What is an Auto Loan?
Auto loans are secured loans designed for the purchase of new or used vehicles, where the vehicle acts as the collateral. Auto loans are almost always fixed-rate loans and there are many different financing solutions available for car buyers applying for a loan.
How do Loans for New and Used Vehicles Differ?
The main difference between new 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.
Compare 5 Recommended Auto Loan Providers
1. LendingTree
- Compare a range of auto loan options from a 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.
Read the full LendingTree review
2. OneMain Financial
- Over 1500 locations in 44 different states
- Flexible repayment terms ranging from 24-60 months
- Quick turnaround on loan applications
OneMain Financial is a direct lender with locations serving customers nationwide. In addition to other loan coverage, OneMain Financial offers auto loans, auto refinance loans, and auto repair loans. OneMain offers a range of rates (18.00%-35.99%) and repayment terms, so borrowers can customize their loan to fit their needs.
OneMain is especially useful for non-prime borrowers, as OneMain Financial does not look at credit score, but uses their own internal scoring system.
Read the full OneMain Financial review
3. Auto Credit Express
- Provides assistance to borrowers with no credit or a history of bankruptcy
- A variety of loan types are available
- Offers extensive educational resources
Auto Credit Express focuses on helping borrowers with less-than-ideal credit find loans with favorable rates and terms. The company was founded in 1999 after the founder discovered that car dealerships were oftentimes rejecting customers with lower credit scores. Auto Credit express was born to serve subprime credit holders and today has a vast network of dealerships and loan providers.
Auto Credit Express also offers financial educational resources on its website, including loan and payment calculators, videos, articles, blogs, and newsletters.
Read the full Auto Credit review
4. MyAutoLoan
- Get rates from a range of participating lenders almost instantly
- Receive funds in as little as 24 hours
- 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.
myAutoloan works with lenders who offer a range of APR rates, loan terms, and repayment plans. Because of their diverse network of partners, most borrowers are able to prequalify for a loan, regardless of credit score.
Read the full myAutoloan review
5. SuperMoney
- Compare multiple lenders with one application
- Offers loan options for poor credit
- Range of auto loans available
SuperMoney is an online marketplace for auto loans, auto refinancing, along with other types of loans, including personal loans and mortgages. Borrowers can easily compare and qualify for multiple lenders in one online application. The process is simple and straightforward, with no charges or obligations for the borrower. SuperMoney even offers a free comparison tool that allows users to see the basics without needing to register.
SuperMoney works with lenders who offer a wide range of loan amounts, rates, and repayment terms, along with accepting credit scores from 400-850.
Read the full SuperMoney review
Bottom Line
If you’re planning to buy a car, the first thing you should do is get approved for a car 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.
