USAA auto loan review: Competitive rates for members only

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In a Nutshell

USAA offers auto loans for new and used cars at competitive interest rates. But you’ll have to qualify for membership as a current or former service member — or have an eligible family member — to apply.

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Pros Cons
APR discounts for car-buying service and automatic payments Must qualify to become a USAA member
No prepayment penalty No prequalification option
Car-buying service

What you need to know about USAA auto loans

USAA is a nearly century-old financial institution that serves current and former military members and their families. If you qualify for USAA membership, you can apply for loans and credit cards, including USAA auto loans and insurance.

Competitive APRs

USAA offers competitive annual percentage rates, or APRs, for new and used cars, though your exact rate will be determined by your credit and other factors. When you enroll in automatic payments or purchase a vehicle through the company’s car-buying service, you can get even better rates. You can lower your interest rate by 0.25% by signing up for autopay, and you can lower your interest rate by another 0.50% if you purchase a car with USAA’s car-buying service.

USAA auto loan rates are lower than what you’ll find at many big lenders. But you’ll need to qualify, set up automatic payments and go through its car-buying service to access its lowest rates.

Rate lock

USAA helps make rate shopping for your new car loan easier by locking in your approved rate for 45 days, allowing you to compare potential rates with other lenders. So if you get a rate offer you like with USAA but want to check out other lenders just in case, you don’t have to rush.

And rate shopping doesn’t necessarily have to affect your credit, depending on different factors. For example, if you’re shopping for an auto loan, FICO gives you a 14- to 45-day period to rate shop depending on the credit-scoring model used. FICO also may treat multiple hard inquiries for an auto loan as one inquiry if they’re made within a certain span of time.

Hard and soft credit inquiries: What they are and why they matter

Several loan options

In addition to financing new and used vehicles, you can apply for a USAA auto loan to buy out a lease, refinance your loan or purchase a vehicle from a private seller. USAA also offers motorcycle, boat and RV loans if you want an alternative vehicle.

A car-buying service

If haggling with the dealership isn’t for you or you don’t want to do independent research, USAA offers a car-buying service where it acts as an intermediary in helping you to secure bids from dealerships. Dealers will compete and offer prices on a number of vehicles you’re considering, and the information in the listings includes car features and any seller notes.

USAA’s car-buying service is powered by TrueCar, an auto marketplace that shows people what others across the country have paid for a similar vehicle. Knowing what others have paid may help you ensure that you aren’t overpaying.

USAA says its members save an average of more than $3,500 off the manufacturer’s suggested retail price, or MSRP, of new vehicles by going through its car-buying service. You may also qualify for bonus cash offers from certain auto manufacturers.

A closer look at USAA auto loans

Here’s what else you need to know about USAA auto loans.

  • Repayment terms of up to 84 months available for an auto loan (best rates available for loan terms of up to 60 months or less)
  • No prequalification
  • No prepayment penalty
  • No application fees
  • Apply with your mobile device
  • Auto insurance available through USAA

Is a USAA auto loan right for you?

USAA auto loans are only available to members, and to qualify you’ll need to be a current or former military service member or be a cadet or midshipman — or have an eligible family member. If you’re eligible but not yet a USAA member, it could be worth joining to get access to USAA auto loans.

USAA auto loans can be attractive for a number of reasons, including the discounted APRs, multiple repayment term options and no prepayment penalty.

If you prefer using a car-buying service to negotiating with a car dealer on your own, USAA may also be a good fit.

One note though, we spoke with a USAA rep and they said it doesn’t allow co-signers. So if you think you might need one to be approved for an auto loan, you may have to go elsewhere.

How to apply for a loan from USAA

To apply for an auto loan with USAA, first note that you must be a USAA member. Also keep in mind that to qualify for their reduced rates, you need to enroll in automatic payments (for a 0.25% rate reduction) and purchase your car through USAA’s Car Buying Services (for a 0.50% rate reduction).

If you agree to the terms and conditions from USAA and submit your application, it will result in a hard credit inquiry. And, unlike some other auto lenders, USAA doesn’t offer prequalification on their auto loans, so you will need to submit an auto loan application to see if you qualify.

If you’re interested to submit an application, you can apply for a USAA loan online or on your phone. Just log in through the USAA member portal on your device to get to the application process. Read carefully through the terms and conditions, including your APR, repayment terms and monthly payments. If you like the offer, you’ll have the option to e-sign for your approved loan amount.

Before you apply for an auto loan with USAA or any other lender, check your credit scores and compare other loan offers. Understanding your credit can help set expectations – in general, lower credit scores will result in higher interest rates. And shopping around can help you find the best loan rate and terms for your needs. Read our article on how to get a car loan to learn more about the process.

Auto loan alternatives to consider

Not a USAA member or want to know what else is out there? Here are some other options you might want to consider.

  • Chase auto loan: Chase also offers a car-buying service, but you won’t need to be connected to the military to qualify. Read our review to learn more.