We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover.
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories, except where prohibited by law for our mortgage, home equity and other home lending products. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you.
Written by
Rebecca Betterton
Rebecca Betterton, a Certified Financial Education Instructor℠, is a writer for Bankrate who has been reporting on auto loans since 2021.
Edited by
Pippin Wilbers
Pippin Wilbers is a Bankrate editor specializing in personal and auto loans. Pippin is passionate about demystifying complex topics, such as car financing, and helping borrowers stay up-to-date in a changing and challenging borrower environment.
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity , this post may contain references to products from our partners. Here's an explanation for how we make money .
Bankrate logoFounded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next.
Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. All of our content is authored by highly qualified professionals and edited by subject matter experts, who ensure everything we publish is objective, accurate and trustworthy.
Our loans reporters and editors focus on the points consumers care about most — the different types of lending options, the best rates, the best lenders, how to pay off debt and more — so you can feel confident when investing your money.
Bankrate logoBankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions.
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers.
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information.
Bankrate logoYou have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey.
Bankrate follows a strict editorial policy, so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers.
We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money.
Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories, except where prohibited by law for our mortgage, home equity and other home lending products. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range, can also impact how and where products appear on this site. While we strive to provide a wide range of offers, Bankrate does not include information about every financial or credit product or service.
Eyeing a new set of wheels but need financing? Preparing before you apply could help you secure the best auto loan rate for your situation. Essential steps include comparison shopping and seeking preapproval.
Before visiting a dealership or looking into online buying, some homework can help you get the best deal. This research will help you understand what you can afford, the price of ownership and expected loan rates based on your credit history.
Your budget is your guide to understanding how much you can afford. Use a car loan calculator to experiment with loan amounts and rates to find an affordable monthly payment. But wait until you’ve moved on to shopping for lenders to finalize any numbers.
Keep in mind that vehicle upkeep is more than just the monthly loan payment. It includes gas, insurance, vehicle add-ons and trips to the mechanic — expected or otherwise. Experts recommend keeping your monthly car-related expenses at or below 20 percent of your take-home pay.
Your credit score will almost always be the primary factor for your interest rate. Lenders tend to offer better rates to borrowers with scores above 670. Applicants with scores above 700 may be able to qualify for the lowest rates. With excellent credit, you may qualify for 0 percent APR deals offered by the manufacturer or dealership.
Some lenders offer auto loans to borrowers with poor credit. However, expect to receive a higher interest rate than someone with a stellar credit profile.
Either way, improving your credit before applying for a loan is in your best interest. Grab a copy of your free credit reports from AnnualCreditReport.com. Highlight any areas that need improvement and dispute any errors.
Also, pay special attention to your credit utilization ratio. By paying off bills and keeping your credit card use low, you may be able to quickly raise your credit score.
Bankrate tipIf your score is lacking, start your search with bad credit auto loans. They tend to have more lenient requirements. Your debt-to-income ratio may also matter, but lenders will primarily want to see that you can handle your debts.
Take some time to explore your options. Shopping with multiple lender types is the key to getting the best rates and terms. Check out banks, credit unions and online lenders, along with dealership financing.
Prequalify with multiple lenders to preview possible rates without a hard credit check. Then, calculate the total costs of your loan, including your monthly payment and total interest.
An interest rate just one or two percentage points lower could save you hundreds over the loan term and lower your monthly payment.
For example, you would save over $1,500 in interest on a $36,000 auto loan with a four-year term.
| Interest rate | Monthly payment | Total interest paid |
|---|---|---|
| 5% | $829 | $3,795 |
| 7% | $862 | $5,379 |
You should also read the fine print and check on extra costs, such as fees or penalties. Ask about the eligibility criteria and loan terms the lender offers. There is no single best loan for everyone. Search for a lender that fits your specific needs.
You may also be offered financing through the dealership. Most often, dealerships don’t have the best rates available. Walking in with a quote from an outside lender can give you the upper hand in negotiating a fair rate.
Look out for a “conditional approval” clause that can result in higher rates than you initially signed for. Beware of other predatory sales tactics, too.
Bankrate tipPrequalification is not an official offer and won’t put you in a strong negotiating position at the dealership. But it is a useful tool for comparing possible rates among multiple lenders.
When you submit a loan application, be prepared to provide documents on your personal and financial information.
Vehicle information is the least important. Almost all lenders offer a preapproval process that gives you up to 30 days to shop for a vehicle.
Applying for loan preapproval is one of the best ways to put yourself in control when negotiating with a dealer. Preapprovals are usually valid for 30 to 60 days. They tell you exactly what terms and rates you can expect with a specific lender.
Multiple preapproval quotes can help you land the best rate — we recommend getting at least three. But keep your rate shopping to a two-week window. The FICO scoring model groups several hard inquiries into one during this period, minimizing the temporary drop to your credit score.
After shopping for the best deal on vehicle financing, the fun part can begin.
Look for the perfect ride, but stick to your budget. Negotiate with the dealer before purchasing. Most importantly, shop for your car with the same thoroughness you used to get the best deal on a new auto loan.
Arrow Right Writer, Auto Loans and Personal Loans
Rebecca Betterton, a Certified Financial Education Instructor℠, is a writer for Bankrate who has been reporting on auto loans since 2021.
