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What’s the Deal with Online Auto Loans?

When you walk into a dealership and see the car of your dreams, it’s easy to get swept up in the purchasing process. When this happens, though, consumers often fall into the trap of trusting that the dealership is offering the best financing available. Just like a car, an auto loan is another product the dealer is selling, and the Consumer Federation of America recently reported that dealers often overcharge by as much as 3 percent on loans. So, it pays to do your homework beforehand so you’ll get the best financing rate available. This is where online auto loans can be helpful.

The emergence of online auto loans is a boon for the savvy consumer – with so many rates readily available, car buyers can walk into a dealership with the upper hand. Consumers with excellent credit may be able to lock in an online auto loan rate for up to sixty days, meaning they can take their time choosing the best vehicle for their money. Those with less-than-stellar credit will know exactly what rates they would qualify for online, enabling them to see whether the dealership is offering a good deal or not.

Online auto loans offer additional pros, as well:

  • They typically feature no application fees
  • Loan approvals are usually quite fast – within an hour
  • Consumers may apply for a maximum amount in advance, leaving more flexibility to find a vehicle
  • They let you avoid the frustration of negotiating with the dealership

As with any loan, be sure an online auto loan is a financially sound choice. Remember: lower monthly payments often mean longer loan terms and more interest paid over the life of the loan. Investigate all your options before choosing a lender, whether online or otherwise.

Image via Flickr/jaciXIII

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