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.
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 AnnualCreditReport.com.
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!
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.
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
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.
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.
Get Control of Your Credit With Our Free Ebook
* indicates required