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Applying for online auto loans is usually quick and easy, but there are other benefits as well. Many lenders have started offering special Internet-only interest rates on car loans which are lower than the rates offered to applicants who walk into a branch to apply, or apply over the telephone. The reason why lenders offer these special Internet interest rates is to entice applicants to apply online.
Using automated lending systems, an online application may not require the attention of a customer service representative until after it has already been approved or denied, resulting in labor cost savings for the lender. Lenders also understand that more and more potential customers are surfing the Internet to find auto loans, and by offering attractive interest rates online a lender may be able to attract new borrowers. Applicants should pay special attention to the terms of the lower interest rates, however. Applicants interested in an Internet-only interest rate may not be able to call a customer service representative for assistance in completing the application over the phone. Applicants applying over the phone will receive a slightly higher interest rate than the Internet-only rate. If the Internet-only rate is much lower, it is definitely worth it to apply online.
Just like any other auto loan, online auto loans can be confusing and complicated if you don't know what to look for. When you apply for an online auto loan, it goes without saying that you should always shop around for the lowest available interest rate first. Interest rates, however, are not the only thing that makes a loan a good one. You should always pay attention to the terms of the loan, and know how much you can truly afford to pay each month on your auto loan. Do not trust what the lender says you can afford; they are simply looking at your credit report and do not have a truly accurate idea of what your monthly expenses are. Be on the lookout for extra fees on your auto loan. Even the most reputable lenders will try to get you to sign up for life and disability insurance, guaranteed asset protection, and extended warranties. The less reputable lenders will tack these extras on to your loan and try to get you to sign the documents without fully explaining the costs associated with the extras. You should also make sure that you are never paying an application fee to apply for a loan, and you should also not have to pay a prepayment penalty if you pay the loan off early. Don't be shy about asking questions about anything you don't understand; sometimes it is only applicants who aggressively ask questions that actually understand the terms of their auto loans.
When you are in the process of shopping for car loans, you should use the Internet to your advantage to find the lowest interest rate. You can go from one lender's website to another lender's website comparing the interest rates and loan terms, but it is far easier to go to an interest rate comparison website such as BankRate.com or LendingTree.com. These sites will list all the available interest rates in your geographic area and may also list any associated fees or required down payments for auto loans.
You should take care, however, when applying for a car loan with a lender with which you are not familiar. You may be fortunate enough to already have a financial relationship with a lender that offers low interest rates and no unnecessary fees, and if this is the case with your bank or credit union it will probably be easier to apply with them. If you find a lender with a fantastically lower interest rate, though, then go ahead and apply with them as long as they are a reputable lender and there are no application fees or prepayment penalties tacked on to the loan.
You may be the type of person who prefers to apply for auto loans at a lender's office, face-to-face with a loan officer. Maybe the idea of applying for auto finance online just doesn't appeal to you because you feel as though it is entirely too impersonal, or perhaps you are the type of person who simply doesn't do any banking online so it never occurred to you to apply for your next auto loan online. You should know that there is absolutely nothing scary about applying for an auto loan online. The same questions that you would be asked on a paper application are asked on the online application, but instead of handing the application to a loan officer after completing it, you simply hit a button to send the application through to the lender.
Most often, the application is sent through an automated lending system which approves or denies the application. If this doesn't appeal to you, you should know that in most cases, loan officers with paper applications simply input your information into the computer and send it through the very same automated system when you apply at the lender's branch. Applying online simply shortens the process by skipping a step. If you have never applied online for a loan, you should consider trying it for your next auto loan. You will probably be pleasantly surprised at how easy the whole process is.
Not all lenders are created equal, so it is important to never assume that one lender will have the same rules and regulations regarding online auto financing as another lender. For example, many lenders allow for borrowers to obtain auto loans for new and used cars without any sort of down payment, but not all lenders do this. Some lenders have very strict down payment regulations which specify the amount of money a borrower must put down on the purchase of a car. Other lenders have no application fee or origination fees, while there are some lenders who charge not only an application fee and an origination fee, but who also tack on prepayment penalties and other costly fees. The point is to never assume that a lender will do things a certain way simply because that is the way you are accustomed to other lenders doing things. Always read the fine print, and if a lender does not do things the way you want them to then move on to another lender. Buying a car is expensive enough; you shouldn't pay extra fees if you don't have to.
Obtaining a car loan online is such a simple process: fill out an application and receive a response form the lender so quickly that many applicants can't imagine applying any other way. Applicants who are not so familiar with computers and the Internet, however, may be wary of applying online because they do not understand how encryption works and may be nervous about their personal information falling into the wrong hands. Other applicants may be put off by the impersonal nature of applying online. Without a human loan officer to assist in filling out the application face-to-face, some borrowers might be afraid that their application will not receive the immediate attention they would like. Online car loans, however, help to keep costs down for the lender, who in turn passes the savings on to customers. The application process online is usually streamlined to make it easier to complete, and the automated lending system returns credit decisions quicker. As long as the credit application is on a secure website, applicants shouldn't have to worry about their personal information being misused. If an applicant is still too apprehensive to apply online, most lenders will allow borrowers to apply over the phone or through the mail.
On the Internet, a number of sites sell financing online. Here are a few savvy strategies for obtaining auto financing, online:
-- Consider new or used car financing with Web site that offers a wide range of companies
-- Analyze annual percentage rates
-- Calculate the cost of insuring the vehicle in combination with the financing
-- Make sure that the car financing does not include extras (for example, credit life insurance and extended service contracts)
|Sheri Ann Richerson|