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Buying a car is one of life’s major purchases. Few of us have the necessary cash at hand needed to buy a car, so we turn to lenders to help us out. Given recent economic events, you may think qualifying for a loan is just too complicated. While the economic crisis did affect available credit, things are improving. Not only is it getting easier to obtain a loan, but getting or refinancing an existing car loan online may be a smart decision.
Traditionally, applying for a loan required going to a bank, filling out a long series of paperwork, and waiting for the requisite credit check and financial inquiry. While lenders still need to research your financial history, modern technology has improved the process. In fact, now a day you can apply and receive approval for a loan online.
To apply with an online lender, you complete a short application form on their website, provide the necessary information, and submit your request. The lender will verify the information you provide, including your employment status and salary–and approve or deny your application. A decision is often made within hours, if not sooner.
Online lending also aids the consumer, as you can compare rates and terms between different lenders, allowing you to find the best deals.
If you have had financial difficulties, and your credit score is less than stellar, do not despair. Auto loans are still an available option even if you have bad credit. By seeking your loan online, you will be able to move beyond local financial institutions, and seek help from a wider network of lenders who may have the means to offer you decent rates even if you have damaged credit.
As with most personal loans, the interest rate you are offered is based on your credit rating. If you have excellent credit, you will pay less in interest. If your credit is damaged, you will most likely pay more in interest. But if other factors are in place, you can still get approved, and by making your payments on time you will begin repairing your credit rating while paying off your new or used car.
Online lending is slightly different from working with traditional banks.
Here’s how it works:
• When you apply online, and are approved, the lender will approve you up to a certain amount (approval may be limited to certain car makes and models)
• You will be mailed a blank check
• You will be able to shop at a list of approved car dealerships (check out the approved list when you are applying to make sure you are comfortable with it)
• When you find a car you want, fill out the check (for no more than the approved amount) and make it out to the dealership
• The check is not activated until it is cashed
• Drive away in your new car!
Another option is to apply for a refinance loan. Refinancing your car loan makes good financial sense if you can either lower your interest rate, or extend the length of your loan to lower your monthly payments.
Because a refinance loan is not about the car, you will not have to have your car appraised or inspected. While the age and mileage of your car will affect your ability to be approved, the loan is really a personal loan to you. If your current loan meets the parameters set by your lender, you will be approved to refinance the amount that you owe on the car. You can pay off your auto loan, and instead pay the new loan at a lower interest rate, or lower monthly payment.
Lowering your monthly payment can help tremendously if you need to trim your household budget to pay off other bills. And lowering your interest rate can help you save hundreds, if not thousands of dollars over the length of the loan.
If you need a new or used car, or if you would benefit from refinancing your current auto loan, an online lender may be the way to go. Take the time to research your options and check several different websites. Compare terms and interest rates, and feel free to call the lender’s toll free number to speak to a customer service representative. Within days you could be driving a new car, or be happy in the fact that you have improved your financial situation by refinancing your current loan.