Best Online Car Financing: Our Smart Car Financing Strategies Revealed

women with laptop looking for the best online car financing

Best Online Car Financing

After days of searching, you’ve found the ideal car. But, before you can call the car your own, you’ll need to secure financing. Unless you plan to pay for the car in cash, you’ll need to get a loan. In 2013, almost 85% of all car sales were acquired through financing. There are many factors to consider when searching for the best online car financing.

mini car with coins stacked in front

You want to ensure you’re working with a qualified lender. You also want to position yourself for the best loan terms possible. If you’re looking for online car financing, there are a few tips you’ll want to know.

Keep reading for 7 helpful tips that will make the process much less of a hassle.

1. Know Your Credit Standing

Before approving a loan, all lenders will examine your credit score. Your credit history will also be taken into consideration.

The higher your interest score and the longer your history, the more likely you are to be approved. Lenders weigh your credit score and history to determine your risk as an applicant.

When applying for loans, know your credit standing. You’ll want to get free copies of the three credit reports. These can be downloaded at

If your score needs some improvement:

  • Pay down debt
  • Resolve any outstanding issues on your credit report
  • Wait a few weeks before applying for new loans

2. Find a Reputable Lender

Online you’ll find all sorts of lenders. But, you want to ensure that the lenders you’re considering are reputable.

When applying for an auto loan, you must provide all sorts of personal information. You wouldn’t give your Social Security number to just anyone!

Be sure that the lenders you apply through are well-known and high-quality. Before choosing a lender, do some with city background

Read online reviews. How do past customers feel about the lender? Are clients mostly satisfied?

To make the process less risky, consider asking friends and family members for referrals.

3. Shop for a Loan First

You wouldn’t buy a house without first making sure you could afford it, right? While cars are much less costly, you don’t want to get hooked on a car that you may not be able to afford.

Before deciding on a car, you’ll want to start the loan application process. There are many online lenders that you can consider, including Lending Tree and RoadLoans.

For a lower rate, choose a credit union or an online bank. These lenders tend to offer lower interest rates, which saves you money each month.

During the application process, ask the lender for a pre-qualification. This gives you leverage when working with the dealership.

4. Know When to Apply

When searching for the best online car financing, you’ll likely apply with several lenders. Each time you apply for a loan, your credit score decreases. This makes it harder to get approved for loans in the future.

During the application process:

  • Only apply for loans with lenders that are a true option
  • Apply within a two-week period
  • Ensure all information is correct to avoid extended loan processing time

5. Focus on Total Loan Not Monthly Payments

Paying $350 a month sounds much better than a $21,000 loan, right? When looking for the best online car financing, avoid lenders that focus on monthly payments. calculator pen and paper

Once you’ve been approved for your loan, you want to ensure that the monthly payment is affordable. But, some lenders will focus on monthly payments to entice you to borrow more money.

Often times, lenders will extend the number of months on the loan.

In turn, you end up paying more interest on the loan. You’re also stuck with an aging car for much longer.

6. Know How to Play Your Cards

Lenders are under no obligation to provide you the best rate possible. This means even if you qualify for a lower rate, lenders typically have their own interests in mind.

The good news? As a buyer, you have more leverage than the lender.

When shopping around for the best online car financing, the power is in your hands. Lenders are only successful when you accept their loan.

Let lenders know that you are shopping around. Be open if another lender has offered a lower rate. To win you over, many lenders will lower their rates to beat out the competition.

7. Read the Fine Print

We’re all guilty of signing before reading the small print at the bottom of an agreement.

Before agreeing to an auto loan, be sure to read all of the fine print. An online lender should allow you to download and print agreements. An auto loan is a binding agreement that will last for years, so you want to thoroughly understand it.

man signing auto loan contract

When reading the fine print, keep an eye out for:

  • Variable interest rates
  • Mandatory binding arbitration
  • Penalties, including those for pre-payment

When working with online lenders, avoid any sort of oral contracts. Any and all terms should be in written form.

If the contract is missing an important piece of information, don’t sign it. Send the contract back so that the lender can correct it. Once your signature is on the paper, there’s no turning back!

Best Online Car Financing: Wrap Up

Buying and owning a car is an exciting part of life. But, the wrong decision can ruin you financially. Before signing any papers ensure you’re working with a reputable lender that offers the best online car financing.

You also want to make sure that you’re making a wise purchasing decision. Stretching your monthly budget too thin can be problematic.

Owning a car comes with added costs, including maintenance and repair. When buying a car, shop wisely.

Want to boost your consumer knowledge? Looking to learn more about credit scores and auto financing?

If so, Credit Squared is the source for you. Our team covers a wide variety of financing and credit information. Get in touch today.


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  1. Thanks for the advice!

    Do you have some tips for ways of bringing up my credit score?

    I’ve never been late on a payment in my life, but my score is still not as high as I would like or expect.

    I have hit my cards limit several times in the past, and had transactions declined. Could this be the biggest source of my problem?

    I also have $25,000 in students loans that I am slowly, incrementally paying off. Is this probably the other reason, and I’m I stuck with its negative effect on my score for the duration of my loan?


    • Hi Jordan – Thanks for the questions.

      If you have never missed any payments then I doubt the student loan is impacting your credit much.  Having said that, credit agencies will take the loan balance into account when calculating your FICO score.  So the sooner you pay it down the better.

      More than likely having high credit card balances and continually maxing out those limits is your issue.  It’s best to use no more than 30% of your available credit limit.  High credit card balance usage is a red flag to the credit bureaus.  They see you as a greater risk and will ding your score for it.

      Here is a link to post I wrote that may help you understand a little better.

      How To Fix Your Credit Score

      Good luck!


  2. Hello Patrick,

    I am looking to purchase a new vehicle as I have been driving my old Ute for some years now and it’s time for an upgrade.

    I saw a Mitsubishi Lancer Evolution 4 for sale at $25,000 and was wondering about getting financing either from a bank or online car financing company.

    Do you know which financing company is better than a bank loan?

    • Hi Sonny,

      Thanks for your question.

      Most folks at some point in time need to replace the old clunker. We become attached to our old reliable vehicle, but at some point the economies of scale say it’s time to let go.

      In most cases the best way to go is online car financing.  Other than your local credit union, online car financing is your best opportunity to land a good deal.

      Here are a couple of places to start.

      Best Online Car Financing

      Online Car Financing

      Best of Luck.


  3. Thank you for this Patrick, its quite insightful.

    The point about focusing on the total loan is quite important.

    The lenders tend to focus more on monthly payments and making this as small as possible.

    This is because the longer the time required to pay-up the loan, the higher the interest to be paid.

    • Quite right. When you are car loan shopping and nailing down the financing, consumers should always be focused on the total loan amount and not the payment.

      Car Dealers play the payment game, so car buyers never really understand what they are paying. In the long run you pay more interest.

      Before heading to the dealership have your financing locked up with a pre approval from your financial institution and know how much you want to spend.

      Staying within your budget limits will set you up for the best deal possible.



  4. Thank you for this Patrick, its quite insightful.

    The point about focusing on the total loan is quite important.

    The lenders tend to focus more on monthly payments and making this as small as possible. This is because the longer the time required to pay-up the loan, the higher the interest to be paid.

    • Absolutely!  The lower the payment the more interest the consumer must pay.  Even worse, the consumer really doesn’t know how much they paid for the car.  The dealer likes to focus on payment, so you end up paying more.

      Car buyers should be fully informed before they start shopping.  Conduct some research by exploring online car financing.  Once you have settled on a lender get a preapproval letter.  

      This will provide the buyer with leverage after they have negotiated the price of the car.  Remember, you should always be a cash buyer before discussing financing. Once you have a deal, read the fine print before you sign.

      Best of luck,


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