Best Car Loans

Need a car loan but don’t know where to start? You’re in the right place. At Financer, we’ve done the hard work for you — comparing dozens of car loan providers across the U.S. to help you find the best rates, fastest approvals, and lowest fees available for July2025.

Whether you’re buying your first car, refinancing an existing loan, or simply looking for a better deal, our top picks below offer something for everyone:

Upstart – Best for Low APR (from 2.25%)

With some of the lowest starting rates in the market, Upstart is ideal for borrowers with strong credit who want to refinance or secure affordable financing quickly.

Here’s why the editors at Financer chose Upstart as the best auto loan of 2025:

• APRs from 2.25% to 29.99%

• Loan amounts: $9,000 – $60,000

• Terms: 2 – 7 years

• Soft credit check for pre-qualification

• Fast funding & digital application

The company also comes with a couple of cons:

• Does not accept bad credit.

• Not available in all states

PenFed – Best for Smaller Loan Amounts

If you’re looking to finance a smaller car purchase, PenFed Credit Union is a great option — offering loans starting as low as $600 with competitive rates.

Although it doesn’t offer the lowest APR, PenFed comes with some notable advantages — which is exactly why it earned a spot on our list of top choices:

• APRs from 4.99% – 17.99%

• Loan amounts: $600 – $50,000

• Terms: 1 – 5 years

• No prepayment penalties

• Reputable credit union with strong member service

• The downside is that to qualify for a car loan from PenFed, you’ll need to have an excellent credit score.

Caribou

Need a quick decision? Caribou offers one of the fastest auto loan approval processes online, often within seconds. Perfect for refinancing or same-day funding.

That being said, if your credit is in great shape, PenFed can be an excellent choice - especially if you’re looking for smaller loan amounts or shorter repayment terms.

They offer auto loans starting from just $600, which is rare among major lenders. It’s a great fit for buyers looking to finance a used vehicle, make a smaller purchase, or refinance an existing loan.

• Loan amount from $5,000 to $50,000

• APRs as low as 5.48%

• Terms between 1 year and 5 years

• APRs can go as high as 36%

• Does not accept bad credit.

How Car Loans Work

Car loans are financial products designed to help consumers purchase vehicles when they can’t afford the full price upfront. These loans typically involve:

• Borrowing a sum of money from a lender to buy a car.

• Repaying that amount plus interest over a set period.

Over 85% of new car purchases in the U.S. involve some form of financing.

Online Car Loans

Virtual lending platforms offer convenience, speed, and often competitive rates compared to traditional brick-and-mortar lenders.

When exploring online car loans, it’s crucial to understand the features they typically offer:

• Interest Rates: Online lenders often provide competitive interest rates due to lower overhead costs.
• Loan Terms: Most online car loans offer terms ranging from 24 to 84 months. However, be cautious of longer terms as they can result in paying more interest over time.
• Loan Amounts: Online lenders typically offer loans from $5,000 to $60,000, depending on the vehicle’s value and your creditworthiness.
• Pre-qualification: Many online lenders allow you to check your potential rate without affecting your credit score through a soft credit pull.
• Digital Documentation: The entire process, from application to approval, can often be completed online, saving time and paperwork.
• Auto-pay Discounts: Some online lenders offer interest rate discounts for setting up automatic payments.

While online car loans offer numerous advantages, it’s essential to exercise caution.

By leveraging the convenience and competitive nature of online car loans, you can potentially save both time and money in your car-buying journey. However, as with any financial decision, it’s crucial to do your homework and carefully consider your options before committing to a loan.

Car Loan Without Down Payment

A car loan without a down payment is possible, but it comes with pros and cons.

• Immediate car ownership without saving for a down payment

• Preserve savings for emergencies or other investments

• Higher overall cost due to increased interest

• Larger monthly payments

• Greater risk of being "underwater" on the loan

Car Loans Vs. Car Leases

When it comes to financing a vehicle, car loans and leases are the two primary options. Each has its own set of characteristics that may make it more or less suitable for your situation.

Key Differences

• Ownership: With a loan, you own the car once it's paid off. With a lease, you return the car at the end of the term (unless you choose to buy it).

• Monthly Payments: Lease payments are generally lower than loan payments for the same car.

• Mileage Restrictions: Leases come with mileage limits (usually 10,000-15,000 miles/year), while loans don't restrict mileage.

• Customization: You're free to modify a car you own, but lease agreements typically prohibit modifications.

• Long-Term Costs: While leases have lower monthly payments, loans are usually more cost-effective in the long run if you plan to keep the car.

Similarities

• Both require regular monthly payments.

• Both typically require insurance coverage beyond the state minimum.

• Credit score impacts the terms for both options.

When deciding between a loan and a lease, consider your long-term plans, budget, and driving habits. If you enjoy having a new car every few years and don't mind mileage restrictions, a lease might be ideal. If you prefer ownership and plan to keep the car long-term, a loan is likely the better choice.

All the Options for a Car Loan

Here are some possibilities for securing a car loan, even if your credit score isn't stellar:

​1. Subprime Auto Loans

These are loans specifically designed for borrowers with poor credit.

• Average interest rates for subprime loans in 2025

• Terms are typically shorter, usually 36 to 48 months

While the rates are higher, these loans can help you get on the road and potentially improve your credit if managed responsibly.

​2. Buy-Here-Pay-Here Dealerships

These dealerships offer in-house financing, often with no credit check.

• Interest rates can be extremely high, sometimes exceeding 30%

• As of 2025, approximately 11% of used car sales occur at buy-here-pay-here lots

Be cautious with these options, as they can be very expensive in the long run.

​3. Secured Car Loans

By offering collateral (often the car itself), you might secure better terms.

• Rates are typically 2-3 percentage points lower than unsecured loans

• The risk is that you could lose your collateral if you default

​4. Co-signer

Finding a co-signer with good credit can significantly improve your chances of approval and potentially lower your interest rate.

• Having a co-signer can lower your interest rate by an average of 3-4 percentage points

• Be aware that your co-signer is equally responsible for the loan

​5. Credit Unions

Credit unions often have more flexible lending criteria and lower rates.

• Credit union auto loan rates averaged 1-2 percentage points lower than banks in 2025

​6. Online Lenders

Some online lenders specialize in bad credit auto loans and may offer competitive rates.

• Approval rates for online auto loans are about 27% higher than traditional banks

Remember, while these options can help you get a loan with bad credit, they often come with higher costs. It's crucial to shop around, compare offers, and consider improving your credit before applying if possible.

Things To Consider as a First-Time Buyer

As a first-time car buyer, navigating the world of auto loans can be daunting. Here are some crucial considerations to keep in mind:

• Your Credit Score – Check your credit report before applying.

• Budget Realistically – Factor in not just the monthly payment, but also insurance, maintenance, and fuel costs.

• Down Payment – A larger down payment can lower your monthly payments and interest rate. Aim for at least 10% down, though 20% is ideal.

• Loan Term – Shorter terms mean higher monthly payments but less interest overall.

• New vs. Used – Used cars are typically cheaper but may have higher interest rates

• Pre-approval – Get pre-approved for a loan before visiting dealerships. This gives you negotiating power and a clear budget.

• Additional Costs – Be prepared for taxes, registration fees, and potential add-ons. These can add 10% or more to the vehicle's price.

• Gap Insurance – Consider gap insurance, especially if you're putting little money down. It covers the difference between what you owe and what the car is worth if it's totaled.

• Refinancing Potential – Keep in mind that you might be able to refinance for better terms after a year of on-time payments

• Read the Fine Print – Understand all terms and conditions before signing. Watch out for prepayment penalties or mandatory arbitration clauses.

By keeping these factors in mind, first-time buyers can make more informed decisions and potentially save thousands over the life of their loan.

How To Get a Pre-Approval on Online Car Loan?

Getting pre-approved for an online car loan can streamline your car-buying process and give you a clear idea of what you can afford. Here's a step-by-step guide.

Loan Requirements

To increase your chances of pre-approval, be prepared to meet these common requirements:

• Age: Must be 18 years or older

• Income: Steady income, typically $1,500-$2,000 per month minimum

• Debt-to-Income Ratio: Usually needs to be below 50%

• Credit Score: While requirements vary, higher scores get better rates

• Employment: Stable employment, usually at least 6 months at current job

• Residency: Must be a U.S. resident or citizen

• Down Payment: While not always required, 10-20% down can improve approval odds

• Vehicle Requirements: Many lenders have age and mileage restrictions for the car

Remember, meeting these requirements doesn't guarantee approval, but it significantly improves your chances. Always be honest in your application, as false information can lead to loan denial or even legal consequences.

Truth About Zero Percent Car Loans

Zero percent car loans sound too good to be true, right? Well, they do exist, but there's more to the story than meets the eye.

Is it possible to get a Car Loan with 0 percent interest?

The short answer is yes, but these offers are rare and come with some caveats:

• Excellent Credit Required: Typically, you'll need a credit score of 700 or higher.

• Limited Availability: Often restricted to specific makes, models, or time periods.

• Shorter Loan Terms: Usually limited to 36 or 48 months. This means higher monthly payments, though less interest overall.

• New Cars Only: Almost exclusively offered on new vehicles.

• No Additional Incentives: You might have to forgo cash back or other promotional offers. Sometimes, taking a low-interest loan with cash back is more beneficial.

• Limited Negotiation Room: Dealers may be less willing to negotiate on price with 0% financing.

• Hidden Costs: Some deals may include mandatory add-ons or inflated prices.

The Real Cost of "Zero Percent"

While 0% APR sounds great, it's crucial to do the math:

• A $30,000 car at 0% for 36 months = $834 /month (x36 months)

• The same car at 3.5% for 60 months = $545 /month (x60 months)

Pro Tip: Sometimes, a longer-term, low-interest loan can be more manageable for your budget, even if you pay more in interest overall.

Remember, car manufacturers aren't in the business of losing money. These deals are marketing tools to get you in the door and often come with strings attached. Always read the fine print and consider all your options before jumping at a 0% offer.

Discover the Top Car Loans Available Today

Remember, these rates and terms are subject to change and depend on factors like your credit score, loan amount, and loan term. Always shop around and compare offers from multiple lenders before making a decision.

Pro Tip: Many lenders offer pre-qualification, which allows you to see potential rates without impacting your credit score. Take advantage of this to compare offers more effectively.