Jasmine Birtles
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Which Banks or Credit Unions Have the Lowest Car Loan Rates Right Now?
Moneymagpie Team
19th Jan 2026
Getting a car loan is usually not the hard part. Finding one with a rate that actually makes sense to your finances is. With vehicle prices climbing and auto loan interest rates sitting near multi-year highs after a series of Federal Reserve rate hikes, monthly payments can add up quickly.
It’s more important than ever to compare your options. The following banks and credit unions have some of the lowest car loan rates right now.
- Compare the Lowest Auto Loan Rates
- Criteria for the List of Banks and Credit Unions
- Finding the Right Fit for Your Budget
1. PSECU
PSECU has a flexible auto loan that can fit a range of budgets and vehicle types. Since the loan is set up by model year, you’ll see different options depending on the car’s age. If you’re planning to buy a vehicle that’s zero to three years old, you can choose repayment terms from one to 96 months, with loan amounts starting at $1,000.
Annual percentage rates (APR) currently start as low as 5.19% for terms up to 63 months, though what you qualify for will depend on factors like vehicle age and value, as well as your credit score. PSECU offers financing from 100% to 125% in some cases, which means you can borrow more than the car’s price.
You can use its auto loan for new or used cars, refinancing an existing loan, buying out a lease, or financing recreational and business vehicles. You’ll need to become a member before applying for a car loan, but the sign-up process is straightforward and can be done entirely online.
Key Features
- APR as low as 5.19%
- Same rates for used and new cars
- Digital-first experience lets you manage applications online
2. Digital Federal Credit Union (DCU)
DCU is the largest credit union headquartered in New England with a wide-ranging auto loan program that covers more than just standard cars. You can use its financing for new or used vehicles, refinancing an existing loan, antique cars, motorcycles, recreational vehicles, and vehicle mobility modifications.
The starting APR for both new and used vehicles is the same, with rates as low as 4.99%, which is among the lowest car loan rates available right now. If you have excellent credit, you may qualify for financing of up to 130% of the car’s value. You can also get rate discounts, including 0.50% off for relationship or Plus members and 0.25% off for energy-efficient vehicles.
You’ll need to become a DCU member to borrow, but the process is quick and easy. With an online application, you may also get an instant decision. Once approved, it will send you the check via FedEx within a few business days.
Key Features
- APR as low as 4.99%
- Loyalty and energy efficiency rate discounts
- No payments for the first 60 days
3. Bank of America
If you prefer to finance through a well-established institution, Bank of America offers an auto loan option that’s open to anyone. Rates currently start as low as 5.29% for new cars and 5.49% for used cars on a 60-month term. You may enjoy an interest rate discount if you’re part of the bank’s Preferred Rewards program.
When you apply online, you can choose from 48, 60 or 72-month terms, depending on the vehicle and loan type. Other term lengths may be available, but you’ll need to discuss those directly with a loan officer after submitting your application.
There are some vehicle requirements you need to consider. The car you want to buy must be no more than 10 years old, have fewer than 125,000 miles and be valued above $6,000. However, Bank of America offers a helpful 30-day rate lock.
Key Features
- APR as low as 5.29%
- 30-day rate lock guarantee
- Interest rate discounts for eligible Preferred Rewards members
4. Capital One
Capital One is an option for anyone who wants to explore auto financing without committing up front. It allows you to prequalify in minutes with no impact on your credit score, using either its website or mobile app. You can finance new or used cars or refinance an existing loan, with APRs starting as low as 5.08% for new vehicles and 5.62% for used cars for terms up to 60 months.
Its Auto Navigator tool lets you browse vehicles and see estimated loan terms before you visit a dealership so you can assess affordability earlier in the process. The catch is that financing is limited to participating dealerships, and eligible vehicles must be priced at least $4,000, have fewer than 120,000 miles and be no more than 10 years old.
Key Features
- APR as low as 5.08%
- Prequalification with no impact on your credit score
- Built-in car shopping and loan comparison tools
5. PenFed Credit Union
PenFed Credit Union offers auto financing with flexible loan amounts. Its auto loans range from $500 to $150,000, with repayment terms of up to 84 months. Therefore, it’s suitable for both a modest purchase and a higher-end vehicle. Loans are available for new and used cars, as well as refinancing.
Rates can be exceptionally competitive if you use PenFed’s car-buying service TrueCar, where new car loans start as low as 3.39% and used car loans at 4.34% for terms up to 36 months. However, rates remain competitive even without the service, with new-car loans starting at 4.19% and used-car loans at 4.79%.
The application process is fully online, and once approved, PenFed sends a check directly to you, payable to the seller or dealership. You can also get quick preapproval without affecting your credit score.
Key Features
- APR as low as 3.39%
- Low minimum loan amount for some options
- Discounted pricing available if you purchase your car via TrueCar
Compare the Lowest Auto Loan Rates
Here’s a quick comparison of the five banks or credit unions that have the lowest car loan rates.
| Company | Starting APR | Loan Term | Amount |
| PSECU | 5.19% | Up to 96 months | Up to 125% of the car’s value |
| DCU | 4.99% | Up to 84 months | Up to 130% of the car’s value |
| Bank of America | 5.29% | Up to 72 months (online application) | Start at $7,500 |
| Capital One | 5.08% | Up to 84 months | Start at $4,000 |
| PenFed | 3.39% | Up to 84 months | Up to 125% of the car’s value |
Criteria for the List of Banks and Credit Unions
Although the advertised APRs of each bank and credit union are the biggest factor, other categories were also evaluated. These include loan details, term lengths, minimum loan amounts, and borrower perks, as well as eligibility and accessibility. The list also focuses on lenders with a good reputation and high customer satisfaction.
Finding the Right Fit for Your Budget
Comparing banks or credit unions that have the lowest car loan rates is an essential part of financing your new or new-to-you car. Remember — the right loan is the one that fits your budget, your timeline and how comfortable you are with the lender’s process.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.
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