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State Farm Auto Loan Review

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Even if you’re one of the millions of State Farm insurance policy holders in the U.S. you might not be aware the company has a banking arm, too. State Farm Bank — not to be confused with State Farm Federal Credit Union — offers competitive rates on new and used car auto loans in all states but Massachusetts and Rhode Island. All loans come with free loan payoff protection, similar to GAP insurance, which is a nice perk. One downside is a prepayment penalty you’ll be charged if you pay off your loan in fewer than 18 months. Keep reading to see if a State Farm car loan is right for you.

How State Farm Bank car loans work

State Farm insures more cars and homes than any other U.S. company. If you’re a policyholder, it may be convenient to have your auto insurance and auto loan in the same place, but anyone can apply for State Farm financing. Cars aren’t the only vehicles you can buy with State Farm Bank financing — it provides loans for boats, motorcycles and recreational vehicles. For purposes of this review, we’ll focus on car loans.

State Farm Bank auto loans: Rates and terms at a glance

  • APRs start at 3.39%
  • Terms between 12 and 84 months
  • Loan amounts from $5,000 to $250,000

State Farm Bank offers competitive rates and terms for both new and used vehicles from a dealer or private party. You may also use State Farm financing to refinance the car you already have or buy out your leased vehicle, though rates for lease buyouts aren’t specified on its website. State Farm also offers title loans, which can be risky though State Farm may offer better rates than traditional payday lenders. Here’s a closer look at new and used auto loans from State Farm:

Type of loan APR range Terms
New auto (2018-2020 models) Starting at 3.39% 12–84 months
Used auto (2017 and older models) Starting at 3.89% 12–84 months
Auto refinance (2018-2020 models) Starting at 3.39% 12–84 months
Auto refinance (2017 and older models) Starting at 3.89% 12–84 months


Credit score. State Farm does not define a required minimum credit score on its website but says it is a factor when evaluating your loan application. If your credit score is low, you may be charged a rate higher than the stated minimum APR, and be required to make a down payment. A higher credit score will likely land you a better interest rate and more favorable loan terms.

Interest rates. In addition to your credit score, your interest rate is based upon many factors including the amount and length of the loan, as well as the type of vehicle that you buy. State Farm does not disclose the highest possible APR on its website. Starting rates for refinance loans are the same as starting rates for new and used vehicles, according to a customer service representative.

Payoff Protector. Any vehicle financed through State Farm Bank comes with free coverage that will pay off your car loan in case of an accident or theft where insurance does not cover the entire amount. This is similar to GAP insurance, which is an extra cost some buyers choose to pay either to their lender or a third-party provider.

How to apply for a State Farm Bank car loan

You may apply online or contact your local State Farm agent to start the application process. If your auto loan application is submitted during business hours, you may have a decision within an hour. It may be necessary to finish your application with an agent — before you make the trip to a local office, check here to make sure the agent you have in mind provides auto loan services.

Preapprovals. It’s possible to apply for a State Farm preapproved auto loan before picking out the exact car you want. Preapproval will require:

  • Date of birth
  • Social Security number
  • Employment information
  • Collateral type
  • Collateral year

A preapproved auto loan gives you a ballpark estimate for the loan amount and financing terms for which you may be eligible. That way you can walk into the dealership knowing what you qualify for — if the dealer can beat it, great, you’re probably getting a good deal. The same goes for your own bank, credit union or online lender. Shopping around for the best loan rates and terms can save you money. Lenders may extend special incentive discounts, promotional rates or more favorable loan terms to get your business.

A final loan offer from State Farm comes after a full review of required documents such as:

  • Social Security number
  • Monthly mortgage or rental payment
  • Contact information for yourself and your employer
  • Proof of income
  • Specific information about the car you would like to buy: model year and VIN and mileage for used vehicles.

Is a State Farm Bank car loan worth it?

State Farm Bank’s rates are competitive but rivals do not charge a penalty for paying off an auto loan early — State Farm does. Other lenders also make more information available on their websites. In order to find State Farm’s maximum APRs or lease buyout rates and terms, for example, you will need to call your local agent. Here are a few more things to keep in mind:

  • Preapprovals are good for 30 days from approval date.
  • The minimum monthly payment is $100.
  • If you pay your loan off within the first 18 months, you will be charged a $200 prepayment penalty.
  • State Farm will not finance vehicles with more than 150,000 miles on the odometer or vehicles driven more than 50,000 miles annually.

Here are some additional benefits and drawbacks of financing through State Farm.

Pros of State Farm car loans

  • High loan amounts – If you are in the market for an expensive car, State Farm finances up to $250,000 for qualified applicants,
  • Wide variety of vehicle eligibility – State Farm finances cars, boats, motorcycles and recreational vehicles.
  • Payoff protection – State Farm’s free Payoff Protector cancels any remaining amount due on your loan in case your car is totalled or stolen and insurance fails to cover the entire cost.
  • No application fee

Cons of State Farm car loans

  • Not available everywhere — Residents of Massachusetts and Rhode Island are ineligible for a State Farm auto loan.
  • Mileage limits — State Farm will not provide auto loans for cars that have over 150,000 miles on the odometer or are driven more than 50,000 miles every year.
  • Prepayment penalty — You will be charged $200 if you pay your loan off in the first 18 months of your loan.

Who is a State Farm Bank car loan best for?

State Farm customers may find it convenient to apply for a car loan through the agent who already provides their home or auto insurance. With a long history in the insurance industry, State Farm is a familiar entity. Competitive rates, high loan amounts and a variety of vehicle types that qualify for financing may further sweeten the deal. A State Farm car loan may not be a good deal for those buying an older or inexpensive used car — if the vehicle you want to buy exceeds State Farm’s mileage restrictions or if you plan to pay off your loan early, you should consider another lender.


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