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Best First-Time Car Buyer Loans June 2024

Entering car ownership, whether with a new or pre-owned vehicle, is thrilling. Yet, many first-time buyers lack the cash for an immediate buy and turn to first-time car buyer loans. These loans not only facilitate the purchase but can also enhance your credit score. Compare the best first-time car buyer loans available, getting you the best rates and terms tailored to your specific needs.

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Key Facts

  • 20+ years in the lending business
  • Offers great services at no rates
  • No SSN needed to pre-qualify

Pros

pros iconMultiple lending options are advantageous

pros iconNetwork of national lenders

pros iconCaters bad credit scores

pros iconApplication is simple and quick

pros iconOnly 6 months of work experience is required

Cons

cons iconLoan rates are determined by the lender

cons iconOnly dealerships in the network must be used

cons iconHigh-interest rates are a possibility

This website is an informative comparison site that aims to offer its users find helpful information regarding the products and offers that will be suitable for their needs. We are able to maintain a free, high-quality service by receiving advertising fees from the brands and service providers we review on this website (though we may also review brands we are not engaged with). These advertising fees, combined with our criteria and methodology, such as the conversion rates, our team of reviewer’s finding and subjective experience and product popularity, impact the placement and position of the brands within the comparison table. In the event rating or scoring are assigned by us, they are based on the position in the comparison table, or according to other formula in the event specifically detailed by us. See our How we Rate page and Terms of Use for information. The reviews, rating and scoring are provided “as-is” without guarantees or warranties regarding the information contained in our website, which shall not be considered as endorsement. We make the best efforts to keep the information up-to-date, however, an offer’s terms might change at any time. We do not compare or include all service providers, brands and offers available in the market.

  • $5K-$50K Loan Amount
  • 300 Min Credit
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Key Facts

  • Car loans for people with bad or no credit
  • Competitive interest rates if you have good credit
  • No associated fees up front
  • Funding available for new and used vehicles
  • Max Loan Amount: $100K

Pros

pros iconQuick and simple application form

pros iconLoans available to people with bad or no credit ratings

pros iconNo fees associated with the loans

Cons

cons iconLimited information available online about the loan terms

cons iconNo soft credit pull available

cons iconHigh APRs if your credit rating is very poor

cons iconNo visibility of lending partners

CarLoans.com is a lead provider to lenders around the US. Average APR rates range from 3.2% to 24% depending on credit. Some dealers/lenders may have implications for non-payment or late payments, please see your specific terms for more information. By applying with CarLoans.com, you agree to have your credit pulled for lending purposes and this could have an impact to your credit score.

  • $1K-$100K Loan Amount
  • 320 Min Credit
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Key Facts

  • A reliable car loan marketplace
  • Lease buyout loans
  • A wide range of offers for average and good credit
  • Max Loan Amount: $100K

Pros

pros iconMany lenders and options are available

pros iconA wide range of loan amounts

pros iconLow initial interest rate

pros iconOffers pre-qualification with a soft credit check

Cons

cons iconAn initial deposit may be required

cons iconIt takes 24-48 hours for a loan to be approved, which is longer than other lenders

cons iconIt may take 1-2 weeks for a loan to be funded, which is longer than other lenders

AUTOPAY offers this loan application and services subject to the following terms and conditions (“Agreement”). Please read this Agreement carefully before using this website or submitting a loan application. By using this website, you accept the terms and conditions outlined in this Agreement. If you do not agree to the terms and conditions outlined in this Agreement, you must not use this website or submit a loan application.

As used in this Agreement, the terms “we” and “us” mean The Savings Group, Inc. and the companies in which The Savings Group, Inc. directly or indirectly owns a majority interest, commonly called “subsidiaries”. These include but are not limited to, AUTOPAY Direct, Inc. d/b/a AUTOPAY and RateGenius Loan Services, Inc. d/b/a RateGenius.

We operate a technology-driven loan and product matching system whereby consumers can apply to finance or refinance their vehicles and be considered by multiple lenders who may offer credit and options for ancillary products related to the loan or vehicle.  We also provide origination fulfillment services for approved loan offers, including, but not limited to, communication of the offer, documentation collection and preparation, and lien perfection.

In most cases, we are not the lender or affiliated with the lender. However, we may offer loans in certain states through a licensed subsidiary. We also provide claims administrations for specific loan products on a limited scale.

  • $3K-$100K Loan Amount
  • 560 Min Credit
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Key Facts

  • A+ rating on BBB
  • Easy online application process
  • Competitive interest rates & flexible repayment terms
  • Max Loan Amount: $150K

Pros

pros iconMany refinancing options are available for different vehicles, including older ones

pros iconBBB A+ Rating

pros iconStrong consumer education material

Cons

cons iconRefinancing only

cons iconOrigination fees apply

APR (Annual Percentage Rate) is accurate as of the publication date and subject to change. Actual APR is subject to credit approval and selected term duration. APR advertised is based on several variables, such as your credit score, your vehicle being refinanced, your home address, and length of payment terms. The actual payment amount is based on APR and term duration and is subject to lender approval and credit terms.

  • $5K-$200K Loan Amount
  • 560 Min Credit
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Key Facts

  • Variety of different lenders
  • Allows you to use co-signers
  • Efficient process
  • Max Loan Amount: $99K

Pros

pros iconCompetitive interest rates

pros iconAccept credit scores of at least 575

pros iconVery efficient application process

pros iconGood range of loan options

Cons

cons iconAn $8,000 minimum loan for new cars

cons iconRestrictions on certain vehicles

cons iconNo support for Hawaii and Alaska residents

  • $5K-$100K Loan Amount
  • 575 Min Credit
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Key Facts

  • Reputable range of lenders
  • Access to competitive rates
  • Access to great refinancing options
  • Max Loan Amount: $150K

Pros

pros iconReputable range of lenders

pros iconAccess to competitive rates

pros iconAccess to great refinancing options

pros iconAcceptable minimum requirements

Cons

cons iconNot suitable for financing a new car purchase

cons iconOrigination fee often charged

  • $10K-$150K Loan Amount
  • 640 Min Credit
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Key Facts

  • Rates as low as 0% on select cars, trucks and SUVs
  • No application fees
  • Allows co-signers
  • Free Online Quotes
  • Local dealers compete to provide the best ra

Pros

pros iconPeople with bad credit and no credit history are viable for loans

pros iconYou can get a loan with records of bankruptcies

pros iconThe company has a fast application process

pros iconIt is a marketplace with a variety of lenders

Cons

cons iconA low credit score is accompanied by high-interest rates

cons iconIt is not a direct lender

cons iconScanty details have been published regarding loan information

cons iconSome customers have complained regarding customer service

We are not a lender and do not make loans or credit decisions in connection with loans or pre-qualify any consumer for a loan. When you submit a request for financing or information using our services, we may submit your information to one or more third party lenders or other brokers, aggregators or referral services, and other reputable third parties in connection with fulfilling your loan request or other request for insurance, marketing, vehicle sales or leasing, or other products and services, and your information may be shared in accordance with this Supplemental TOU and our Privacy Policy. We generally send a user’s information to one or more lenders based on the consumer’s location, the requirements provided to us by the lender and other agreements between us and the lenders and we may receive compensation from the lender in connection with submitting your loan request. Although we strive to connect all users with a lender in their area, we do not guarantee that we will be able to connect you with any lender. In some circumstances, we may not be able to send your information to a lender or other brokers, aggregators or referral services, for reasons which may be based on the information you provided in your loan request, your location, or the lender requirements communicated to us.

All lending decisions are made by the lender and we do not guarantee approval or that any loan terms or rates provided or offered to you will be the best terms or the lowest rates available in the market. We do not guarantee that submitting your information through the sites or services will result in you being matched with a lender for further processing. We do not guarantee that you will be offered auto financing related to your loan request, nor do we guarantee that any auto financing or loan product you are offered by a lender will include rates or terms satisfactory to you. Any offerings made to you will be done so by the lender and not by us. We do not endorse or recommend any specific lender or act as a representative or agent for any lender. Services listed on the site do not represent all financing or credit options, products or services available in the market. Not all consumers may be approved and individual loans terms and rates may vary based on the lender’s credit determinations, amount financed and other factors. The lender may perform a credit check or other credit evaluation in making their lending decisions. Nothing contained on our sites, services or in these Supplemental TOU constitutes an offer or promise for a loan commitment or interest rate lock-in agreement. There is no guarantee that a loan will be given to any user using these services.

You should rely on your own judgment in deciding which available loan product best suits your needs and financial means. The lender you select is solely responsible for its services to you, and you agree that we will not be liable for any damages or costs of any type arising out of or in any way connected with a loan obtained from any lender or your use of a lender’s products or services.

The services listed on our sites may not be available in all states and you should check with the lender for availability. We and the lenders expressly reserve the right to discontinue, suspend or terminate the offering of any services at any time.

  • $5K-$45K Loan Amount
  • 300 Min Credit
  • 1.99-35.99% APR
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Key Facts

  • Co-applicant OK
  • Zero application fees
  • Entire loan process conducted online

Pros

pros iconSince OpenRoad Lending is a marketplace applicants can receive multiple loan offers with a single application

pros iconSome applicants receive approval with credit scores as low as 500

pros iconDepending on the vehicle’s age and condition, loans go as low as $7,500 and up to $80,000

pros iconPrequalify with just a soft credit check

Cons

cons iconApplying for an auto loan refinance could result in multiple hard credit inquiries as OpenRoad Lending attempts to find a suitable lending partner

cons iconVehicle restrictions could narrow the choices when car shopping

cons iconOpenRoad Lending does not refinance auto loans in Alaska, Hawaii, New Hampshire, Nevada, North Dakota, South Dakota, Vermont, or Washington, D.C.

  • $8K-$100K Loan Amount
  • 500 Min Credit
  • 2.29-24.99% APR

Top First-Time Car Buyer Loan Providers

300

Min Credit Score

5.18-21.32%

APR. Fixed Rate

$5K-$50K

Loan Amount

12 - 72 Months

Repayment terms

Yes

Soft Credit Pull

Marketplace

Lender Type

Yes

Other Fees

None

Origination Fee

None

Prepayment Fee

1 days

Funding Time

Pros & Cons

drop-down-btn
  • con-icon Multiple lending options are advantageous
  • con-icon Network of national lenders
  • con-icon Caters bad credit scores
  • con-icon Application is simple and quick
  • con-icon Only 6 months of work experience is required
  • con-icon Loan rates are determined by the lender
  • con-icon Only dealerships in the network must be used
  • con-icon High-interest rates are a possibility

Auto Loan Types

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  • Secured Auto Loans
  • Unsecured Auto Loans
  • Simple Interest Loans
  • Precomputed Interest Loans
  • Direct Financing
  • Indirect Financing
  • New Car Loan
  • Used Car Loan

Vehicle Types

drop-down-btn
  • Car
  • Truck
Carvana logo
Carvana

Hassle-Free Online Car Loans

300

Min Credit Score

7.90-27.90%

APR. Fixed Rate

7.9-27.90%

APR. Variable Rate

$1K-$100K

Loan Amount

36-72 months

Repayment terms

Yes

Soft Credit Pull

Marketplace

Lender Type

Yes

Other Fees

None

Origination Fee

None

Prepayment Fee

Pros & Cons

drop-down-btn
  • con-icon Simple overall experience
  • con-icon No minimum credit score, good for those with bad credit
  • con-icon No application fees, origination fees, or prepayment penalties
  • con-icon Prequalified terms last 45 days, giving you time to decide
  • con-icon Allows for a co-signer
  • con-icon 7-days money back guarantee
  • con-icon Only finances vehicles sold on Carvana
  • con-icon High interest rates if you have bad credit

Auto Loan Types

drop-down-btn
  • New Car Loan
  • Used Car Loan

Vehicle Types

drop-down-btn
  • Car

320

Min Credit Score

3.2-24%

APR. Fixed Rate

$1K-$100K

Loan Amount

12-84 months

Repayment terms

No

Soft Credit Pull

Marketplace

Lender Type

None

Other Fees

None

Origination Fee

None

Prepayment Fee

48 hours

Funding Time

Pros & Cons

drop-down-btn
  • con-icon Quick and simple application form
  • con-icon Loans available to people with bad or no credit ratings
  • con-icon No fees associated with the loans
  • con-icon Limited information available online about the loan terms
  • con-icon No soft credit pull available
  • con-icon High APRs if your credit rating is very poor
  • con-icon No visibility of lending partners

Auto Loan Types

drop-down-btn
  • Unsecured Auto Loans
  • New Car Loan
  • Used Car Loan

Vehicle Types

drop-down-btn
  • Car

First-Time Car Buyer Loans: Definition

First-time car buyer loans cater specifically to individuals wanting to get into vehicle ownership for the first time. As new buyers are usually new to borrowing money, these loans can differ from standard auto financing. They can account for things like potentially limited credit history and someone who has never purchased a new or used car or larger asset before.

Key Terms to Know

In order to understand how auto repair loans work, let's get familiar with some of the most common terms you might come across:

  • Annual Percentage Rate: APR is the amount you’ll pay to borrow the money, including interest and fees, given as a yearly percentage. The higher the APR, the more you’ll owe in return for the loan.
  • Down Payment: This refers to the upfront amount you pay at the time of purchasing the car. The size of the downpayment can affect everything in the loan, from interest rates to monthly payment amounts.
  • Creditworthiness: This is a lender’s assessment of how risky you are as a borrower. It’s based on several factors, such as your credit score, income, employment status, and debt-to-income ratio before and after receiving a loan. A higher creditworthiness can get you better loan terms.
  • Term of the Loan: The term is the length of time that the loan has to be repaid. Common terms are 36, 48, or even 60 months, but it can be tailored to the specific needs of the borrower.

First-Time Car Buyer Loan: How it Works

While car financing might be a bit daunting, it’s simpler than it sounds. Most of the time, the lender will give you funds to purchase a car, and you will provide the car as collateral in a secured loan. The top first-time car buyer loans are mostly the same as standard auto loans with a few tweaks, and the process is generally as follows:

  1. Application: Begin by applying for a loan either online or in-person.
  2. Document Verification: As it’s your first car purchase, lenders will likely need a few things before handing you cash. Things like proof of income, employment, and any other relevant financial information are customary asks to assess your repayment ability.
  3. Loan Approval: After reviewing your creditworthiness, the lender will determine the loan amount, interest rate, and terms. Some lenders will offer special rates or terms for first-time buyers.
  4. Choosing Your Car: Once approved, you can head to the dealership or private seller to choose your vehicle. The loan amount typically will cover the price minus any downpayment you’ve made, i.e., you don’t get more money than needed.
  5. Repayment: After purchasing the car, you’ll make monthly payments based on the terms set out in the contract. Timely payments will avoid penalties and help you build a stronger credit history, so don’t be late.
  6. Ownership Transfer: Once you’ve repaid the entire loan, the car’s title - which might initially be with the lending institution as collateral - is transferred to your name, making you the sole owner.

Many financial institutions, including traditional banks, credit unions, and online lending platforms, will offer these types of loans. They can vary widely based on the vehicle’s price and the buyer’s creditworthiness. It’s common to see loans ranging from a few thousand dollars for used cars to larger amounts for new vehicles. The ultimate goal is to make the process smoother for new borrowers, ensuring they get behind the wheel without any real financial hiccups along the way. Review the loan agreement thoroughly and ask questions if anything is unclear.

First-Time Car Buyer Loan Rates and Fees

Understanding some basic terms will help you with figuring out the best first-time car buyer loan rates. For example, the average rate can be anywhere from 5.18% to 14.08%, according to Finmasters.com, based on your credit score.

First-time buyers often face slightly higher rates because of their limited credit history. However, rates can vary based on the loan’s term and other factors. Be aware of potential extra fees when signing on, such as origination fees or early repayment penalties. Always check the APR and all fees to understand the loan’s total cost before finalizing.

Types of First-Time Car Buyer Loans

There are a few types of these loans, and some of the best first-time car buyer loan companies will offer several of them. Some are listed below:

  1. Secured Auto Loans: These are the most common, where your car serves as collateral on the loan. If you fail to make payments, the lender may repossess the vehicle.
  2. Unsecured Auto Loans: These don’t require collateral in the car, but may come at a higher interest rate or be reserved for those with the highest credit ratings. This is to compensate for the increased risk.
  3. Pre-computed Loans: The interest is calculated upfront, and fixed payments are set for the loan’s duration.
  4. Simple Interest Loans: Interest is calculated on the remaining balance, so if you pay lump sums early, you can save on interest costs.
  5. Lease Buyout Loans: If you initially lease a car instead of financing it, and decide to purchase it after the lease ends, this loan will cover the cost.
  6. In-house Financing: This type of loan is offered directly by car dealerships, often with promotional rates or incentives for first-time buyers.

Weigh the pros and cons of all the options available to you to get the best option for your financial situation and car-buying goals.

First-Time Car Buyer Loans Pros and Cons

Pros

Cons

Opportunity to build a credit history Higher interest rates due to limited credit history
Various loan options tailored for first-time buyers Potential for overreliance on dealer financing
Promotions and incentives from dealerships Risk of car repossession with secured loans
Some loans offer flexible payment terms Might require a co-signer or a larger down payment

How to Apply

The best way to apply for a first-time car buyer loan is as follows:

  1. Do Your Research: Look into various lenders to find the best first-time car buyer loan rates.
  2. Gather Documents: Being prepared with essential paperwork will help smooth the process. Government ID, proof of income, proof of residence, and a credit report are common things to gather, although the institution will likely help you with this.
  3. Application: Complete the lender’s application form.
  4. Approval: This could be quick or take some time, but get the lender’s review and approval - this could also involve a hard credit check.
  5. Agreement: Review and sign the loan agreement after understanding all the terms.

Conclusion

Buying a car with a first-time car buyer loan can be complicated, but with the right information, you can make the most informed choice. Understand the different types of loans, rates, fees, and the pros and cons before entering into an agreement. Do your research and due diligence, and get driving today (or when you’re ready!).