San Diego residents need a car to have the most freedom to get around the city, but vehicles are expensive purchases that generally require loans. Getting a car loan is a complicated process, and comparing offers can be frustrating. ConsumerAffairs researched the best car loans in San Diego to help you find the lowest rates and know what to look for in a lender.
Consumers purchasing vehicles have many options for financing in San Diego. Banks, credit unions, online lenders and dealerships all offer auto loans.
Lenders have specific requirements to qualify for an auto loan or refinance offer, including:
You must be at least 18 years old
No active bankruptcies
Minimum income of $1,500 to $1,800 per month (varies by lender)
Credit score of 500 or higher (varies by lender)
Maximum mileage of 125,000 on the car being purchased (varies by lender)
The vehicle being purchased must be less than 10 years old (varies by lender)
Minimum financing amount of $5,000 (varies by lender)
When applying, you must have a valid driver’s license, proof of insurance and current vehicle registration. Be prepared to provide proof of income with pay stubs or bank statements.
Prequalifying for a car loan in San Diego
Some lenders offer pre-approval for auto loans. If you apply for pre-approval, the lender reviews your financial information and provides you with a loan amount and annual percentage rate (APR) before you shop for a specific vehicle. This lets you determine your budget while looking for a car and purchase the vehicle you want as soon as you find it.
Arranging financing before shopping for a car also lets you:
Understand the rates you’re likely to receive
Compare rates from several loan offers
Shop at multiple dealerships
Potentially negotiate a lower rate from the dealer
Save time by having cash deposited in your bank before shopping
Comparing car loans in San Diego
Lenders usually pay the most attention to your credit score when deciding whether you qualify for a loan and what the annual percentage rate (APR) of your loan is. It’s helpful to know your credit score before applying for car loans. Many credit card or loan companies let you see your credit score as a courtesy.
Once you have loan offers, you’ll want to compare them to decide which works best for your financial situation. Specific things to consider are:
Annual percentage rate: The lower the credit score a borrower has, the higher the APR a lender charges. For those with average credit, typical APR for auto financing is around 4 percent. For San Diego residents with excellent credit, it can be as low as 1.5 to 2 percent, and those with poor credit should expect to pay up to 16 percent or more.
Loan term length: Auto loan terms generally range from two to seven years. Shorter loans have a lower total cost because they accrue less interest, but longer loans have lower monthly payments. Ask about prepayment penalties if you pay off your loan before its scheduled end of term.
Down payment: Your lender may not require a down payment, but paying more upfront money toward your car lowers your interest rate and payments. You may be able to reduce the term of your loan, which saves money in the long run.
Additional fees and costs: Aside from interest fees, ask the lender about any origination or documentation fees associated with your loan. Be sure your total loan amount is enough to cover dealership fees and other expenses, including title and registration fees, state sales tax and insurance.
California law requires lenders to disclose the interest rate and keep that rate fixed during the life of the loan. The Equal Credit Opportunity Act prevents lenders from discriminating against borrowers, and San Diego military members and their families should be aware of benefits granted by the Servicemembers Relief Act, specifically the interest cap on loans.
Getting a car loan with bad credit in San Diego
Those with poor credit might be able to secure an auto loan from an alternative online lender or credit union, which tend to have more flexible criteria. If you have a steady source of income, many lenders try to work with you. Be aware that you’ll pay a higher APR with bad credit. Most lenders let you refinance your loan after six months to a year if you improve your credit score and qualify for better rates.
Putting down a more substantial down payment helps you qualify for a loan and reduce your APR. You can also have a relative or friend with strong credit co-sign your loan, which lets you use their credit to qualify but makes them liable for the loan if you default.
LightStream is a division of SunTrust Bank that offers alternative, online lending options. For auto finance, LightStream does not place any restrictions on the vehicle’s year, make, model or mileage, and the company does not require a down payment. San Diego car buyers praise LightStream’s easy-to-use website.
AutoApprove offers refinancing for existing auto loans. The company transmits your information to a network of lenders, letting you compare results and choose the best offer. While most reviewers in San Diego report friendly service and better rates when refinancing, a few experienced poor communication from customer service reps and problems with paperwork.
LendingTree is a free online loan and refinancing comparison tool. The company helps San Diego customers with bad credit by letting them input their information and find which lenders will work with them. Some reviewers appreciate the comparison service, but many report receiving multiple sales calls from companies after signing up for LendingTree’s service.
myAutoloan offers loans and loan comparison tools to San Diego car buyers. The company works with lenders that specialize in bad credit situations, and it provides up to four loan offers within minutes. Many San Diego customers are happy with lower interest rates and the simple, straightforward application process.
Capital One is a national lender with a division for auto financing. The company has a quick, online application and allows you to pre-qualify for a car loan without affecting your credit score. Capital One also has loan calculators and other online tools available on its website. San Diego customers appreciate the company’s prompt customer service.