If you Google how to get a car loan online, you're most likely bombarded with ads and websites vying for your business. It's pretty straightforward, like most things people do online these days, you fill in some info, and a lender contacts you with a yes or a no. But are these online lenders legit? Here's what you should know.
Online Car Loan Options
There are many options when it comes to getting a car loan online, whether you go with a car company like Carvana or Vroom, an online bank like Capital One, or a financial technology company, there is no shortage of places to look for a loan online. Online car loans come in many forms, like personal loans and auto loans.
Though you can technically use a personal loan to buy a car, it's better to look at auto loan options that are specifically designed with car buying in mind, so they typically come with lower interest rates than personal loans, and sometimes, longer loan terms. In many cases, online auto loans have lower rates than traditional loans from a bank, but your interest rate will vary depending on your situation.
Like with any loan, it's a good idea to rate shop and see who can get you the lowest interest rate for your situation. Rate shopping means applying for several loans of the same kind, like an auto loan, in a short amount of time, typically around 14 days.
Some online lenders may offer a pre-qualification that doesn't impact your credit score. Approval is also dependent on your situation and the online lender.
When Online Car Loans Make Sense
Online lenders make sense if you're looking for things like fast approval and online loan management. Also, if you've been turned down by traditional lenders, turning to an online car loan can be an option to get the vehicle you need.
Online auto loans can make sense if:
- You've been turned down by a bank or credit union
- You need to get into a vehicle quickly
- You desire contactless transactions
Many online lenders specialize in subprime lending, too, so you may have better luck with these entities if you have poor credit.
Is It Safe To Apply For Car Loans Online?
Online lending can be just as safe as going into a bank for a face-to-face loan. But, because the entire process is done digitally, you have to be comfortable providing your personal and banking information online. If you're not comfortable with this, online auto loans won't be a good option for you.
Like anything else you do online, it's important to know how to track a legit site, and how to tell when a website isn't up to snuff. To this end, it's key to do your homework and know which lenders are reputable or not. There are plenty of sites that rank online lenders, and this can make it easy to see who comes up in multiple lists.
Also, be wary of an online lender if you can't find any reviews or info about them. Small sites that don't have a BBB or TrustScore, should be used with caution. When in doubt, don't give personal information to a website that you can't verify as legitimate.
