If you have subpar credit finding a traditional lender to approve your car loan application, without high interest rates, can be frustrating and time consuming.
Banks, credit unions and Buy Here Pay Here lots are not your only financing option. You can search and apply for a bad credit auto loan online. While this might be the answer you needed, there are a few things you should know before you “sign on the dotted line”.
What are Online Car Loans?
An online automobile loan is similar to one you get from a traditional lender. The main difference is that everything is usually handled from your computer. The same information is still required with your loan application,
- Valid driver’s license
- Proof of income and residence
- Current utility bill
- Credit history
You might also be required to show proof of insurance. The lender you are applying with will provide you with a complete list of the necessary documents. The advantage to having this information before you start, is it can speed up the answer from the online lender.
Advantages of Internet Auto Loans
There are several advantages to applying for a vehicle loan online that include not having to leave your house. This means that you don’t have to haggle over interest rates and fees with a banker or auto dealer or face being turned down in person.
If your loan application is rejected due to your poor FICO score, it is a little less embarrassing online than in person.
Some of the other benefits of shopping online for a bad credit auto loan include,
- Easy to get multiple quotes. Instead of visiting or calling several lenders to compare financing options, you can see multiple companies online at once. Take a couple of hours to fill out and submit the short forms, and soon you’ll receive the lenders answers and offers. Shopping around will help ensure you get the best interest rate, in spite of your bad credit.
- Helpful tools. If your credit is less than perfect or you’re not sure what you can afford, many internet auto loan companies have helpful tools and information on their websites. You can find details about specific bad credit vehicle loans, along with tools that will help you create a budget. See, before you buy, exactly what you can afford so your credit doesn’t take a ding when the auto loan payments are too high.
- Access to auto loan brokers. An auto loan broker is essentially a third party that works to connect drivers with potential lenders. They do not approve loan applications, only connect you with the best financial companies depending on your resources. They can save you a lot of time, searching for lenders yourself, and have the experience and connections that consumers often don’t have. Applying with the right lenders will increase your chances for approval.
- Potentially lower interest rates. This may be the best benefit to internet auto loans. Even if you have bad credit, you still have a good chance of securing a vehicle loan with lower interest rates than you typically get from traditional lenders. This doesn’t mean that you a guaranteed a great rate, only that your chances are significantly improved. This is also why it is important to shop around and compare multiple quotes.
Disadvantages of Online Vehicle Loans
While getting your vehicle loan online does have its advantages, there are a few disadvantages that you should be aware of.
- Can be difficult to get additional information. If the information you’re looking for isn’t on the site, contacting some potential online lending companies can be difficult. It also might not get any easier after you’ve signed the loan contract. If problems do arise, it can damage your credit and lead to other financial issues.
- Provide personal information. When you apply for a vehicle loan online, you will be required to submit some personal information. With the increase in data breaches, even with a credit reporting agency, this should cause you some concern.
- Could be a potential scam. If you do your research and don’t provide your financial information to every internet lending site you land on, you’re chances of being caught in a scam are relatively low. Going through an online auto loan broker can also help you avoid potential scams. You do need to be cautious and read the fine print, before submitting any information. Unfortunately, there are some online lending companies that will sell your data to other businesses.
Get a Vehicle with an Internet Auto Loan
Bad FICO scores and thin credit histories don’t necessarily mean that you can’t get a low interest car loan. It also doesn’t have to be harder to get approved, if you explore all your options. This includes looking online.
Do your homework and read all the details before providing any personal information. Wait until you have multiple offers, before filing out the loan forms. This way, not only are your protecting yourself from fraud and scammers but also ensuring that you get the best interest rate possible. When in doubt, don’t be afraid to go through a third-party auto loan broker.