Guide: How to Find & Get the Best Car Finance Rates

When looking to purchase a new car with the lowest car loan rates, the financing options can be tricky to navigate.

This is our guide to all the different options for financing your new car purchase, so you know what to consider when you are comparing car finance rates, be it online or at your local bank.

Before we sink into the details, let’s examine a few key questions to help clarify the process when you compare car loan interest rates.

What Is a Car Loan?

Put simply, a car loan is a type of personal, direct loan that you take out with the express purpose of buying a new car.

You therefore borrow a lump sum, which comes with a repayment term and car finance rates with interest attached, and these will vary according to the loan product you select. This is also known as “direct lending.”

This means that you are getting that money directly from a source of auto loans with car finance interest rates attached, to help you purchase a new car quickly.

Typically, repayment term lengths vary from one to ten years. It is important to compare car loan interest rates before committing to a loan product. However, this allows you to buy a car outright instead of deferring ownership until repayments are made.

How to Find & Get the Best Car Finance Rates

Image Source: Best Car Finance Rates

What Is Car Financing? Is It the Same as a Car Loan?

It’s important to note here that car finance and car loans are not the same thing when you start to compare car loan rates.

Car financing is a different process—it’s about leasing the car and making monthly payments, such that you can then buy the car outright at the end of the process. This means that the financer owns the car until you’ve made your final payment at the specified car finance rates.

Often, a requirement exists to put down a sizeable deposit first before securing your best car finance interest rates. This is not the same as a personal loan, in which you receive a loan to buy a car outright without a deposit, then pay back the loan in installments.

Dealership financing is a common type of car financing of this kind, in which you enter into a contract with your car dealer.

The dealer can often retain the contractual ownership of the vehicle until payments are complete, though they usually have an assignee (i.e., a bank, finance company, credit union) working on their behalf to collect your payments.

This can be convenient and offer a multitude of car finance interest rates options if the dealer has a good relationship with a variety of banks or finance companies. Sometimes dealers have special low car finance rates or other deals on offer for their buyers.

They tend to require a very strong credit rating though, so be aware before you apply and be sure to compare car loan interest rates thoroughly, as they may not offer you the best deal.

See Also: Home Interest Rates | Tips for Finding the Best Home Mortgage Interest Rates

What Other Types of Car Financing Exist?

Car financing takes a few forms and can be a good alternative if you’re not ready to compare car loan interest rates for a personal loan. These options are:

  • Hire purchase plans: These typically require an up-front deposit and a commitment to a certain term of monthly repayments at certain car finance rates. Once repayments are made, the car is yours! Until that point, however, the car can be repossessed should repayments fail to be made—and you cannot sell the car until it is repaid.
  • Leasing agreements: If you aren’t too worried about owning the car long-term and prefer to enjoy a new car without paying car finance interest rates for it up front, this can be another viable option. Leasing agreements are essentially long-term contracts of rental in which you pay a monthly fee for use of the car at particular car finance rates. With Personal Contract Hire leasing agreements, you can get a new car every few years. This is different from Personal Contract Purchase deals, which involve you buying the car at the end of the leasing agreement.

Don’t Miss: How to Find the Highest Savings Account Rates | This Year’s Guide | Highest Savings Rates

All-in-One Change Management Tools

Top Rated Toolkit for Change Managers.

Get Your Change Management Tool Today...

What Should I Do to Get the Best Car Finance Rates?

There are many ways to ensure that you get the best deals on car interest rates from your auto loans. Here are just a few things to think about to get yourself in on the best car finance rates.

1. Get your credit in order

Your credit rating will determine not only how much you can borrow, but how generous your car finance rates will be. Have you borrowed before? Do you have any credit cards? Whatever the case, it will all help toward building up a credit rating in your name, enabling you to get the best car finance rates. All US consumers are entitled to a free credit check once per year under the law, so take advantage of this before you compare car loan interest rates in order to know what car finance rates you’re likely to be starting out with. Hopefully with good credit, you’ll be achieving the lowest car loan rates possible.

2. Determine what you can afford to spend

Figure out your monthly budget and how much you can currently afford to be paying in monthly installments as well as car interest rates before you compare car loan rates. This is important before you get carried away by shiny new vehicles—if it’s not in your budget, it’s best to know this up front.

Also, if you have some savings behind you, it’s very powerful to make a larger down payment—as large as possible. This means a smaller loan, the lowest car loan rates, and fewer repayments.

Of course, you might balk at the prospect of spending more up front, but you will be rewarded with less money to repay with interest on your car finance rates.

3. Determine how long you will be making repayments

The toss-up always exists between deciding on a longer term loans featuring lower monthly repayments and with a higher car interest rates attached, or a shorter term that will have higher monthly payments to be repaid quickly at the lowest car loan rates. Figure out what the best balance of car finance rates will work best for you.

4. Discuss extra payments

Of course, you might not be able to make extra repayments toward the car finance interest rates within the month (on top of your usual repayments).

But if you are able to budget extra payments, make sure you pick a loan that rewards this behavior. Avoid penalties for prepayments—check the fine print carefully! Any discount on your car interest rates can help make the payment process smoother.

5. Take the time to shop around

Below we have listed some great places to start to compare auto loan rates and contrasting the deals on car finance rates out there. Make sure you take the time to investigate car interest rates options thoroughly—picking the best loan for you with the lowest car loan rates attached will make a very big difference in the long run and shouldn’t be rushed!

Related: Money Market Interest Rates | Ways to Find the Best Money Market Rates

Where Can I Find the Lowest Car Loan Rates?

1. LightStream

LightStream offers a great way to compare auto loan rates and contrast the best car finance rates available for financing your car loan. They start with some of the lowest car loan rates at 1.74% APR with automatic payments, offering from $5,000 to $100,000 in loans. Examine all your car finance interest rates choices including secured and unsecured car finance rates.

If you have an excellent credit rating, you can borrow with the cheapest car loan rates, without a lien on your vehicle. Secured loans may be offered to others with less exceptional credit. Keep this in mind when using this option to compare car loan rates, as bad credit will see you requiring a bigger up-front cost, as well as higher car interest rates.

LightStream is really best for those with excellent credit, and they offer to match other lenders’ offers with their $100 guarantee on their car finance rates in the event that you are unsatisfied. They tend to be more difficult to get approval from, and you need to prove a decent income to qualify.

This site is also less decked out with information on car finance interest rates, so it may be better for those who are not first-time buyers looking for information or advice.

2. CarsDirect

Though it is mostly known as a great place to buy cars, CarsDirect also provides a great search function for getting the best car finance rates as well. It’s all laid out in easy-to-read terms, offering a handy loan calculator and trade-in-value calculator to assist you in finding the cheapest car loan rates.

There’s no minimum or maximum loan amount you can apply for, which means it’s great for smaller loans (less than $5,000), which is the minimum usually required from most companies. They offer a lot of valuable additional information on the lowest car loan rates in the form of articles to help you figure out your best options.

Take note: CarsDirect will forward your details on, so if you don’t want a flurry of calls from potential leads on the lowest car loan rates, this might not be the service for you.

3. MyAutoLoan

MyAutoLoan provides an easy way to compare car finance rates, with an easy, secure application process. They also allow applications for lease buyouts. MyAutoLoan also provides a handy interest rate estimator, so you can compare car loan rates and know what you’ll end up paying back in total, according to your credit score and the type of loan.

lowest car loan rates

Image Source: Cheapest & Lowest Car Loan Rates

They have a great section answering all your questions and queries, making it excellent for first-time buyers needing information on the best car finance rates. Like CarsDirect, however, they will forward your details to lenders, so be aware that you will get calls from a few places offering the lowest car loan rates.

There are somewhat more stringent rules when you compare auto loan rates on MyAutoLoan, including a minimum of $8,000 for a car that is newer than 8 years old. It must have less than 100,000 miles, and you need a minimum monthly income of $1,800 to qualify. Keep these in mind when shopping around!

Popular Article: Mortgage Interest Rates Trend | Key Mortgage Rate Predictions, Trends, and Graphs

4. Bankrate

Bankrate is a great place to start your search for car finance rates, as it shows the average loan rates nationally for easy comparison. Alternatively, you can enter your zip code and find special deals on the cheapest car loan rates for your area. Bankrate will present all the best car finance rates information in front of you, with a whole variety of loan products available to suit your individual needs.

It’s great for people looking for more detailed information about their options, as there are many articles detailing different aspects of financing your car loan at the lowest car loan rates.

5. U.S. Bank

U.S Bank auto loans feature competitive car finance rates with no down payment required. They make same-day credit decisions and have a nice easy online system to track your applications. They offer reductions, some of the lowest car loan rates for choosing fuel-efficient cars—a 0.5% reduction in car interest rates. Great if you’re looking to go green with your purchase!

U.S. Bank offers information from all the big bank lenders, and also offer some of the best car finance rates for cars purchased from private sellers. This may be a great option for those wanting to buy from private sellers as opposed to other sources.

 If you’re in the market for a used car, this could be an option to check out, as they do not offer higher interest rates as a penalty to used-car purchasers, as long as it has fewer than 100,000 miles and is less than 6 years old. This way you can take advantage of the cheapest car loan rates on a larger variety of vehicles.

6. Bank of America

A big one—Bank of America offers a whole variety of loans, for vehicles in particular, with some of the best car finance rates. They will give loans on vehicles with up to 125,000 miles. Cars need to be less than 10 years old, but already this is one of the more generous options in terms of the age and mileage on the vehicle you intend to buy.

Search for your loan via the Bank of America and enjoy some of the cheapest car loan rates, particularly if you already bank with them. There are opportunities to qualify for car finance rates deductions, particularly if you already bank with them.

7. Credit Unions

Local credit unions are quite similar banks, except that they only lend to members. Members are also owners of the credit unions themselves, and as well as being not-for-profit, equate to low operating costs and competitive car finance rates. Exploring your local credit unions is a good way to determine if you could be getting the best car finance rates offline.


When you start to compare auto loan rates, it’s helpful to take into consideration all this information from our guide. Work step by step through the questions we’ve listed to secure yourself the cheapest car loan rates and fund your car purchase in the best way possible for your budget and lifestyle needs.

Read More: How to Find the Best VA Mortgage Loan Rates Today | Tips for U.S. Veterans

AdvisoryHQ (AHQ) Disclaimer:

Reasonable efforts have been made by AdvisoryHQ to present accurate information, however all info is presented without warranty. Review AdvisoryHQ’s Terms for details. Also review each firm’s site for the most updated data, rates and info.

Note: Firms and products, including the one(s) reviewed above, may be AdvisoryHQ's affiliates. Click to view AdvisoryHQ's advertiser disclosures.