Car Loans Rating Methodology

Our Rating System for Auto Loans

Our team paid close attention to customer reviews, loan options and rates while assembling our auto lender rankings. We also considered availability and any restrictions lenders put on auto loans. To better understand what mattered to consumers, our team conducted a survey of 1,000 people with auto loans and shopped for loans ourselves before assigning provider ratings.

These are the specific categories we applied to our auto lender ratings:

• Industry Standing
• Rates and Discounts
• Availability
• Loan Details
• Customer Service

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Factors We Use To Score Auto Loan Companies

We begin our scoring process by giving each provider a rating out of 100, then later translate that into a score on a 10-point scale. This score is the average of the company’s rating across five key categories. Below, we break down each of these categories in detail. Note that some percentages are rounded for clarity.

Industry Standing (30%)

We consider an auto loan company’s standing in the business world as we assign this rating. These are the criteria we weigh for both direct lenders and aggregators that present consumers with an array of financing options.

• Better Business Bureau (BBB) rating (16%): A BBB rating shows consumers how well a company responds to complaints and communicates with the public. We also look at BBB accreditation, which is a sign that a company has gone the extra mile to build consumer confidence. Companies that score the highest in this category have an accredited A+ rating.
• Years in business (14%): There’s a wide variance here, as lenders, like Chase, have been in business for over 200 years. We give the highest scores to companies that have 50 or more years of experience.

Rates and Discounts (25%)

As you would expect, auto loan companies that feature competitive rates score well in this category. Here are the specific criteria we factor when scoring:

• Lowest APR (17%): The lower the starting annual percentage rate, the higher our score. Providers that score best offer starting rates at 3% or lower.
• Prepayment penalty and missed payment forgiveness (3%): No penalties and forgiveness for missing payments earns companies a better score.
• Application fee (3%): Few of our top-rated auto loan companies require an application fee, but some do require credit union membership. While this isn’t much of a hindrance, it’s enough to bring a company’s rating in this category down a bit.
• Discounts (2%): Options for enrollment in auto pay, bundling loans and purchasing through a lender’s car buying service are all examples of rate discounts we consider. Because discounts are a rarity in the industry, we award full points to providers with one or more discounts.

Availability (20%)

We measure availability by how many states an auto loan company serves and by borrower eligibility requirements. Here are the specific things we weigh for this category:

• State availability (6%): Many of our top-ranked auto loan companies offer services in all 50 states. Those that don’t receive lower scores in this category.
• Pre approval (5%): The option to get pre approved for a loan makes things easier for borrowers, so we give maximum points to companies that offer it.
• Minimum credit score (5%): A higher minimum credit score results in a slightly lower availability rating from our team. Providers with no minimum or a minimum under 550 earn the most points in this category.
• Age restrictions (2%): Some auto loan companies only serve consumers that are age 18 and up, while others are age 19 and up. Companies with no restrictions or an 18-and-up restriction earn the highest scores here.
• In-person locations (2%): Having the ability to meet with an auto loan provider in person or shop online earns providers higher scores.

Loan Details (15%)

Auto lenders and auto loan aggregators vary in financing amounts and terms. Here’s how we evaluate companies for the loan details category:

• Loan amounts (6%): Some auto loan companies have strict minimum and maximum loan amounts. The more flexible a company is with loan amounts, the higher its score. For example, companies with no minimum or a minimum below $1,000 and a maximum of $100,000 or more score best.
• Loan terms (6%): Generous term lengths, like 84 or even 96 months, result in higher scores in our loan details category.
• Loan types (3%): Companies that feature traditional auto loans, auto refinance loans and lease buyout loans get the highest scores.

Customer Service (10%)

Communication with borrowers is a significant piece of our auto loan company rating process. These are the key factors we examine for this category:

• Online customer ratings (4%): We focus on the BBB and Trustpilot here, looking for common themes and trends in customer feedback. Companies with consistent 4.5- to 5.0-star ratings score highest in this category.
• Chat and phone service (2%): Companies with 24-hour phone service and chat features earn more points in this category.
• Loan calculator (2%): A loan calculator is a convenient tool for many borrowers, so having one online earns a provider full ratings.
• BBB complaints (1%): The BBB tracks consumer complaints and how well a company handles them. An auto loan company that quickly responds to and resolves complaints gets a high score in the customer service category.
• Mobile app rating (1%): Having a well-reviewed mobile app is another way to get high marks. We reward providers with top marks for ratings of 4.5 stars or higher.

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The Bottom Line: How To Choose the Right Auto Loan Company

We designed our rating system for auto loan companies to help you make sense of the car financing industry. The data we gather helps us fully analyze lenders and loan aggregators while putting you in the best position to secure financing.