Bank of America's auto loans have low starting interest rates and bonus discounts for current customers
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- Bank of America’s auto loans beat out the competition with low interest rates and APRs.
- Rewards members get even more incentive with interest rate discounts of up to .5%.
- This lender requires a minimum loan of $7,500 and a minimum value of $6,000.
- See Business Insider’s picks for the best auto loans »
While Bank of America auto loans come with perks for customers who already have accounts, low interest rates mean that they’re often a good bet for anyone looking for an auto loan in 2021.
Next to the competition, Bank of America’s starting 2.59% APR for new car purchases and 2.89% APR for used car purchases are quite low. Much of the competition start their rates higher.
Only buyers with the best credit scores will get the lowest possible interest rate. Before settling on a car loan, remember to shop around and compare all of the offers. Look beyond the monthly payment, too, and consider the interest rate and the length of the loan.
Should you get an auto loan from Bank of America?
Bank of America offers several types of auto loans, including loans for purchasing a car either new or used from a dealership, for buying your current leased car, and for buying a car from a private seller. This lender doesn’t finance motorcycles or RVs with auto loans, nor commercial vehicles, though a separate small business auto loan is available.
Loan terms range from 12 to 75 months. Buyers in all 50 US states are able to use Bank of America auto financing. The car you’re looking to purchase will need to meet a few requirements. It must:
- Be fewer than 10 years old
- Have fewer than 125,000 miles
- Have a value over $6,000 according to NADA
- Not have a rebuilt, salvage, or branded title
Who are Bank of America auto loans best for?
This lender is best for anyone who already has a Bank of America account. Not only will it be easy to see your auto loan with the same login information as the rest of your banking, but you’ll also have some perks if you have an elite status with the bank.
Instead of auto pay discounts, Bank of America offers incentives to customers who already use its services. Customers with gold, platinum, or platinum honors status will receive up to .5% off their auto loan’s APR. To achieve each status, you must have a three-month average balance in Bank of America accounts or Merrill Lynch investment accounts greater than or equal to the following balances:
- Gold members (minimum $20,000 balance) : .25% off listed APR
- Platinum members (minimum $50,000 balance): .35% off listed APR
- Platinum honors members (minimum $100,000 balance: .5% off listed APR
While this lender is an excellent choice for current customers, anyone can apply for an auto loan. And, with starting interest rates from this lender so low, it may still beat the competition, even without the discount.
The pros of Bank of America’s auto loans
Low interest rates
One of the big draws of Bank of America auto loans are the low interest rates. Rates for both new and used cars start well below the competition. Comparable lenders like LightStream, which mainly focuses on borrowers with good credit, has interest rates that start higher for new car purchases with certain term lengths. In many cases, Bank of America is almost a full percentage point below the competition.
No loan fees
Some lenders charge fees when originating new loans, or charge prepayment fees for anyone who pays off the loan early. Bank of America auto loans don’t involve any prepayment or origination fees.
Several different types of loans to choose from
Bank of America offers several types of auto loans in one place. It offers not only dealer purchase loans for new and used cars, but also offers loans for private party purchases, lease buyouts, and refinancing. Additionally, Bank of America offers auto loans for customers who need an accessible vehicle.
The cons of Bank of America’s auto loans
Interest rate discounts require a relationship (and high balances)
While some lenders offer discounts for setting up automatic payments for your loan each month, Bank of America does not. It only offers discounts to current customers who have balances in their Bank of America or Merrill Lynch accounts of $20,000 or more.
High minimum loan amount
Bank of America requires a minimum loan of $7,500 (and $8,000 in Minnesota), which is relatively high. If you’re looking for an affordable vehicle, this high minimum amount could mean buying more car than you need (or can afford).
The minimum car value Bank of America finances is $6,000, but the minimum loan amount is $7,500. If your budget is under $7,500, you could end up underwater on your loan where the car worth less than the value of the loan.
How do Bank of America auto loans compare to competitors?
Compared to other lenders, Bank of America has some of the lower starting interest rates available for new cars and used cars bought from dealers. Here’s how the starting APRs stack up against LightStream, Capital One, and USAA, not including any auto pay or relationship discounts. These APRs are the starting APRs, and are generally only available to those with the best credit scores.
|Lender||New car purchase starting APR||Used car purchase starting APR|
|Bank of America auto loan||2.59% APR||2.89% APR|
|Capital One auto loan||3.99% APR||4.62% APR|
|USAA auto loan||2.89% APR||3.29% APR|
Bank of America vs. LightStream auto loans
Both of these lenders are solid choices, but Bank of America has an advantage with lower starting interest rates. If you’re already a Bank of America customer qualifying for discounts, the deal could be even sweeter.
LightStream only works with borrowers with good or better credit scores and requires a credit score of 660 or better. Bank of America doesn’t have a minimum credit score requirement, so it could be more flexible with some borrowers. However, remember that lower credit scores often mean higher interest rates.
Bank of America vs. Capital One auto loans
Capital One’s auto loan options don’t beat the starting interest rates available through Bank of America for most buyers with good or better credit scores. However, Capital One could be a good option for anyone with bad credit. Capital One makes loans to people with FICO credit scores as low as 500. Bank of America doesn’t have a minmum credit score it considers, so it may still be worth applying even if you have a low credit score.
Bank of America vs. USAA auto loans
USAA offers some competitive interest rates on auto loans, and .75% worth of interest rate deductions for drivers using its buying service (.5% discount) and setting up auto pay (.25%). However, USAA only works with people with military affiliations, making it only accessible to some Americans.
Get the latest Bank of America stock price here.
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