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An auto loan represents the largest or second largest form of indebtedness many people ever take on. But just as there are high performance cars and clunkers, some auto loans are very bad deals. If you're in the market for an auto loan, considering the factors below will help you avoid taking on a lemon of a loan.

Auto Loans and FICO Scores

Whether you’re in the market for a new or used car, your credit report and FICO score are of the utmost importance.  Auto dealers and lenders categorize potential car buyers into four categories; Prime, Nonprime, Subprime and Deep Subprime.  When car commercials refer to “well qualified” customers, they mean Prime buyers.  Prime and to a lesser extent Nonprime buyers receive the lion’s share of offers and perks. On the other hand, Subprime and especially Deep Subprime borrowers may find it difficult to obtain financing at all. The list below illustrates the FICO scores associated with each of the four categories of auto loan borrowers.

Prime 660+
Nonprime 601 to 659
Subprime 500 to 600
Deep Subprime Below 500

Loan Options and Perks

Loan options and perks like zero percent financing and generous cash back programs are almost always reserved for customers with the highest FICO scores.  Other perks include payments made by the manufacturer and upgrades such as HEMI engines. However, online auto loans allow Nonprime and even Subprime customers to shop around for the most favorable deals, even if the most generous offers are out of reach.

Shorter is Better

While a 15 or 30 year mortgage is often viewed as a wise investment, this is not the case with long-term auto loans. This is because cars begin to lose value as soon as they’re driven off the dealer’s lot. With the exception of vintage and collector’s vehicles, this depreciation process only continues, if not accelerates.  Buyers who take car notes for five years or longer may find themselves driving a beater and paying new car rates.

Support and Security

Online loan application websites should incorporate high level encryption and other security measures to keep your sensitive personal and financial information as safe as possible. Support should also be readily available at all stages of the loan application process, by phone, email, live chat or some combination of the three.

Buy Here, Pay Here Lots

Many deep Subprime buyers especially are drawn to so-called buy here, pay here lots, featuring dealer provided financing.  In some cases, buyers can obtain reasonable deals, but in many instances, such lots often feature subprime cars, if not outright lemons and high APRs. In the worst cases, buy here pay here lots are little more than scams. Instead, Subprime and Deep Subprime buyers should consider settling for a used car for which they can afford to pay cash.

Compare Auto Loans

An auto loan represents the largest or second largest form of indebtedness many people ever take on. But just as there are high performance cars and clunkers, some auto loans are very bad deals. If you're in the market for an auto loan, considering the factors below will help you avoid taking on a lemon of a loan.

Auto Loans and FICO Scores

Whether you’re in the market for a new or used car, your credit report and FICO score are of the utmost importance.  Auto dealers and lenders categorize potential car buyers into four categories; Prime, Nonprime, Subprime and Deep Subprime.  When car commercials refer to “well qualified” customers, they mean Prime buyers.  Prime and to a lesser extent Nonprime buyers receive the lion’s share of offers and perks. On the other hand, Subprime and especially Deep Subprime borrowers may find it difficult to obtain financing at all. The list below illustrates the FICO scores associated with each of the four categories of auto loan borrowers.

Prime 660+
Nonprime 601 to 659
Subprime 500 to 600
Deep Subprime Below 500

Loan Options and Perks

Loan options and perks like zero percent financing and generous cash back programs are almost always reserved for customers with the highest FICO scores.  Other perks include payments made by the manufacturer and upgrades such as HEMI engines. However, online auto loans allow Nonprime and even Subprime customers to shop around for the most favorable deals, even if the most generous offers are out of reach.

Shorter is Better

While a 15 or 30 year mortgage is often viewed as a wise investment, this is not the case with long-term auto loans. This is because cars begin to lose value as soon as they’re driven off the dealer’s lot. With the exception of vintage and collector’s vehicles, this depreciation process only continues, if not accelerates.  Buyers who take car notes for five years or longer may find themselves driving a beater and paying new car rates.

Support and Security

Online loan application websites should incorporate high level encryption and other security measures to keep your sensitive personal and financial information as safe as possible. Support should also be readily available at all stages of the loan application process, by phone, email, live chat or some combination of the three.

Buy Here, Pay Here Lots

Many deep Subprime buyers especially are drawn to so-called buy here, pay here lots, featuring dealer provided financing.  In some cases, buyers can obtain reasonable deals, but in many instances, such lots often feature subprime cars, if not outright lemons and high APRs. In the worst cases, buy here pay here lots are little more than scams. Instead, Subprime and Deep Subprime buyers should consider settling for a used car for which they can afford to pay cash.

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Company

Reviews

Loan Term (Months)

Loan Amount

APR

Credit Score Range

Additional Details

Company Website

SpringboardAuto

SpringboardAuto

3
 
3
6 total votes
Maximum Loan Term (Months) 72 Maximum Loan Term (Months)
Loan Amount $7.5K - $40K $500 $100K+
APR 5% - 36% 0% 36%+
Credit Score Range 500 - 850 300 850
  • No Prepayment Fee

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Auto Credit Express

Auto Credit Express

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Maximum Loan Term (Months) 72 Maximum Loan Term (Months)
Loan Amount $3.5K - $45K $500 $100K+
APR N/A APR
Credit Score Range 400 - 850 300 850
  • No Origination Fee
  • No Prepayment Fee
LendingPoint

LendingPoint

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Maximum Loan Term (Months) 48 Maximum Loan Term (Months)
Loan Amount $2K - $25K $500 $100K+
APR
()
15.49% - 34.99% 0% 36%+
Credit Score Range 590 - 720 300 850
  • No Prepayment Fee
Autopay

Autopay

 
 
13
14 total votes
Maximum Loan Term (Months) 84 Maximum Loan Term (Months)
Loan Amount $2.5K - $100K $500 $100K+
APR 1.99% - 15.99% 0% 36%+
Credit Score Range 620 - 850 300 850
  • No Prepayment Fee
Prosper

Prosper

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Maximum Loan Term (Months) 60 Maximum Loan Term (Months)
Loan Amount $2K - $40K $500 $100K+
APR 6.95% - 35.99% 0% 36%+
Credit Score Range 640 - 850 300 850
  • No Prepayment Fee
LendingClub

LendingClub

Be the first to rate

Loan Term (Months) N/A Loan Term (Months)
Loan Amount $5K - $55K $500 $100K+
APR 2.24% - 24.99% 0% 36%+
Credit Score Range 600 - 850 300 850
  • No Origination Fee
  • No Prepayment Fee
myAutoloan

myAutoloan

1
 
2
3 total votes
Maximum Loan Term (Months) 84 Maximum Loan Term (Months)
Loan Amount $8K - $100K $500 $100K+
APR 2.19% - 24.9% 0% 36%+
Credit Score Range 500 - 850 300 850
  • No Prepayment Fee
US Bank

US Bank

1
1
 
2 total votes
Maximum Loan Term (Months) 72 Maximum Loan Term (Months)
Loan Amount $3K - $100K $500 $100K+
Starting APR 3.12% Starting APR
Credit Score Range 650 - 850 300 850
USAA

USAA

3
5
8
16 total votes
Loan Term (Months) 12 - 72 12 240
Loan Amount N/A Loan Amount
APR 2.49% - 13.85% 0% 36%+
Credit Score Range 560 - 850 300 850
  • No Origination Fee
  • No Prepayment Fee
Sea Air Federal Credit Union

Sea Air Federal Credit Union

 
1
 
1 total votes
Maximum Loan Term (Months) 84 Maximum Loan Term (Months)
Loan Amount $500 - $500K $500 $100K+
APR N/A APR
Credit Score Range 550 - 850 300 850
  • No Prepayment Fee