Searching for an Online Auto Loan

If you need financing to purchase a car, then you might want to check out your online possibilities first. While online financial products sometimes are viewed with some skepticism, in reality such fears are mostly groundless. Particularly in the auto loan market there are limitless legitimate online options, many of which offer advantages over more traditional auto loans.

The Advantages of Online Loans

The online auto loan industry is highly competitive. Many major brick-and-mortar banks offer car loans over the internet, including Chase, Wachovia and Wells Fargo, as do newer internet-based companies. Because individuals have access to such a wide range of online options, most companies provide online borrowers with perks that are not found in the “real world”.

The lowest interest rates that you can find on auto loans generally are online; often several percentage points lower than the norm. Many auto loan shoppers make it their goal to find the agreement with the smallest down payment possible instead of the one with the lowest interest rate -- but this usually will not save you money in the long run. Rather, if you choose to make a small down payment, then the money that you have “saved” will just be paid through a higher interest rate.

Focus on finding those low rates instead. They will save you the largest amount of money over time. In order to secure the lowest rates offered, you will have to apply online, and also probably will have to sign up for an automatic electronic pay system.

In addition to low interest rates, online loans also tend have much quicker approvals that do auto loans that are not internet-based. Oftentimes, all you have to do is fill out a short application, after which you may be approved or denied within minutes.

While these perks do encompass a large amount of the auto loans offered online, they do not apply to all such loans, of course. Interest rates, fees, and other terms and conditions vary greatly among different lenders. Remember also that money is not everything. Do not sacrifice customer service or ease of use for costs.

Before deciding on any one particular company, you should take the time to comparison shop. Read on for step-by-step suggestions for obtaining an online auto loan.


Step-by-Step

1. Determine how much you can spend.

The first step toward any large purchase should be the development, or reevaluation, of a budget. For one week, track all of your expenses to see exactly where your money is going, and to determine how much disposable income you have each month with which to work. Whatever you have “left over” is what you can stand to pay monthly on your new car.

Remember that you will need the funds to pay not only for a down payment and monthly payments, but also for all of the expenses that come with owning a new car. You need room in your budget for licensing, registration, gas, insurance, and maintenance as well. In general, you should be able to set aside about 20% of your earnings for your new car.

2. Decide how much you will spend.

Shop around only for cars within your budget and that match your needs. Once you have decided to go for a particular car, then it is time to start searching for your loan.

3. Compare, Compare, Compare

Around 70% of new car purchases are made through loans, so borrowers have lots and lots of options that must be sifted through. It may be a good idea to start with the companies with which you have worked in the past. Take several days to see how different online auto loan packages measure up.

The goal is to know enough about various loan offers that you will be able negotiate with companies to get even better terms and conditions on a loan. Keep in mind that your credit report and score will have an affect on the interest rates that you will be offered, but that it is entirely possible to find a decent online loan even if you have bad credit.

4. Choose a Loan.

Ask for a quote from a few different lenders before making your final decision. This should be free, and if it is not then you can find a better deal elsewhere. After getting your quotes, zero in on the auto loan package that is best for you.

Before taking out the loan, check and double check the lender. Chances are that the source is completely legitimate and honest, but better to be safe than sorry. Check the company with the Better Business Bureau, and make sure that they have the proper registration to be an online company. If possible, you should meet with a representative in person to confirm your loan agreement.

5. Get that Car.

Once you have been pre-approved for your online auto loan, you are in the perfect position to negotiate your auto purchase at the dealership. Financing available via dealerships is designed to generate more money for the company, so making your purchase with your loan already set up is ideal. Happy shopping!