The United States Automobile Association, or USAA, is an insurance company that offers not only insurance products for autos and homes but also provides auto loans to its members. USAA offers competitive rates for their car loans, and since your auto loan rate can significantly impact what you pay each month for your vehicle, shopping around is always a good idea. Take a look at USAA car loan rates and how this company’s loan process works.
What is USAA?
USAA started as a small organization made up of 25 Army officers who got together to insure each other’s vehicles. Since then, it has grown to over 12 million members. The corporate offices are in San Antonio, Texas, and the company now insures millions of cars and trucks around the country and offers a wide variety of financial services to its members, including auto loans.
In order to get an auto loan through USAA, you must become a member. All members are either current or former military, their spouses, and their children.
What Does USAA Offer for Car Loan Rates?
The interest rate environment is continually changing, and what you can get for a rate depends largely on your personal information. The rates are also different for new cars vs. used cars. Currently, USAA offers:
- Rates as low as 3.29% for vehicles that are 2021 model year or newer
- Rates as low as 3.74% for model years between 2015 and 2020.
To find out what you can get for a rate, you can fill out the online application and get preapproved. if you want to get a quick look at what your loan payment might look like, the USAA website also has an auto loan calculator that will help you get an estimated APR and calculate your monthly payment.
Both the new and used car loans are available with terms up to 84 months, and you can get a lower rate if you sign up for automatic payments. USAA does not penalize you for paying off your loan early, so if you find yourself in a situation where you can make higher payments, there are no hidden fees.
What Is a Car Loan Rate?
The loan rate refers to the interest rate you’ll pay on a car loan. The interest rate is the cost to borrow money and is expressed in a percentage. The interest rate does not include any fees in the loan. APR, or annual percentage rate, is the cost you’ll pay each year to borrow money to purchase a car, but it includes the fees. It is also expressed as a percentage. These two percentages are the most important measures of the price you’ll pay to borrow money.
What Affects a Car Loan Rate?
Lenders base their car loan rates on many different factors. It can differ depending on the time of year, the type of vehicle you want to buy, and the terms of the loan, but it all starts with the Federal Reserve. This organization sets the benchmark interest rate, and auto lenders base their rate on this.
Your personal information also affects the rate you can get. Some of the things that may determine your car loan rate include:
- Your credit score. Some lenders require a FICO score of at least 700, but it doesn’t mean you won’t get a loan if your score is lower than this. If you have a lower credit score, you’ll end up paying a higher interest rate.
- Your income. Income is another significant factor in determining auto loan rates. If you have a full-time job, it’s an indication that you’ll be able to make your monthly payments. USAA differs from other lenders in that they don’t require all borrowers to have employment.
- The down payment. Making a down payment on your loan reduces the amount you need to borrow and affects the interest rate you can get. The larger the down payment, the better the interest rate you can get.
- The trade-in. Trading in your old car and using what you get for the trade-in toward the new vehicle will help lower your rate.
- The term length. The longer the loan term, the more interest you will pay over time. The interest rate might be lower for a longer-term loan, but you’ll end up paying more over the life of the loan.
How To Get a Car Loan With USAA?
You can start the process of getting a car loan with USAA with the online preapproval and application. Some of the information you should have ready include:
- The amount you need to borrow
- Your gross income
- Your housing information
- Your current employment
Once you fill out the application, you’ll have an answer about whether you’re approved and the rate within a few minutes. The company will run a credit check before approving you for a loan. In most cases, they require a credit score between 560 and 850. It’s also worth noting that USAA does not require a minimum annual income requirement. They will consider your application based on your ability to repay the loan regardless of your employment status.
USAA’s loan offer is good for 45 days, giving you time to shop around and compare rates. When you compare rates, make sure to look at the length of the loan and the interest rates. These two factors will impact the amount you pay over the entire term of the loan. You can also look at any fees the lender charges that can increase your monthly payment.
Once you’ve decided to use USAA, you can complete your documents online by e-signing them. Soon after signing the documents, you can expect to receive the funds to purchase your car.
USAA is one of the top insurance companies and financial institutions in the country and offers competitive auto loan rates. The one significant downside is the loans are only available to USAA members, which means you have to be a current or former military member or the spouse or child of a military member.
At FIXD, our mission is to make car ownership as simple, easy, and affordable as possible. Our research team utilizes the latest automotive data and insights to create tools and resources that help drivers get peace of mind and save money over the life of their car.