For most of us, buying a car is a big purchase and, unfortunately,
often quite a stressful experience. Car dealers are notorious
for their sale tactics, and banks compete ferociously in the market
of extending loans.
Auto loans are very lucrative and a fairly secure business for
lenders as they can repossess the property (your vehicle) should
you not repay the loan.
Because of these practices, more people are looking to buy a
car using online resources, and even more so, to secure
an auto loan on the internet before they make a trip
to a car dealership.
Auto loan online – direct lenders versus loan brokers.
Many big and small banks have established their presence on
the internet, and they offer online auto loan applications. There
are also countless websites of lending brokers who do not underwrite
loans themselves. If you have good
credit it is probably best to go with a direct lender (a bank
or a credit union), since you are going to get the best deal
on a car loan no matter where you go. However, a reputable
loan broker can match you with a bank that will “take you”
if your credit
score is less than perfect. One way of quickly scrutinizing
whether a website offering car loan applications online is trustworthy
or not is by checking its standing with the Better
Business Bureau. And, it is always a good idea to read the
page(s) about the company titled “about,” “privacy,”
and “information collected.”
Get a car loan before you go to the dealer.
All car buying guides suggest that it is much better to secure
an auto loan, before you go shopping at a dealership. It is not
likely that the dealer will be able to offer an auto loan on better
terms than a bank, but there are situations in which a dealership
might have special promotions with outstanding terms, usually
available only to very well qualified buyers. Securing a loan
allows you to shop at different places and compare their prices.
© iStockphoto.com - KLH49
It also forces the seller to compete for your business, but most
of all, it creates a clear distinction between a car price and
the cost of the financing.
See also: dealership
car loan, car
insurance cost, lowering