Online Auto Finance for the Savy Borrower

Even with a tight credit market, it is still possible for you to receive an auto loan.  There are many online financing sites, but all are not created equal. Arm yourself with as much information as possible before you apply for a loan.  Research the finance companies regarding information such as interest rates, the length of business, and number of satisfied customers.  And remember: if the deal sounds too good to be true, it is not true.  The more you know, the better your chances for buying a new or used vehicle at a fair price.

Advantages to Online Financing

Negotiate the vehicle sales price and auto financing separately. Make sure that you have your financing before you go to the dealer.  This gives you a negotiating advantage, and the salesperson will see you as a cash buyer with pre-approved financing.  You will get the lowest available rate from many online financing companies.  Once you are approved, you will receive a bank-approved check to take to the dealer.  Another advantage to using an online lender is that most will not charge higher rates if you are looking for a sports car or luxury vehicle.  Many sites have a payment calculator that you can use to determine how the interest rate, purchase price, loan term and down payment will reduce your auto loan payment.

Know Your Credit Rating

If you have a poor credit rating, expect to have a higher interest rate and down payment requirement.  Get your credit report and score from the three major reporting agencies so you know what the lender sees.  Do this before you apply for a loan or visit a car dealership.

Research several online finance sites to determine what the interest rates are in your area.  Make sure you are satisfied with the information about the lender before signing an agreement to allow them to pull your credit report.  Inquiries appear on your credit report, and can hurt your rating.  Lenders might become concerned and view this as your inability to acquire credit if they see you are applying to several lenders at once.

New or Used?

Should you get a new or used auto loan? In part, that depends on where you get the financing. More people are making used car purchases. Used cars depreciate at a slower rate than new cars, and lenders consider used cars to be better short-term collateral. However, there is minimum difference in the interest rate.

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