10 Lowest Auto Loan Interest Rates in the U.S.

Editors' pick: Originally published Sept. 1.

Car loans are piling up at a frightening pace, but the best rates are still elusive.

The Federal Reserve Bank of New York notes that U.S. auto loan debt stood at $1.1 trillion in June. That's $97 billion more than it was a year ago and is the second-fastest-growing portion of consumer debt behind only the $246 billion increase in mortgage debt from 2015 that brought the nation's mortgage tab to $8.36 trillion.

Auto loan debt is now perilously close to the total amount of U.S. student loan debt ($1.26 trillion) and is nearly $400 billion more than the nation's $726 billion credit card debt. The good news is that the 3.5% of auto loans that are past due are minuscule compared to the 7.2% of credit card debt and 11.1% of student loan debt that's similarly in arrears.

The bad news? It's still more than the 1.8% of mortgages that are behind on their payments and is up from 3.2% in 2014 and just 2.2% in pre-recession 2006. It also doesn't help that 22% of all car loans fall into the "subprime" category of borrowers with credit scores of 620 or less.

"Growth rates continue at unsustainable levels," said Nick Clements, former banker turned consumer advocate and founder of personal finance advice site MagnifyMoney. "Too much risk is being taken, and defaults will be coming."

Even new auto loans at credit unions a have jumped 15.7% within the last year, accounting for 18.4% of total loan growth, increasing $20.7 billion year-over-year and adding 572,550 new auto loans the national total, according to credit union analysts Callahan & Associates. Used car loans, meanwhile, rose 13.4% since August of last year, account for 25.8% of all loan growth during that span and have an average balance of $11,941.

Unfortunately, even at credit unions, auto loans don't always tend to be a great investment. The folks at CreditCards.com note that of all loans that required a co-signer during the last year, 51% were auto loans. Unfortunately, 38% of co-signers were stuck with all or part of the bill because the borrower couldn't pay. That resulted in a drop in credit score for 28% of co-signers, while 26% say it damaged their relationship with the person they cosigned for.

"With a 38% chance of losing money and a 26% chance of damaging a relationship, co-signing doesn't sound like a very good bet," says Matt Schulz, CreditCards.com's senior industry analyst. "If you absolutely have to co-sign, then at least be aware there's a sizable chance you'll lose some money and/or get your feelings hurt."

However, a lot of the ugliness above can be avoided if you have excellent credit and a lender willing to provide a low rate as a result. With the help of Rate Watch, a Fort Atkinson, Wis.-based premier banking data and analytics service owned by TheStreet, Inc., we found the ten best auto loan rates in the country. If you manage to qualify, use them wisely:

10. Teachers Federal Credit Union
10. Teachers Federal Credit Union

Farmingville, N.Y.

36-month, 48-month and 60-month new car loans: 1.45%

Teachers Federal has only ten branch location on Long Island, and it has a few stipulations for membership, but the folks at TFCU make it incredibly worthwhile for folks who can clear the bar.

If you live, work, conduct business, worship, attend school or run a business in Nassau County or certain portions of Suffolk County (Huntington, Babylon, Smithtown, Islip, Brookhaven, Riverhead, Southold or the Poospatuck Reservation) you can join. Once you're in, your family's eligible as well.

For free checking, $1 minimum account balances and low rates on mortgages and home equity lines of credit as well, it's worth considering.

9. Nassau Educators Federal Credit Union
9. Nassau Educators Federal Credit Union

Valley Stream, N.Y.

36-month, 48-month and 60-month new car loans: 1.45%

Again, just 12 locations on Long Island, but a great source of low-interest loans for people who qualify.

NEFCU was formed in 1938 as a means for school employees to pool their money together and borrow from one another. Those ten members and their $50 investment have grown to 160,000 members and $2 billion in assets throughout Nassau and Suffolk counties. They share branches with other Long Island credit unions, have surcharge-free ATMS and look a lot like the last Long Island Credit Union we just mentioned out of design. The Long Island credit unions are in it together, and all their members benefit as a result.

8. Andrews Federal Credit Union
8. Andrews Federal Credit Union

Suitland, Md.

36-Month new car loan: 1.39%

This credit union wears its rates on its front page and its history in its name.

Founded in 1948 near Andrews Air Force Base by eight people depositing five bucks apiece, this credit union has since expanded to Washington, D.C., Maryland, Virginia, New Jersey, joint bases Andrews and McGuire/Dix/Lakehurst and military installations in Germany, Belgium and the Netherlands. While active-duty military and their families make up the core of their business, their services are open to anyone who qualifies.

7. Consumer Credit Union
7. Consumer Credit Union

Greeneville, Tenn.

36-Month new car loan: 1.35%

You're getting the basic gist of the credit unions.

This is just a little ten-location outpost in Tennessee that just brought Covenant Health Credit Union into the fold as well. There's no homespun backstory to share, no narrative about founders building the credit union with impossibly small amounts of money. There are just low loan rates, fraud protection and a summer loan program that allows families to skip a loan payment to invest in their families instead. Those rates and loan leniency are both great draws on their own, but using both to build better saving habits and credit is a worthy endeavor.

6. Library of Congress Federal Credit Union
6. Library of Congress Federal Credit Union

Washington, D.C.

36-month new car loan, 36-month 2-year-old used car loan: 1.29%

48-month new car loan, 36-month 4-year-old used car loan, 48-month 2-year-old used car loan: 1.35%

All right, we've finally reached exclusive territory.

The Library of Congress Federal Credit Union was founded in 1935 by 12 Library of Congress employees who bought 17 shares at $5 each. The LCFCU is still teeming with Library of Congress workers, but now it's also offered as a benefit by various D.C.-area companies. If you're fortunate enough to fall into either of those categories, congratulations: you get ridiculously low rates on just about any consumer loan you could ever need. If not, see if you're related to any of the above. If you are, start begging them to vouch for you.

5. Fortera Credit Union
5. Fortera Credit Union

Clarksville, Tenn.

36-month new car loan, 36-month 2-year-old used car loan: 1.29%

Credit unions don't always evolve in a predictable fashion.

In 1954, Fortera offered its services solely to civil service employees. It expanded to military families back in 1960 and is now extends its benefits to anyone who lives, works, worships, or attends school in Montgomery or Stewart counties in Tennessee or Christian, Trigg or Todd counties in Kentucky. If you fall into those groups, a $5 savings account deposit and a $5 membership fee gives you access to that loan rate and low rates on mortgages, home equity loans and more.

4. ServU Federal Credit Union
4. ServU Federal Credit Union

Painted Post, N.Y.

36-month new car loan, 36-month 2-year-old and 4-year-old used car loans: 1.24%

In Southern New York near the Pennsylvania border, there's a six-branch credit union that has some of the lowest rates in the country. Though the 35,000 people in Steuben, Schuyler, Yates and Allegany counties who keep their money with ServU are a relatively sizable contingent compared to its humble beginnings, that's still basically a townful of folks.

Founded in 1956 as the Corning Teachers Credit Union, ServU eventually brought in other teachers from surrounding school districts to grow its numbers and help it offer and increasing amount of services. However, it didn't stop being a teachers-only affair until 2004, when it embraced the most general purpose of a credit union: "[T]o promote thrift among its members by offering them an opportunity to accumulate their savings and to create for them a source of credit for economic and productive services."

3. Advantage Financial Credit Union
3. Advantage Financial Credit Union

Washington, D.C.

36-month new car loan, 36-month 2-year-old and 4-year-old used car loans: 1.24%

We had an issue tracking this one down, largely because Rate Watch still identifies it under its old name: The Department of Veterans Affairs Federal Credit Union.

Yep, that's the "dva" in "Advantage," and it began in 1932 as a small collective of Veterans Administration employees. Today, it has 10,000 members and $100 million in assets, but still limits membership to Department of Veterans Affairs workers and anyone who lives, works, worships or goes to school in Washington, D.C. The only stipulation beyond that is maintaining a balance of $5 or more, which makes it a fairly sweet deal.

2. Ontario Shores Federal Credit Union
2. Ontario Shores Federal Credit Union

Newfane, N.Y.

36-month new car loan, 36-month 2-year-old used car loan: 1.2%

Two: That's the number of offices this particular credit union has in Western New York. However, the two locations in Newfane and Medina are sort of beside the point, as Ontario Shores prides itself on its online access.

There aren't a whole lot of restrictions on who can join and Ontario Shores doesn't even have a minimum balance requirement for its accounts. Ontario Shores wants to build your credit and savings and make sure you qualify for loans -- among other things -- without much hassle. The Ontario Shores serves just 5,000 members in Western New York, but that loan rate coupled with fairly easy access to an institution that, in other regions, isn't always quite up to 21st Century standards, makes this particular credit union a community gem.

1. Advance Financial Federal Credit Union
1. Advance Financial Federal Credit Union

East Chicago, Ind.

36-month new car loan, 36-month 2-year-old and 4-year-old used car loans: 1%

Another two-branch credit union, another impossibly low rate.

That isn't a coincidence. Back in 1937, eight Inland steelworkers founded this credit union with the idea that people can help other people save. Advance Financial still adheres to that ideal, relying heavily on its fellow credit unions, their 5,000 shared branches, their 32,000 no-fee ATMs nationwide and the sense of community that binds them. Sure, Advance Financial serves mostly Porter and Lake counties in Indiana, but its members enjoy a whole lot of national benefits for their regionally reasonable loan rates.

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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.