Insider experts choose the best products and services to help you make smart decisions with your money (here’s how). In some cases, we receive a commission from our partners, however, our opinions are our own. The terms apply to the offers listed on this page.
If you are looking to borrow money to buy, refinance, or rent a car, a car loan could be a great option for you. There are many lenders to choose from. We critique them and their loan offers in reviews and guides that help you make the best possible loan decision.
To make sure we rate each equally, we use a rating system that considers a number of factors, from interest rates and fees, to customer service and ethics. We consider the pros and cons of each company and product, comparing them with others available so you can decide which personal loan matches your particular needs.
What we look for when we evaluate auto loans
We rate all auto loan products in our reviews and guides on a scale of 1 to 5. The overall rating is a weighted average that takes into account seven different categories, some of which are rated more heavily than others. I’m:
- Interest rate (20% of the rating)
- Commissions (20% of the valuation)
- Loan duration and amounts (15% of the rating)
- Accessibility of the borrower (15% of the rating)
- Variety of loans (15% of the rating)
- Customer Service (7.5% of rating)
- Ethics (7.5% of the vote)
The weighting of each category is based on its importance to your lending experience. Fees and commissions have the most direct impact on the overall cost of your loan, so we weigh those most heavily. Customer support and ethics are still very important parts of the loan experience, but they don’t directly link to the terms of a personal loan, so they have less of an impact on the overall rating.
Interest rate (20%)
We mainly consider the minimum interest rate offered by a lender to determine its rating. Many auto loan lenders do not list their maximum rates, which makes it difficult to take them into account in our assessment. Let’s look at how often the floating rate changes and what metrics are used to change the rates.
- A lender will receive 5 out of 5 if its minimum APR is one of the lowest on the market (around 2.99%) and keeps its rates relatively stable
- If a lender has a higher minimum APR but still has low rates (around 4%) and changes rates a little more frequently, they will earn 3 out of 5.
- They will get lenders with significantly high minimum rates and frequently fluctuating rates 1 out of 5.
Lenders could charge a variety of fees, from origination fees to late payment penalties. We prioritize lenders who charge little or no commissions.
- If a lender does not charge fees, they will receive a 5 out of 5.
- They will receive lenders with a small origination fee and a reasonable late fee 2.5 out of 5.
- Lenders will receive a 1 out of 5 if they charge high source fees that take a significant portion of the total loan amount and late fees that accrue if you are late with payments.
Loan duration and amounts (15% of the rating)
We determine if the company has a variety of repayment terms, offering options for borrowers who want to pay off their loans quickly and save on interest, as well as those who want to spread their costs over multiple years. However, we try to focus on lenders who do not force borrowers to take out too long a term.
Longer terms generally come with a higher interest rate that you will have to pay the longer. Also, the longer the term, the more likely it is that your car’s value will drop to the point where you owe more than it’s worth. Generally, 60 months is considered the maximum term length you should consider.
We also look at both a company’s minimum loan amount and its maximum. A smaller minimum makes a company more accessible to borrowers who need a small amount of financing for their car. A high maximum allows borrowers who want a more expensive car to get one.
We also examine whether the company sets repayment terms or whether the borrower is able to choose.
- A lender will earn a 5 out of 5 if you have a minimum loan of at least $ 2,500 and a maximum of at least $ 50,000, along with terms of between one and seven years.
- Businesses with a minimum loan of $ 5,000 or more or a maximum loan of $ 35,000 or less or a suggested long-term term (approximately seven years) get a 3 out of 5.
- Lenders will receive a 1 out of 5 if they have extremely narrow loan amount ranges or select the term length for you from a limited number of options.
Variety of loans (15%)
Let’s see if the lender offers new and used car loans, refinancing and lease acquisitions. The more options you have, the better.
- They will get lenders who have all four options 5 out of 5.
- Lenders with three of the four options will earn 3 out of 5.
- Lenders will receive a 1 out of 5 if they have only one option for the loans they make.
Accessibility of the borrower (15%)
Lenders can only suit borrowers in certain states or with certain credit scores and income levels. Let’s look at how accessible the lender is for borrowers with a wide range of backgrounds.
- They will get lenders available in all states and with little or no credit requirements 5 out of 5.
- A company that is available in nearly all states or has slightly stricter eligibility requirements will receive a 3 out of 5.
- Lenders will receive a 1 out of 5 if they are not available in most states or if they have high barriers to entry for most borrowers.
Customer Service (7.5% of rating)
Let’s look at the different ways you can contact customer support. For example, let’s look at whether you can reach someone over the phone, via live chat, email, or regular mail. We also review customer service hours and give high marks to companies that offer 24-hour service.
- A lender will receive 5 out of 5 if it offers various means of contact and is open seven days a week for a significant part of the day.
- A lender with customer support available six days a week and many ways to contact him will earn 3 out of 5.
- Lenders will receive a 1 out of 5 if they have limited ways to contact them and are only available during certain times of the traditional work week.
Ethics (7.5% of the vote)
We review the company to see if there have been any scandals in the past three years. We look to see if the company is known to be racist, sexist towards its customers or staff, or has predatory lending practices. We also consider the company’s Better Business Bureau rating.
- A lender will receive 5 out of 5 if it hasn’t had any scandals in the past three years and has an A + rating with the Better Business Bureau.
- If a company has no scandals and a BBB grade of around B, it will get a 3 out of 5.
- Lenders will receive a 1 out of 5 if they have participated in a significant scandal in the past three years or if they have a BBB grade of D or lower.
Our ratings can help you determine which lender is best for you. The auto loan lenders who get high ratings in each category will be our lenders with the highest overall ratings. However, consider options with lower overall ratings if they suit your individual situation better.