Cheapest Car Loan: According to Kelley Blue Book, the average price of a new car in July 2024 was $48,401. Given the high cost, Experian reported that 80% of all new cars in the second quarter of 2024 were financed. Although the average price of used cars has dropped this year, it’s still a big amount to pay out of pocket: $25,415.
If you’re thinking of buying a new (or new-to-you) vehicle, qualifying for the best auto loan rates can help you maximize your savings. Start your search by comparing multiple lenders to discover the best fit for your borrowing requirements.
Here are our picks for the best car loan rates and why you should (and shouldn’t) consider the lenders that offer them.
Alliant Credit Union
Why We Chose It
Alliant Credit Union offers some of the lowest auto loan rates, flexible repayment terms, multiple rate discount opportunities, and same-day approval in most cases. In the case of a qualified financial hardship, this lender offers a repayment assistance program that temporarily lowers your rate. Alliant also ranks high on our list of the best auto refinance lenders.
You’ll get an interest rate discount of 0.50 percentage points on your loan if you use Alliant’s car-buying service, which also promises a discount on vehicle prices. It also offers a special loan to finance Teslas at lower rates than its standard auto loan.
That said, the credit union does not offer loans for private-party purchases. You’ll need to become a member of the credit union before the loan can be finalized — if you don’t live near Chicago or work for an Alliant partner, you can be eligible by joining the Alliant Credit Union Foundation for free of charge.
Pros
- Same-day approval possible
- Next-day financing available
- Offers car buying service with discounted rates and pricing
- AutoPay discount
- Repayment assistance during financial hardship
Cons
- Credit union membership required
- Does not allow private-party purchases
- Does not offer pre-qualification
- Does not disclose eligibility criteria
USAA
Why We Chose It
USAA auto loans are only available to eligible members of the military community and their spouses and children. However, USAA does offer auto loans for dealer purchases, private-party purchases, refinances, and lease buyouts. Since this lender focuses on military borrowers, it offers military-specific features, such as allowing you to take the car overseas during deployment and financing customized vehicles for wounded veterans.
USAA’s longest repayment term (seven years) is only available for purchases over $25,000 and vehicles seven years old or newer. Loan approval is valid for 45 days, and once the loan contract is finalized, you can choose the repayment schedule that works best for you: monthly, twice a month, or every two weeks.
But to see what car loan rates you may qualify for, you’ll need to submit an official application and agree to a hard credit pull — USAA doesn’t offer pre-qualification.
Pros
- Possibly same-day funding
- Autopay discount
- Longer purchase window
- Allows private-party purchases
- Flexible repayment schedule
Cons
- Membership and military affiliation required
- Doesn’t offer pre-qualification
- Longest terms only for newer and more expensive vehicles
Digital Federal Credit Union
Why We Chose It
Some auto lenders only allow loan funds to be used at qualified dealerships, but you can use a Digital Federal Credit Union (DCU) loan to buy a car from a private supplier — and DCU does not charge high rates for these loans. It also finances antique cars, motorcycles, and RVs. You can borrow up to 130% of your vehicle’s value, up to $500,000.
This credit union offers interest rate discounts of up to 0.75 percentage points for qualified borrowers:
0.50 % points off your rate by enrolling in direct deposit and authorizing automatic payments
0.25 % points if you finance a fully electric vehicle
You must be a DCU member to be approved for a loan. But if you don’t live in an eligible community or work for a participating employer, you can qualify by joining one of eight specified nonprofit organizations for just $10 during the application process.
Pros
- Private-party purchases allowed
- Rate discounts for eligible borrowers
- High loan limits, up to 130% of the car’s value
- Option to defer first payment for 60 days
Cons
- Credit union membership required
- Does not offer pre-qualification
- Does not disclose eligibility criteria
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