To put yourself in a stronger position when car shopping, it’s a smart idea to get pre-approved for a car loan. Pre-approval removes the uncertainty of the loan application process and allows you to easily compare interest rates so you can get the best auto loan. Read more about the online auto-loan process below.
Here’s how getting pre-approved for an auto loan online works:
- Once you apply, the lender will quickly contact you with a decision, often within an hour. If your loan is approved, the lender will offer you a maximum amount you can borrow at a fixed interest rate. For example, it might offer a $20, 000 loan at 3.9%.
- If you agree to those terms, the lender will give you a no-obligation check or certificate you can take to the dealership or car lot. (Note: Some lenders have restrictions on where cars can be purchased using their loan. For example, some lenders won’t grant loans to buy cars from private party sellers.)
- Negotiate your best deal for the car, being sure to leave enough money to cover taxes and fees. For example, if the loan is for up to $20, 000, look for a car in the $15, 000 range because the final price will be about $16, 500 or higher.
- Once you pay for the car with the lender’s check, the loan is finalized at the purchase amount.
Pre-approval helps streamline the negotiation process because you can sidestep the car seller’s favorite tactic: the monthly payment game. If you negotiate for a monthly payment instead of the price of the car, it’s easy for the salesman to obscure the real price. But with a pre-approved check in hand, you become a “cash buyer, ” meaning that you can ignore the monthly payment question and concentrate on negotiating only the price of the car.
Here are other points to keep in mind as you shop for an online car loan:
- Apply to several lenders to find your best interest rate. But do this within a two-week period to minimize damage to your credit score that can be caused by multiple credit checks over an extended period.
- Be sure to check the loan terms offered by your bank or credit union. Their rates are often very competitive.
- Gather all your documents before beginning the loan application process: driver’s license, bank account numbers and pay stubs.
- Set up your loan so you pay it off as quickly as you comfortably can. Shorter terms usually mean lower interest rates.
- Be careful: If you’re shopping at a dealership, the finance manager will probably try to “flip” you — get you to use the carmaker’s financing. It doesn’t hurt to hear the pitch, but make sure all the terms — particularly the length of the payback period — are the same so you can accurately compare the dealership’s offer to your pre-approved loan.
When shopping for a car loan, it’s important to be realistic. Just because interest rates are low doesn’t mean you should buy too much car. And remember, the most important thing for you, your budget and your credit score is to keep up with the payments and get the loan paid off on time.
In finance, subprime lending (also referred to as near-prime, non-prime, and second-chance lending) means making loans to people who may have difficulty maintaining the repayment schedule. These loans are characterized by higher interest rates and less favorable terms in order to compensate for higher credit risk.
Proponents of subprime lending...
A Revolving Loan Fund (RLF) is a source of money from which loans are made for multiple small business development projects. Revolving loan funds share many characteristics with microcredit, micro-enterprise, and village banking, namely providing loans to persons or groups of people that do not qualify for traditional financial services or are...
A Credit Book For People With Bad Credit: Get Credit Help For Bad Credit Repair Plus Tips on How To Get Loans With Bad Credit So You Can Rebuild Credit ... Become A Financial Success in Good Time!