financing decision online within minutes
- Loan terms range from 36-84 months
Clearlane is an online marketplace for new and used auto loans and refinancing. It offers car buyers a free online search tool to find the lowest rates from its national network of lending partners. Clearlane is best for car buyers looking to quickly and easily compare a range of financing options, or for existing borrowers who need to compare refinancing options.
To find out if you pre-qualify for a loan from one or more of Clearlane’s lending partners, simply fill in a few basic personal and financial details and you’ll get an answer in seconds. On the next screen, you’ll see all the rates being offered to you. Select your preferred vehicle, as well as your preferred lender and loan, and confirm; you’ll receive a financing decision from your chosen lender almost instantly.
Once you’ve accepted an offer, it can generally take up to a week for your loan to be approved. As with any car loan, the final step involves signing the contract at the dealer and picking up your vehicle.
- See range of auto loan options from large network of lending partners
- Plenty of loan options for customers with poor credit rating
- Terms range from 12-84 months
LendingTree is an online marketplace that enables users to search and compare for new and used car loans between a vast national network of lending partners. It’s a great service for people who wish to do some quick market research and find low rates in just a couple of minutes. It’s especially useful for people with less-than-perfect credit, because it offers a wide variety of flexible loan options from nationally recognized lenders.
LendingTree is a huge online marketplace for all types of loans – auto loans as well as mortgages, personal loans, business loans, and more – and it offers a wealth of free resources to help you better understand your auto loan options. This includes an auto loan calculator, where you can input details like credit score, purchase price, loan rate, and term to find out how your monthly payments will be.
- Use sleek mobile app to apply and compare options
- See new and used car loans from 5 participating lenders
- Terms from 24-72 months
AutoGravity is an online auto loans marketplace that works with 5 of the nation’s most respected lenders: U.S. Bank, Hyundai Finance, Mercedes-Benz Financial Services, Nissan Motor Acceptance Corporation, and Volkswagen Credit. With AutoGravity, simply select the car you wish to purchase from dozens of options to see your estimated monthly payment. Fill in a few basic details to apply for financing and compare up to 4 different loan options. The whole process takes place on AutoGravity’s mobile app, and approval is given within seconds of submitting your details.
Users can select from a range of options, with the network of partnering lenders offering loans for new or used vehicles and for lease or purchase. After selecting your preferred vehicle, you can also use the app to search for your closest dealership in any state (except Nevada).
- Direct lender backed by one of America’s largest banks
- Apply online and get an answer in minutes
- Rates as low as 3.09% APR for applicants with excellent credit
LightStream is a direct lender owned by SunTrust Bank that offers users the chance to apply for a loan online and to receive approval in minutes. It’s so confident of its ability to satisfy its customers that it promises to beat any qualifying interest rate from any other lender by 10 percentage points (0.1%), as long as the other lender meets certain terms and conditions. And what’s more, if you’re not completely satisfied by your loan process, it promises to send you $100 as compensation.
The lowest APR of 3.09% listed by LightStream is for an unsecured loan between $10,000 and $24,999 with a term between 24 and 36 months for applicants with excellent credit. As an example, monthly payments for a $10,000 loan at 3.09% APR with a term of 3 years would result in 36 monthly payments of $291.21. The maximum possible APR is 14.74%.
- Get rates from a range of participating lenders almost instantly
- APRs start as low as 2.49%
- Options for customers with excellent and poor credit
myAutoloan is an online marketplace that allows you to compare offers for new car loans, used car loans, refinance, private party, and lease buyout. The entire process takes just minutes and ends with a choice of loans from myAutoloan’s network of participating lenders. At the end of the process, select your preferred loan offer and provide any additional information to receive a final decision. Your chosen lender will provide you with their method of funding.
Unlike some other marketplaces, myAutoloan allows you to compare rates and APRs on a daily basis. At time of writing, the best APR for a new vehicle (for borrowers with excellent credit) was 2.49% for a term of 36 months or less through to 2.99% for a term of 73-84 months.
If you’re planning to buy a car, the first thing you should do is compare the best auto loan providers around to get approved for a loan. By getting financing from a reputable lending institution before going to a dealership, you put yourself in a strong position – and protect yourself against the kinds of unfavorable financing terms that dealers have a reputation for foisting on to buyers.