Compare financing offers from several creditors and the dealer. Many creditors offer longer-term loans, like 72 or 84 months. While these loans can lower your monthly payments, they may have high rates.

And the longer the length of the loan, the more expensive the deal will be overall. Cars quickly lose value once you drive off the lot, so with longer-term financing, you could end up owing more than the car is worth.

Some dealers and lenders may ask you to buy credit insurance that will pay off the loan if you die or become disabled. Check your existing insurance policies to avoid duplicating benefits.

Credit insurance is not required by federal law. If your dealer requires you to buy credit insurance for car financing, it must be included in the APR. Ask questions about the terms of the contract before you sign.

For example, are the terms final and fully approved before you sign the contract and leave the dealership with the car? Does the price on your contract match what the dealer sent you ahead of time?

Consider waiting to sign the contract, and keeping your current car, until the financing has been fully approved. Know how leasing is different than buying.

The monthly payments on a lease are usually lower than monthly finance payments if you bought the same car.

At the end of a lease, you have to return the car unless the lease agreement lets you buy it. Review the terms before you sign for the purchase and financing. Tell them you want to see the terms clearly before you agree, especially all the fees and charges in the deal.

Carefully compare what you are seeing at signing to what the dealer sent you beforehand. Make sure you understand whether the deal is final before you leave in your new or new-to-you car. If you're refinancing, you can prequalify without impacting your credit as well. Capital One will only place a hard inquiry on your credit report when you officially apply.

Don't miss: Best Capital One credit cards. MyAutoloan isn't a dealership or financial institution. It's a virtual platform designed to connect car buyers with lenders that best fit their needs — which allows for easy rate shopping.

It offers a solid selection of auto loan types, including new and used car loans, lease buyouts and refinancing. Carvana is an online used car dealer that offers all the same services you'd expect from a traditional dealership: from buying and selling vehicles to providing financing.

Once you find the right car offer, you can schedule a pickup or delivery. At this point, Carvana will pull your credit and you'll get finalized loan terms. CarMax is a household name in the car-buying industry. The used car dealer is known for its large lots and "no-haggle" policy which aims to simplify the process of purchasing or selling a vehicle.

As the largest used-car retailer in the U. Similar to myAutoloan, Autopay is an online platform connecting borrowers with financial institutions. This allows Autopay to work with borrowers of all credit profiles and provide competitive rates.

You can prequalify without a hard credit check to get multiple loan options from banks and credit unions. If you choose a lender to move forward with, the financial institution will perform a hard credit inquiry and review your information and documents to finalize the loan terms.

Note that the final approval might take up to two days. When financing a car, you want to make sure you get the best terms your financial and credit situation can get you. First, remember that the best deals are reserved for those with high credit scores.

If your credit could use some work, it might be a good idea to take time to improve your scores before shopping for a car. Another thing you might want to think about in advance is the down payment. Putting more money down can allow you to lower your monthly payments and interest charges, shorten the loan and even get better rates.

Additionally, make sure to shop around for interest rates. The lower rate you get, the less you'll pay in interest charges over the life of the loan. This can lead to thousands of dollars in savings. Don't worry about the impact multiple hard inquiries will have on your credit: Most credit scoring models will count car financing inquiries made within 14 to 45 days of each other as one.

Further, get the shortest loan term length you can fit into your budget. A longer-term length means more interest paid over the life of the loan. Plus, many financial institutions will give you a higher interest rate to begin with for choosing a longer loan.

To get the most favorable financing terms when buying a car, you'll need at least good or excellent credit — a credit score of and greater.

That said, it's not impossible to get approved for a car loan even with bad credit as specific requirements vary by lender. You generally can and should negotiate interest rates when shopping for a car loan since the rate the dealership gives you can be higher than what the lender proposed, leaving room for negotiation.

There are a few reasons a financial institution can reject your auto loan application, including a low credit score, a high debt-to-income ratio or not enough verifiable income. Whether you're buying a new car or refinancing an existing car loan, take the time to shop around for the best loan terms.

Take advantage of prequalification tools many lenders offer and don't shy away from applying with multiple lenders. This strategy will help you not only get the car you'll love but save on this big purchase too. Money matters — so make the most of it.

Get expert tips, strategies, news and everything else you need to maximize your money, right to your inbox. Sign up here. To determine the best auto loans, CNBC Select analyzed more than a dozen car loan providers, including banks, dealerships and online marketplaces.

The rates and fee structures advertised for car loans are subject to fluctuate in accordance with the Fed rate. However, once you accept your loan agreement, a fixed-rate APR will guarantee your interest rate and monthly payment will remain consistent throughout the entire term of the loan.

Your APR, monthly payment and loan amount depend on your credit history and creditworthiness. To take out a loan, many lenders will conduct a hard credit inquiry and request a full application, which could require proof of income, identity verification, proof of address and more.

Catch up on CNBC Select's in-depth coverage of credit cards , banking and money , and follow us on TikTok , Facebook , Instagram and Twitter to stay up to date.

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Best overall: PenFed Auto Loans Best from a big bank: Capital One Auto Finance Best for rate shopping: myAutoloan Best for online car shopping: Carvana Best for used vehicle selection: CarMax Auto Finance Best for refinancing: Autopay.

Learn More. Annual Percentage Rate APR Starting at 5. Cons Credit union membership required Late payments subject to fees. View More. Annual Percentage Rate APR Depends on credit profile. Pros Open to borrowers with bad credit No early payoff fees Prequalification available Convenient online tools allowing to search for vehicles and check estimated loan terms.

Cons Only available at participating dealers You must apply at the dealer to get the final loan terms. Annual Percentage Rate APR Starting at 4. New vehicles, used vehicles, refinancing, private party and lease buyout. Pros Open to borrowers with bad credit minimum score No early payoff fees Prequalification available Provides multiple offers Fully online application available Co-borrowers and co-signers allowed.

Cons Not available in all states Limited customer service. Annual Percentage Rate APR Starting at 6. Cons Financing is only available for cars sold through Carvana Not available in all states. Annual Percentage Rate APR Not disclosed. Cons Financing is only available for cars sold at CarMax Not available in all states Prices are non-negotiable.

Annual Percentage Rate APR Starting at 2.

Compare Best Auto Loans, Rates and Lenders ; LightStream - Used car purchase loan. · % ; Consumers Credit Union - Used car purchase loan. · You have several options when choosing a lender for a car loan. Dealerships, banks, credit unions and online lenders all offer auto financing Understand your four options for financing a car: purchase loan, auto lease, auto refinance and lease buyout. Learn about financing a car

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Why AutoPay stands out: AutoPay offers rates as low as % APR for those who qualify. Here's more information about AutoPay. Read reviews of AutoPay auto Different sources for auto loan financing · Dealer-arranged financing · Bank or credit union · Buy Here, Pay Here dealership financing Understand your four options for financing a car: purchase loan, auto lease, auto refinance and lease buyout. Learn about financing a car: Vehicle financing options

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