Auto loans are the loan of choice for many people these days, despite the current economic climate. Many people have to buy a new or used car and simply cannot afford to purchase one unless they receive a discount or have low interest rates. When you choose to buy an auto loan, you choose the lender who will give you the best interest rate along with the terms and conditions that you need. The more research you do into auto loans, the more likely it is that you will save money in the long run.
There are several factors you should consider when researching auto loans. For example, you want to choose a lender who has reasonable interest rates, and you want to find one who has favorable terms. When you use a lender’s website, you will be able to get quotes from multiple lenders. You may also be able to get an instant online quote for your loan. After you apply, the lender should contact you within just a few days to discuss financing.
With a dealership-based auto loan, you go to a bank or a major lending company, and you agree to an interest rate and a repayment plan with that lender. While you can usually choose a vehicle at any dealer, you are limited to the vehicle that a specific dealer has available. This is called “indirect financing” and it is not as beneficial to you as direct financing.
“New car loans” refer to new car loans, and “used car loans” refer to used car loans. Many people are confused by these terms because they don’t know which type they are referring to. The truth is that both used car loans and new car loans are secured loans. When you finance a vehicle through a dealership, the lender provides you with a promise to pay for the vehicle based on the price that you pay for it.
Direct financing requires you to take out an “in person” or “offline” loan at a local lending company and sign an agreement. You agree to the interest rate and monthly payments in advance. The lender then takes your information and contacts a lender of your choice in order to obtain the funds to pay for the vehicle. When you finance through an “offline” loan, you still give the lender permission to obtain funds for the vehicle based upon the price that you paid for it. This type of financing is good for people who want a new or used car but do not have immediate access to cash in order to do so.
Indirect funding is more advantageous to you because you have more control over what happens to the funds. Instead of making a decision and giving the lender sole access to the funds, you are able to negotiate with lenders regarding the interest rate, monthly payments, and other terms. If you are interested in obtaining preapproved auto loans for credit cards, your best bet would be to apply for a loan online. You can learn more about how to get preapproved for credit cards and other types of financing by registering for a free mortgage guidebook. See Bankrate’s top tips for saving money on mortgages and refinancing today.