Getting Good Auto Loans Online

05
July

With the recent downturn in the economy, auto loans, like all other loans, are becoming harder to secure. Your credit score has to be higher, your record cleaner, and your down payment bigger to find good interest rates. This does not mean that you cannot secure a car loan; it simply means you have to be smarter about where to look and how to find the loan that is right for you.

You may wish to apply for credit with an auto dealer, but be aware of pitfalls if you do. For one thing, auto dealer credit departments will try to get you into the most car for which they can possibly secure financing; as a result, you may experience some high-pressure sales tactics for a loan you do not really need. Further, the oldest trick on the car lot is to ask you what payment you want and craft a loan to meet that demand, even if they have to finance for 72 months, rather than truly trying to find you the best financing for the minimum amount you need to buy a car. The result is that you may pay thousands more than necessary to get reliable transportation. For some buyers, an online loan may be a good compromise that allows you to find a good loan without the high-pressure sales pitch.

The first step to finding a good auto loan online is to research your credit score. You can do this in several ways, but one of the cheapest and easiest is simply to write to the credit reporting firms. Experian, TransCorp, and Equifax are three of the biggest–simply contact them, pay a fee, and receive your credit score. You can also apply with your bank for a traditional auto loan on the car you desire. Even if you are turned down, the bank must give you a letter explaining why, and you are offered a look at your credit report to help explain their decision. You do not want to do this too often, as each time your credit is accessed it can affect your score negatively–chalk it up to all those people who apply for fifteen credit cards, run them to the limit, and file bankruptcy. Bank loan applications may have less impact on your credit score than applying for an online credit card, and your loan officer may be able to offer you some good advice on securing a loan.

If you have a credit score less than 700, it is going to be difficult to secure a low APR loan. In that case, you have to have a “Plan B”; get a loan at the lowest interest rate possible, for an acceptable term, then pay extra each month to curtail the higher interest impact.

Assuming you are unsuccessful in your quest for a bank loan, the next step is to research online loan opportunities. There are several large companies which now offer online financing or re-financing–a good option if you find out that the local car lot overcharged you on interest on your vehicle purchase. You can try Up2Drive at support.up2drive.com; their front page shows you possible interest rates for various terms of financing. Another option is MyAutoLoan at www.myautoloan.com, a service which, much like the dealer, sends your application to several financing entities and gives you options for choosing the right loan for you. You can also visit Cars Direct at www.carsdirect.com; they may have options for those turned down by other lenders. Be sure to compare offers from more than one site to make sure you are getting the best deal.

The normal procedure for these sites is for you to be approved up to a certain amount for financing, then for them to send you a blank check. You fill in the final sales price. It helps if you have an idea of the sticker price of the car you are looking for when you apply; you do not have to know an exact amount, but having an idea of what you are going to spend makes the application process more streamlined. Once you receive your check, you negotiate with the dealer and write the check for the full amount.

This post was written by

jason – who has written posts on Budget Clowns.
Father of three and married to a lovely women. Always looking for ways to save money, and invest it properly for my children's future.

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