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Posted: 07/06/08
07:27 AM
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I hope this is the right place to post this question. I need an auto loan and someone suggested that I apply for one online. Is this normal? I have never heard of anyone doing this before. Why would someone fill out an online application for an auto loan as opposed to getting an offline one? Is it better financially?
Thanks,
Stephanie
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Posted: 07/08/08
01:39 PM
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Why would someone fill out an online application for an auto loan as opposed to getting an offline one? Is it better financially?
Interest rates and fees are lower at most online banks, so yes it'll save you money over local banks and the dealership/factory rates unless they are offering below market financing.
Have you tried a local credit union? They almost always have lower rates than banks when it comes to auto loans. Just about anyone can join a credit union these days.
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Posted: 07/21/08
01:03 PM
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Hi Stepahnie,
I'd have to agree with and disagree with sooner. You will typically get very competitive rates from a credit union, but the online banks he refers to are the same lenders I have available at my car dealership. Due to the volume I send and other dealers send to these banks, the car dealers will get a better rate from those lenders. For example, if you applied to bank A online and were approved for 6.25%, you could come to my dealership and I could more than likely get you approved for 5.75% with the same lender.
The problem you run into financing at a dealership is that a car dealer will often try to mark your rate up. Using the same example above, if you went to a car dealership and had no idea what type of rate to expect and the dealer was able to get you approved for 5.75% they may try to mark up your rate, to let's say 6.75% and profit from the financing.
I'd always suggest getting pre approved, if not for the better rate, then to at least keep the dealers honest.
Take care and beware,
J the Car Guy
www.insidercarbuyingtips.com
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