In the past, getting a car loan wasn’t easy. You used to have to schedule an in-person meeting with a lender to apply for a car loan. Then, you were required to fill out pages and pages of paperwork to submit an application. The entire process–from application to approval–often took weeks to complete.
Fortunately, those days are gone. Many lenders now offer online car loans. The ability to apply for a car loan online has completely changed the way borrowers obtain financing for new or used vehicles. What are the benefits of online car loans? Here’s what you should know:
More Options to Choose From
Before online auto loans were available, borrowers didn’t have many options when it came to choosing a lender. They were typically forced to choose between local banks, credit unions, and auto dealers. Now, there are countless online lending options to choose from, which makes shopping for an auto loan easier.
This is especially important for borrowers with less-than-perfect credit. If your credit isn’t perfect, you may have had trouble getting approved for an auto loan in the past. But now, there are more lenders available to you, which may make it easier for you to get approved for an auto loan.
Applying for a car loan has never been more convenient. There’s no need to waste time meeting with a lender in-person to apply for a car loan. Now, the entire process of applying for a car loan can be completed online from the comfort of your home. All you need is a computer, smartphone, or tablet and an internet connection to get started.
Because the entire process takes place online, you can complete it at whatever time is most convenient to you. The internet is open 24 hours a day, seven days a week, so you won’t need to wait to apply for a loan during standard business hours. Now you can apply for an auto loan on your own schedule.
Fast Application Process
The online car loan application process isn’t just convenient–it’s fast, too. You may not have to spend hours filling out paperwork to start the process of applying for a loan. You are usually only required to provide basic information about your financial situation to get started. Once you submit this information, you can typically find out if you are pre-qualified for a car loan within a matter of minutes.
You should consider many factors when choosing an auto loan, including the Annual Percentage Rate (“APR”), monthly payment amount, length of term, and any fees or costs for the loan. However, perhaps the most important factor to consider is the APR, which is the cost of borrowing money from the lender expressed as a percentage of the principal. Interest rates and APRs vary from lender-to-lender.
Unlike Buy Here Pay Here auto dealers, indirect auto dealers aren’t lenders–even if they offer financing. They don’t actually lend money to consumers. Instead, they submit your information to lenders in order to find an auto loan on your behalf. However, they may potentially increase the interest rates or fees on these auto loans so they can profit from the loan, too. As a result, auto dealers offer very high interest rates on auto loans.
Securing a lower rate could save you a significant amount of money over the course of your loan. The rate doesn’t need to be significantly lower to make a major impact on the total cost of the loan. Even a difference of one percentage point could save you hundreds or thousands of dollars.
Online lenders are also more likely to offer flexible auto loan terms. If you apply for an online car loan, you may have the opportunity to customize the terms of your loan to ensure it meets your needs.
For example, many online lenders may allow you to choose from several loans with different interest rates, terms, and monthly payments. If you want the lowest monthly payment available, you could choose the loan with the longest term. If you want to spend as little as possible on the loan, you could choose the loan with the lowest APR.
You may also be given the option of adding a GAP waiver, powertrain coverage, or other features to your loan. These options allow you to create a loan with terms that are right for you.
Get Prequalified for A Car Loan
It’s best to apply for a prequalification for a car loan before you start shopping for a vehicle. But if you go to an auto dealer directly you may not have an opportunity to get prequalified ahead of time. On the other hand, if you choose an online lender, you can quickly and easily get prequalified for a car loan before you look for a vehicle.
Getting prequalified in advance will help you set your budget. This way, you won’t waste your time looking at vehicles that are way out of your price range. A prequalification offer also simplifies the car buying process. You’ve already figured out financing, so all you need to do is focus on finding the right vehicle.
Tips for Finding the Best Online Car Loan
- Shop around for the best loan. Ask multiple lenders for quotes so you can compare rates and other loan terms. Each lender may check your credit when preparing your quote, but this doesn’t mean you will have multiple hard inquiries on your credit report. All auto loan hard inquiries made within a 14-day period are usually treated as one hard inquiry. This means only one inquiry will appear on your report regardless of how many quotes you receive within this 14-day period.
- Read the fine print. You should never sign a loan agreement without reading every word, including the fine print. Make sure you understand all the terms and fees outlined in the agreement.
- Look for restrictions. Some lenders include auto loan terms that limit where borrowers can purchase a vehicle from or prohibit borrowers from purchasing certain types of vehicles. Read through these restrictions carefully to ensure you don’t choose a loan that prevents you from getting the type of vehicle you want.
- Understand common auto loan terms. It’s hard to understand your loan agreement if you don’t know what certain terms mean. Before you start shopping for a loan, brush up on common auto loan terms, including annual percentage rate (APR), amortization, ancillary products like GAP insurance or waivers, and principal.
- Choose a lender with exceptional customer service. Applying for an online car loan is easy, but you may still need assistance at some point. This is why it’s so important to choose a lender that provides stellar customer service. Your lender should be willing to answer your questions, address your concerns, and guide you through the process of getting a car loan online.
- Work on your credit. It’s a good idea to check your credit before applying for an auto loan. If you don’t need to buy a car right away, consider working on your credit for a few months before you take out a loan. Don’t open new lines of credit and be sure to make on-time payments on all your debts. This could improve your credit score and help you secure more favorable auto loan terms.
- Don’t focus solely on the monthly payment. The monthly payment is one of many factors you should consider when choosing an auto loan. You should also evaluate the APR, term, and additional fees to determine which loan is right for you.
How to Apply for An Online Car Loan
Take the first step toward securing the cash you need to purchase a new or used vehicle by applying for an online car loan with Loan Center. Here’s what to do:
- Get pre-qualified. Find out if you pre-qualify for a car loan by submitting your information about your employment, residence, income, and desired loan on our website. Submitting this information will not affect your credit.
- Customize your loan. Review your options and choose a loan structure that works for you. If you change your mind, you can always go back and select another option before finalizing your loan.
- Add extra features. You can choose to add features such as a GAP Waiver, a vehicle service contract with Powertrain Coverage, or Advantage Coverage to your loan. Adding these features will provide additional protection, but they may also increase the cost of the loan.
- Start shopping for a car. Search through countless vehicles in our inventory to find a car that you can purchase with your auto loan.
- Pick up your vehicle. Download or print your pre-qualification letter and bring it with you to the auto dealer. Present the letter once you arrive so you can drive home in your new vehicle.
That’s all it takes to complete the process of purchasing a new or used vehicle with an online auto loan.