The best auto loan rates and lenders of January 2024

A car is an expensive purchase, but choosing the right lender can save you thousands of dollars in interest charges and fees. Plus, you want your car shopping experience to be easy and transparent so that you’re confident about the terms you’re getting.

CNBC Select evaluated dozens of auto loan lenders based on their rates and terms, selection of loan options, car-buying experience and other factors. Below are our picks for the best auto loan providers, whether you’re shopping for a new vehicle or looking to refinance your existing car loan. (Read more about our methodology below.)

Who’s this for? PenFed can be an excellent choice whether you’re shopping for a new or used car or want to refinance your auto loan. The credit union offers affordable rates, flexible loan amounts and term lengths and charges no prepayment penalty. Additionally, you can prequalify for a new or used car loan and see estimated terms without a hard credit check.

Standout benefits: While you can secure financing through PenFed for a car loan at the dealer of your choice, you’ll find the most appealing deals using the credit union’s car buying service, powered by TrueCar. Benefits include members-only cash-back incentives and special loan discounts.

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Who’s this for? When it comes to auto financing, traditional banks can offer competitive rates, especially to existing clients. If securing the most favorable loan terms from a big bank is your goal, you might want to consider Capital One Auto Finance.

Standout benefits: Capital One makes the car buying process convenient. Using the bank’s online Auto Navigator tool, you can browse used and new cars from participating dealerships. Prequalification is also available, allowing you to check estimated terms with a soft credit check. Once you prequalify, you’ll see monthly payments and rates as you browse car offers.

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Who’s this for? MyAutoloan can be a great option if you want to shop around for car loan rates without filling out applications at multiple lenders.

Standout benefits: MyAutoloan will match you with up to four prequalified loan offers after you fill out a quick form. Prequalification will not hurt your credit — you’ll only get a hard inquiry if you choose to apply with one of the lenders you’ve been matched with.

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Who’s this for? Carvana can be a good solution if you want as simple of a car buying process as possible. While many lenders offer an online application, there are usually extra steps you need to take to finish the car buying process, such as visiting the dealership or getting in touch with the lender to finalize financing. Carvana simplifies the process by only offering loans for cars from its inventory, keeping the entire process in-house.

Standout benefits: With Carvana, you can prequalify online without a hard credit check and see personalized estimated terms for each car you browse on Carvana’s website. The prequalification offer expires in 45 days as opposed to the 30 days you’d get with most other lenders.

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Who’s this for? CarMax Auto Finance is a good choice for consumers who are on the market for a used car and want access to a large inventory.

Standout benefits: CarMax’s application process is easy and there is no minimum score requirement to qualify. You can use the retailer’s prequalification tool to get personalized terms, such as APR and monthly payments, with no impact on your credit.

Further, CarMax offers a Three-Day Payoff program if you find a better loan offer within three days of closing your CarMax loan. For that reason, it pays to shop around for financing if you’re going with CarMax — especially since its policy doesn’t allow for price negotiation.

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Who’s this for? Autopay is worth considering if you have an existing car loan you’re looking to refinance.

Standout benefits: While you can finance a new or used vehicle using Autopay, what stands out is its wide selection of refinancing products. These include both traditional and cash-back financing, as well as lease-buyout financing.

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PenFed, short for Pentagon Federal Union, is one of the largest credit unions by assets. You don’t need to be a member to apply for an auto loan but will need to sign up for a PenFed membership to receive your funds. To join, open a PenFed savings/share account with a $5 deposit and maintain a $5 account balance to keep your membership active.

If you’re interested in refinancing, the online application process is also easy and transparent. You can also prequalify without any impact on your credit to check how much you can save if you refinance with PenFed. Note, however, that PenFed doesn’t refinance its own car loans.

Auto loan purpose

New vehicles, used vehicles, refinancing

Co-borrowers allowed?

Yes

Credit score requirements

Not advertised

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Capital One is a full-service bank known for its competitive products, minimal fees and user-friendly digital experience. To get a car loan with Capital One, you need to buy a vehicle through its auto dealership network.

If you’re refinancing, you can prequalify without impacting your credit as well. Capital One will only place a hard inquiry on your credit report when you officially apply.

Auto loan purpose

New vehicles, used vehicles, refinancing

Co-borrowers allowed?

Yes

Credit score requirements

Not advertised

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MyAutoloan isn’t a dealership or financial institution. It’s a virtual platform designed to connect car buyers with lenders that best fit their needs — which allows for easy rate shopping. It offers a solid selection of auto loan types, including new and used car loans, lease buyouts and refinancing.

Auto loan purpose

New vehicles, used vehicles, refinancing, private party and lease buyout

Co-borrowers allowed?

Yes

Credit score requirements

575

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Carvana is an online used car dealer that offers all the same services you’d expect from a traditional dealership: from buying and selling vehicles to providing financing. Once you find the right car offer, you can schedule a pickup or delivery. At this point, Carvana will pull your credit and you’ll get finalized loan terms.

Auto loan purpose

Used vehicles only

Co-borrowers allowed?

Yes, with a third-party loan provider

Credit score requirements

Not advertised

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CarMax is a household name in the car-buying industry. The used car dealer is known for its large lots and “no-haggle” policy which aims to simplify the process of purchasing or selling a vehicle. As the largest used-car retailer in the U.S., CarMax also provides financing for the cars it sells.

Auto loan purpose

Used vehicles only

Co-borrowers allowed?

Yes

Credit score requirements

Not advertised, but the dealer states its finance sources accommodate most credit profiles

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Similar to myAutoloan, Autopay is an online platform connecting borrowers with financial institutions. This allows Autopay to work with borrowers of all credit profiles and provide competitive rates.

You can prequalify without a hard credit check to get multiple loan options from banks and credit unions. If you choose a lender to move forward with, the financial institution will perform a hard credit inquiry and review your information and documents to finalize the loan terms. Note that the final approval might take up to two days.

Auto loan purpose

Used and new vehicles, auto loan refinancing, lease buyout

Co-borrowers allowed?

Yes

Credit score requirements

Not advertised, but the dealer states it worked with borrowers of all credit profiles

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First, remember that the best deals are reserved for those with high credit scores. If your credit could use some work, it might be a good idea to take time to improve your scores before shopping for a car.

Another thing you might want to think about in advance is the down payment. Putting more money down can allow you to lower your monthly payments and interest charges, shorten the loan and even get better rates. The best practice is to put 20% down on a new car or 10% on a used car.

Additionally, make sure to shop around for interest rates. The lower rate you get, the less you’ll pay in interest charges over the life of the loan. This can lead to thousands of dollars in savings. Don’t worry about the impact multiple hard inquiries will have on your credit: Most credit scoring models will count car financing inquiries made within 14 to 45 days of each other as one.

Further, get the shortest loan term length you can fit into your budget. A longer-term length means more interest paid over the life of the loan. Plus, many financial institutions will give you a higher interest rate to begin with for choosing a longer loan.

To determine the best auto loans, CNBC Select analyzed more than a dozen car loan providers, including banks, dealerships and online marketplaces.

When narrowing down and ranking the best car loans, we focused on the following features:

• Flexible minimum and maximum loan amounts/terms: Each lender provides more than one financing option that you can customize based on your monthly budget and how long you need to pay back your loan.
• Prequalification: Each lender offers prequalification which doesn’t trigger a hard inquiry and allows you to get estimated loan terms before applying.
• Online user experience: The lenders on our list make it easy to complete most of or the entire financing process online.
• Ability to add a co-signer or co-borrower: Each lender offers the option to add a co-signer or co-borrower, which can help you get approved and receive more favorable terms. Note that a co-signer generally agrees to be responsible for your loan without getting any ownership rights for the financed vehicle. A co-borrower (or co-applicant), on the other hand, equally shares ownership of the car and loan.
• No early payoff penalties: The lenders on our list do not charge borrowers for paying off loans early.
• Streamlined application process: We considered whether lenders offered same-day approval decisions and a fast online application process. 
• Customer support: Every loan on our list provides customer service available via telephone, email or secure online messaging. We also opted for lenders with an online resource hub or advice center to help you educate yourself about the personal loan process and your finances.
• Loan sizes: The above lenders provide loans in an array of sizes, from $500 to $100,000. Each lender advertises its respective payment limits and loan sizes, and completing a prequalification process can give you an idea of what your interest rate and monthly payment would be for such an amount.

The rates and fee structures advertised for car loans are subject to fluctuate in accordance with the Fed rate. However, once you accept your loan agreement, a fixed-rate APR will guarantee your interest rate and monthly payment will remain consistent throughout the entire term of the loan. Your APR, monthly payment and loan amount depend on your credit history and creditworthiness. To take out a loan, many lenders will conduct a hard credit inquiry and request a full application, which could require proof of income, identity verification, proof of address and more.

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