Auto Loan Review Methodology

When you shop for an auto loan, you may be presented with an overwhelming array of options. Should you just go with dealer financing, or should you get pre-approved for a loan on your own and gain some leverage for negotiating? What kind of interest rates and monthly payments can you expect to be approved for, and how will your vehicle options change based on that?

Add all that to the stress of actually finding the right vehicle, and the whole process can feel a little daunting. That’s why we researched the auto finance industry to identify the top lenders, based on factors like interest rates, loan features, borrower requirements, and vehicle requirements. Our methodology outlines how we analyzed and scored auto loan lenders, allowing us to present the most affordable and convenient loans for every borrower.

Our Review Process

We narrowed down the auto finance industry to the leading 21 auto loan companies, and examined them in the following categories with the accompanying weights:

1. Costs of Loan (53.50%): Criteria include APR (new, used, and refinance), origination fees, prepayment fees, and late payment fees.
2. Loan Terms (17.50%): Criteria include the types of loans offered, minimum and maximum loan amounts, repayment term options, and time to receive funds.
3. Borrowing Requirements (24.50%): Criteria include state availability and membership requirements, borrower requirements like credit and income, and vehicle requirements like loan-to-value (LTV) ratios, maximum accepted mileage, and maximum accepted age.
4. Additional Features (4.50%): Criteria include whether or not lenders allow borrowers to get pre-approved for a loan; restrictions on how the loan funds can be used; availability of promotions, rebates, and discounts; and whether or not private-party vehicle purchases are allowed.

We gave each criterion a weight and objectively scored lenders on the loan features and options they provide. The individual ratings were combined to give each company an overall score of 0 to 5.

Research

• Data collection: We collected over 1,100 data points about 21 auto loan lenders and marketplaces (offering new, used, and refinance loans); data were collected from company websites and customer support/media representatives.
• Competitive analysis: We conducted a competitive analysis to identify the most well-known and well-researched auto loan lenders, and to better understand how they’re viewed by borrowers and industry experts.
• Literature review: We looked at market share and revenue data from Statista to help identify the biggest players in the auto financing industry.
• Customer survey and interviews: We surveyed 1,016 U.S. auto loan borrowers to learn how and why they make auto finance decisions, how they rate certain auto loan features, and how they feel about specific companies. We also conducted extended one-on-one interviews with a subset of survey respondents to gain deeper insight into their experiences with auto loan financing.

Choosing the Best Auto Loan Lender for You

The right auto loan for you will largely depend on your credit and income circumstances, lender availability, and the vehicle you’d like to finance. We looked at a variety of important factors to score companies and provide recommendations, but it’s important to evaluate a handful of potential lenders to find a loan that works for you.

We recommend looking at these features first when you’re in the market for an auto loan:

• Lender availability
• Credit and income restrictions
• Vehicle make/model restrictions
• APR
• Loan amounts
• Loan repayment terms
• Loan-to-value ratio restrictions, maximum accepted mileage, maximum accepted age

Take note that auto loan lenders often update their interest rates, and other loan features like amounts, terms, and borrower/vehicle requirements may change as well. 

A new auto loan can have a significant impact on your finances and your credit, but it doesn’t have to be a difficult process; learn more about getting a car loan to take it step by step.