What Are the Best Options for Low-Interest Auto Loans?

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Finding a deal requires strategy, especially with large investments like a vehicle. Interest rates are always in flux, so the best way to ensure a reasonable loan agreement is by finding companies that provide consistently competitive rates. What are the best options for low-interest auto loans, and what factors make up a quality lender?

Here are the best options for low-interest auto loans

1. PSECU

PSECU has been recognized as one of the best low-interest-rate options since 1934, with accolades from Newsweek and CardRates.com. It is a digital-first experience for those who are tired of visiting locations in person, setting a precedent for credit unions to modernize nationwide. It still has a human touch, as each employee is dedicated to helping members achieve their financial goals. 

Shoppers can browse auto options through its AutoSMART tool, simplifying the beginning steps of the research process. It also outlines the interest rate ranges for cars based on year, giving customers high levels of transparency before they even apply. A 2022 model with a term of up to 63 months will have rates as low as 5.69%, while a 2015 model with the same terms will be 6.44%. 

Buyers can also bundle their warranty and insurance into one place through PSECU instead of going through multiple companies. With its PSECU Protect and MPOWER+ Vehicle Protection Programs, car owners can streamline their car services under one roof.

2. Gravity Lending

Gravity Lending’s major selling point is its simplistic pricing structure. Applicants will notice there are no origination fees, an allowance to skip payments up to 90 days and rates starting as low as 4.99%. Loan terms range from two to seven years. During this time, Gravity intends for its customers to save at least 18% on average every month on their payments because of competitive interest rates.

It is also a great option for refinancing. The review only requires a soft credit check and a few minutes. Everything is online and fee-free, giving applicants decisions within minutes. It is ideal for people who want to shorten their loan terms or try for a lower interest rate.

Another selling point is its guaranteed asset protection (GAP) coverage. It provides peace of mind for people who have longer loan terms or had negative equity when applying. It protects the deficiency between the payoff amount and the value of the car if it is stolen or totaled. Therefore, GAP coverage could save drivers thousands in out-of-pocket expenses during stressful times. 

3. Tenet Energy

Tenet Energy is one of the few low-interest auto loan options available that specializes in electric vehicles (EVs). Shopping for an EV through Tenet is simple — pick a credit score range, desired loan term and make. Then, drivers will see what options Tenet can potentially provide. Credit score ranges begin around 620, but those with 760 or higher can have access to more options. It also has an EV financing calculator to estimate payments for a purchase or refinance.

Each vehicle shows the estimated monthly payment and APR. Tenet even offers bundled solutions for applicants, including warranties, coverage and home charging installations. Starting an EV journey can happen in one place, with preapproval amounts available in less than 60 seconds. 

The company also has robust resources for people just learning about EVs. To Tenet, there are no dumb questions, which is why it offers educational resources on everything from listing the benefits of charging an EV at home to why the car does not need an oil change. Customers with EV dreams can default to Tenet because of this specialty.

4. Southeast Financial Credit Union

Even though Southeast Financial Credit Union has fewer locations than other low-interest options, it is worth considering if it is nearby. Its interest rates are some of the best in the nation, with the potential to go as low as 3.5%. Even a seven-year-old vehicle could still have a 6.5% rate — one of the most competitive.

It is also one of the most understanding lenders, with its Skip-A-Payment program. It lets buyers take the time they need to get payments in order during rough times. The option is only applicable for some loans, but it gives flexibility without punishing people for extenuating circumstances. 

Southeast attempts to remove as many barriers to owning a car as possible, wanting people to enjoy paying off their debt quickly by having no prepayment penalties. There are also no application fees or mileage restrictions. Applicants with lower-than-average credit scores are also welcome to apply because its credit range is more forgiving than other entities.

5. Caribou 

Featured in Forbes, The New York Times and TechCrunch, Caribou is a modern auto loan aggregator with competitively low interest rates. It has helped over 100,000 drivers get access to reasonable terms and an average monthly savings of $130. It works with a wide network of providers, including small community banks and nationwide branches, to give applicants diverse options. Caribou does not provide the loan, but it facilitates finding the most cost-effective lender for the buyer’s needs.

Its application process is one of the best on the market. Buyers will be surprised at how few fields they must enter before receiving prequalification information. It is a soft credit check, so people won’t harm their scores just by looking. Everything from document uploads to signatures is done completely online.

While Caribou prioritizes tech conveniences, it is also known for its helpful customer support team, which is available seven days a week. If buyers get the urge to do market research on the weekend, Caribou has staff ready to help.

6. LightStream

LightStream offers a starting APR of 6.49%, but its benefits make the slightly inflated rate worth it. The company is a trusted name in the business as a division of SunTrust and Truist. Applicants with an existing car need not put their vehicle up for collateral, as the loans are unsecured. 

It works at getting cars into customers’ hands as fast as possible. Applicants could get the loan on the same day without paying an unnecessary application fee or requiring an appraisal. Everything is online, giving shoppers instant approval with minimal obstacles.

Loans range from $5,000 to $100,000 with a minimum term of 24 months for people who want ownership as fast as possible. There are no prepayment penalties, and discounts are available for those who use auto pay. 

7. Auto Approve

Auto Approve is another alternative to applying through standard lenders. It takes the buyer’s information and aggregates loan offers from multiple entities. It is one of the best places for loan comparisons, especially at the start of the car-buying process. Applicants do not even need to give away their Social Security numbers to see what they are eligible for.

It matches shoppers with loans, acting as the perfect liaison between DMV paperwork and car ownership. The option is ideal for people feeling fatigued from manual research or feeling like they have not found the best deal yet. Auto Approve automates the task while making it as personalized as possible.

The team has several options outside of buying a new or used car. Refinancing, auto lease buyback and motorcycle refinancing are also available to give even more diverse options for drivers.

Lenders at a Glance

Learn what the best options are for low-interest auto loans with a quick comparison.

Lender	APR	Credit Score	Specialty
PSECU	5.89%-13.34%	Prime	Comprehensive car solutions with digital-first ecosystem
Gravity	4.99%-14.99%	Near prime	High loan amounts with no hidden fees and comparative refinancing
Tenet	5.99%-16.20%	Near prime	Specialized in low-interest EV loans
Southeast Financial Credit Union	3.50%-7.50%	Subprime	Flexible and empathetic payment structures
Caribou	5.49%-24.55%	Near prime	Tech-forward loan aggregation with quality customer service
LightStream	6.49%-15.54%	Near prime	Obstacle-free application and loan processing
Auto Approve	4.99%-19.99%	Near prime	Collects and compares loan rates from multiple lenders

Frequently Asked Questions

Borrowers should consider the following information in addition to learning about a lender’s reputation and services.

1. What Is Considered a Low Interest Rate?

Numerous factors influence someone’s chance of getting a low interest rate. The U.S. credit bureaus, such as Experian, collect the national average, which was 5.08% in the third quarter of 2024. Therefore, a low interest rate would be below 5.08%. It is a good sign if shoppers get an offer in or around this number.

Typically, lenders with higher credit score requirements offer better deals. Score ranges dictate the expected rate for new and used cars. When shopping around, drivers can estimate before they apply based on the criteria, which are:

Range Category	Credit Score	New Car APR	Used Car APR
Deep subprime	300-500	15.43%	21.55%
Subprime	501-600	13%	18.95%
Near prime	601-660	9.73%	14.07%
Prime	661-780	6.7%	9.63%
Super prime	781-higher	5.08%	7.41%

 

A lender with super prime expectations has a better chance at providing a better rate for a used car than a near-prime bank for a new car. Buyers will need to consider if the higher upfront price of a new vehicle is worth the lower interest rate over time, even though a used car could be paid off faster.

Additionally, a low interest rate for someone with a low credit score is around 15%. Therefore, what constitutes “low” can differ based on circumstances. If this is too high to commit to, then consumers may want to consider boosting their score before applying for a vehicle loan.

2. How Do You Pay the Lowest Interest on a Car Loan?

Accepting a deal from a quality lender with low interest rates is the first step to success. Then, buyers must ensure there are no early payoff penalties. Some banks charge customers fees if they pay down their loan balance before the end of the term. 

If drivers can avoid this, then the best guidance is to pay the loan before it ends. Shoppers pay more the longer the loan is active. Paying off a five-year loan in three years is ideal because it saves drivers from paying two years of interest. It may not be feasible for all households, but it is the most certain way to pay as little interest as possible.

3. What Considerations Impact Credit Scores?

A person’s credit score is determined by many factors, carrying different weights. Buyers who want to increase their chances of competitive loan offers should focus on the following:

• Payment history: Make credit payments on time, as late and missed payments severely hurt credit.
• Credit utilization: Use a small percentage of the available credit limit.
• History length: Keep old accounts open to boost credit history, which is the average age of all cards and loans.
• Hard inquiries: Ensure as few third parties as possible are running checks against credit reports.

Credit mix is also important, so people should have a diverse history of loans, credit cards and other lines. The versatility proves the individual is an accountable and trustworthy person to lend to.

4. What Is Refinancing, and Can It Help Lower Interest Rates?

Refinancing is taking a loan and transferring it to a new lender with new terms. Most people do this to get a lower interest rate. Therefore, a driver could have an auto loan for a year with a 10% interest rate and refinance for several points less.

Interest rates fluctuate from season to season. It might be in a person’s best interest to accept a loan, spend a year working on their credit score and reapply to refinance later. Some negotiate with their current lender or seek another source. Smart shoppers could save thousands over the loan’s term by refinancing for a lower interest rate.

What Are the Best Options for Low-Interest Rate Auto Loans?

Many banks are available to help borrowers get decent rates. Managing finances is more important than ever, as prices from rent to groceries skyrocket. Contact one of these lenders to shorten the research phase of the car-buying journey and have reliably affordable payments.