Auto Loans 101: How to Get the Best Rate

Car key and interest rate chart for auto loans

Whether you’re buying new or used, securing a low auto loan rate can save you thousands over the life of your car loan. In this guide, we’ll walk through the steps—credit preparation, term selection, and lender comparison—to help you drive off with the best deal.

Table of Contents

1. Check Your Credit Score

Your credit score is the single biggest driver of your auto loan APR. Obtain a free report, correct any errors, and pay down high balances before you apply.

2. Shop Multiple Lenders

Compare prequalified rate offers from banks, credit unions, and online lenders like SoFi Auto Loans and LendingClub. Use soft credit pulls to avoid impact on your score.

3. Choose the Right Loan Term

Shorter terms (36–48 months) generally have lower APRs but higher payments. Longer terms (60–72 months) lower your monthly payment but may cost more in interest overall.

4. Dealer Financing vs. Bank Loans

Dealerships often advertise 0% for well-qualified buyers, but may mark up the car price. Bank or credit union loans can offer competitive rates with transparent terms.

5. How to Lock in Your Rate

Once you find a favorable rate, ask your lender to issue a rate lock or preapproval letter. This guarantees the APR for a set period (usually 30–60 days) while you shop for your vehicle.

This post contains affiliate links. We may earn a commission at no extra cost to you.

Get Prequalified with SoFi Auto → Get Prequalified with LendingClub →

Conclusion

By checking your credit, shopping around, and locking in a competitive rate, you’ll secure an auto loan that fits your budget and minimizes interest costs. Start the process today and hit the road with confidence.

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