The Internet now makes it possible for new car buyers to shop for financing and get a car loan online before they buy a car. As a result, lenders must compete for borrowers by offering competitive rates, and borrowers can avoid the sometimes difficult and confusing process of dealing with car dealership financial staff.
Check on your credit score before you seek out online car financing, just as you would before trying to get car financing from a dealership. Take any steps you can to strengthen your credit score, because a higher score will qualify you for more favorable terms and interest rates.
Decide on the car make and model that you want to buy, and the amount that you will seek to finance after your down payment and trade-in, before you seek out car financing online. The terms that may be available to you may vary considerably based on the amount you will finance and the other terms that you may seek, including the length of the loan.
Use an online clearinghouse for lenders such as Lending Tree or Bankrate.com to submit your initial lending information and requirements (see Resources below).
Visit the websites of banks in your community to see if they offer online car financing. Start with the bank or banks where you have your own personal checking or savings accounts, but do not hesitate to contact other banks to ask if they have any special financing offers for car buyers.
Get an online commitment for car financing before you arrive at the dealership to maximize your bargaining power. Once you negotiate the price of a car, you will have a choice between buying with cash or telling the dealer, "Here is the interest rate you will have to match."
Compare the car financing interest rates that are available from online lenders and banks with other financing opportunities that may be available to you. These may include home equity credit lines or a loan that you may be able to take out against a life insurance policy or your employee credit union.
