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 By leveraging the power and speed of the Internet, many traditional automobile financing companies are now offering an online auto loan solution to their product mix. In most situations, applying online is fast, secure, and usually only takes minutes to get a response.
Getting a Car Loan Online
In this article we're going to explain what you can expect when you're dealing with an online lender. We'll also warn you about what are known as predatory loans - and how to identify a dealer leading you down that road. Finally, we're going to tell you why getting a car loan online can be a good deal and show you where you can find some tools to help you understand the impact of a loan on your monthly budget.
Applying for a Loan
Applying for a car loan over the web is a fairly simple and fast process. That's because online service providers can automate a lot of the manual "back office" functions by having you fill out form and linking them to sophisticated computer systems.
Secure Internet Connections
Whenever you're providing private information over the internet, you should always be familiar with the company you're dealing with. Be careful of email solicitations and always check the web address carefully.
You should also make sure you're using a secure website. This is normally indicated by a lock appearing in your web browser - usually in the lower right hand corner. By double clicking on that icon, you can see who issued the security certificate and who the certificate was issued to.
Automated Credit Checks
Based on the information via the online forms, the lender can quickly do a credit check to figure out if you qualify for a loan. This process sometimes involves running a credit report or checking your credit score. Based on that information the lender will know your credit risk profile, how much they are willing to lend you, and the interest rate they will charge on the car loan.
Once you're approved, the lender will send you a check via the mail that you can take with you to the car dealership and use to pay for your new or used car. In fact, the check acts just like a personal or bank check in that it can be used to buy a car, refinance an existing auto loan, or even buy out a lease.
That's all there is to the process, it really is that simple. But like most things in life that that seem too good to be true, you need to be careful when conducting transactions over the web. In particular, when acquiring an online auto loan you need to watch out for predatory auto lending companies.
Predatory Car Loans
Predatory lending is the practice of charging consumers an excessively high rate of high interest for auto loans. This can happen to you online or when visiting a car dealership. These lenders will attempt to charge you a much higher interest rate than you could get by shopping around. For example, a dealership might refer to this as a dealer "markup." But this higher rate of interest just allows the lender or dealership to make more profit on the loan.
Comparing Loans
Fortunately, when shopping online for an auto loan, you can quickly compare interest rates and the terms and conditions on a loan. In fact, whenever shopping for a loan of any kind, you should try to get at least three quotes and you should never feel pressured to take the first loan.
The best way to shop for loans is by comparing the annual percentage rate for each loan. The APR is a standardized calculation that takes all of the costs of a loan - including fees - into consideration.
Nearly all of the large online car loan companies are reputable firms that have established themselves as long term dealers in the auto lending market. These are certainly not the companies that have predatory lending practices. These companies are in the market for the long haul and don't want to tarnish their good names.
Good Deals Over the Web
The good news is that the competitive nature of the Internet, and the low cost of conducting transactions via the web, can translate into real savings passed on to the consumer. Online auto loan rates will almost always beat dealer rates. Online companies usually do not charge application fees, or ask for down payments.
In fact, in today's market the online auto loan rates have now become the standard for automobile dealers to beat. So do your homework and get a couple of online auto loan quotations, compare these to dealer auto financing, and use whoever gives you the best car loan interest rate.
Car Loan Calculators
If you're contemplating buying a car and you're not sure what you can afford or you simply want to play around with the numbers a bit then you'll want to take a close look at our online car loan calculators. There you'll find tools that can help you with car leasing or purchase decisions, simple monthly car loan calculators, biweekly car loan calculators and more.
About the Author - Online Auto Loan
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