Auto Loan Companies

March 18, 2013

Until recently, the main options for car financing were banks and dealerships, but aftermarket auto loan companies have become a popular alternative.

Working with auto loan companies can be a great alternative to traditional bank financing. Many auto loan companies work hard to give their customers the best terms, service and finance options to help buy a new car, even when there are some credit issues.

Auto loan companies became prominent after the Internet began to prove itself. Each year, there are new auto loan companies in search of new customers. Because of this high level of competition, companies become more creative in their financing options, more lenient in their credit applications and work with more and more dealers across the country. Car buyers should seriously consider looking at the various auto loan companies, before they walk onto the lot of their nearest dealer. Many auto loan companies give you the option to be pre-approved for a loan, so you know exactly what you can afford. Once you find a vehicle you like, and it's within the parameters of the pending loan, a simple phone call will secure the car for you.

Applying for a loan through an online company is also very convenient. You don't have to go through a lot of paperwork or financial questions. A simple application and about 5 minutes of your time will be all that is needed to see whether or not you are approved. If you are looking into buying a new car, take a look at the many different articles on CarsDirect, to help you make a better, financially sound decision when buying your next new car.

CarsDirect Financing
CarsDirect helps more credit-challenged customers find car loans than any other website in the country. The company works with a network of dealers who specialize in car loan financing. The dealer has access to a number of financial institutions and will shop around to find you the best deal. Just fill out a simple application and you will be on your way to receiving a car loan.

Advantages of Auto Loan Companies

Getting a car loan can be a relatively pain free experience, and finding a car loan lender is simply a matter of research in the comfort of your home. Gaining an understanding of the auto loan process will pay for itself when it comes time to commit to a loan. It's worth it to spend a little time going over some of the benefits of working with an auto loan company.

Convenience
It is hard to imagine a more convenient way to shop for an auto loan than while sitting in front of your home computer. Rather than go to a car loan broker, such as a financing agent at a dealership, who can only scan your credit and put you into contact with a lender, you go straight to the lender yourself. Seek out as many quotes and interest rates as you possibly can, so you will get the best deal. To do this, you either have to drive all over town, from dealer to bank to credit union, or you can do it online. Either way you get various quotes, but auto loan companies that offer easy online applications are faster and infinitely more convenient.

Fast Service
You probably have received junk mail that says you have been pre-approved for ex-amount of money. This is conditional approval, meaning that you must apply and submit to the lender's rigorous standards before being offered final approval. Banks, credit unions and manufacturers' lending companies, such as GMAC, do the same thing, and it might take days or weeks for final approval. With many online auto loan lenders, if your credit is excellent, final approval comes a lot faster than elsewhere.

Competitive Rates
By choosing to find your auto loan online, you encounter numerous lenders, all of whom compete for your business. This translates to competitive interest rates and flexible terms. You can get quotes from as many auto loan lenders as you can find, but you should always get at least 3. Doing this helps ensure you get the best possible rate your credit score allows.

See what kind of interest rates you can get >>

No Obligation Quotes
When you receive a quote from an online auto loan lender, you are not committing to anything. There is no obligation by simply getting a quote. It is a competitive business, so it is in their best interest to give you the lowest rate possible. These lenders know you can go elsewhere for your loan. Auto loan companies make it a priority to offer the most competitive interest rates with no obligation to go any further.

Convenience, fast service, competitive rates and the ability to get a quote without being obligated to sign up are among the advantages of auto loan companies. Take the time to research several different lenders before you commit to any one of them. Not only will you benefit from the added knowledge, but you will get the auto loan that saves you the most money in the long run.

Disadvantages of Auto Loan Companies

Finding a good car loan lender can be daunting. You don't want to end up paying more than you can afford. It's good that there is so much competition among lenders. This typically translates into better rates and terms. There are, however, some disadvantages to dealing with auto loan companies, rather than a traditional lending institution, such as a bank, credit union or car manufacturer's lending agency.

Customer Service
When you go to a bank, credit union or a dealer, you receive a certain type of customer service impossible to get from a virtual lender. The ability to talk to a real person sometimes makes all the difference in the world, and is enough to lead people down a more traditional route of auto financing. This, of course, applies only to online auto loan companies, but that is where they predominate. If you are seeking a lender to whom you can pay a visit, chances are it is one of the traditional types.

Rebates—or Lack Thereof
One of the greatest advantages of visiting a car dealership to secure financing and make your purchase are rebates. You have to remember to ask, because they will not necessarily be offered, but the opportunity to receive cash back on your purchase, or be able to eliminate any negative equity you have on your car with a rebate is valuable. Rebates are a feature you will not find with third party lenders, who simply make loans. They do not control the price or incentives on the cars for sale.

Manufacturer Incentive
Much like rebates, car dealers are able to offer incentives that come directly from the car maker. Depending on economic conditions, a car manufacturer might be looking to move a large number of units, so they offer enticing incentives, such as cash back, very low APR or extended periods without having to make your first payment. Auto loan companies don't have this luxury. That is why you should do your homework and find out what sorts of deals are out there.

Expertise
A car loan broker is someone who works for a dealership, but who does not approve the loans. Their job is to connect borrowers with lenders. Because they work in volume, they have fruitful business relationships with particular lenders. Sometimes, the lenders are a branch of the car maker, like GMAC, designed to make loans to purchasers of their products. Other times, they are outside lenders. When you work with a car dealer, you have a middleman, true, but their business connections can prove valuable to you. They might be able to secure an interest rate that no amount of haggling on your part could hope to bring.

The rule applies: buyer beware. You want to thoroughly examine all of your options, weighing the pros and cons before you decide where to go for car finance.

How to Find and Choose an Auto Loan Company

Choosing an auto loan company is a matter of researching all of the alternatives, weighing your options and picking the lender who offers you the best terms possible. Getting a car loan may or may not be complicated, depending on how prepared you are and the type of lender you choose. Familiarizing yourself with the auto loan process will save you a lot of hassle in the long run. You won't encounter any surprises, and you will be well prepared to obtain the best financing your credit score merits.

Assess Your Financial Situation
Don't start shopping before you know two things: how much you can comfortably borrow, and your credit rating. A budget will help reign in your desire to overextend yourself, and knowing your credit rating is good information, giving you an idea of what kind of interest rate you will receive. This will at least put you on an even keel with salespeople and finance agents who will have the information at their disposal. Having these figures allows you to make wise decisions about the amount to be borrowed and the general range of interest rates you can expect.

Get several quotes
The best part about third party auto loan companies is that you are not obligated to borrow anything. You can typically be pre-approved and get an interest rate quote from several of them before you decide on going with one. Doing this will give you options and save you money.

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Cut out the Middleman
A car loan broker is someone who links potential borrowers with financing firms. A broker is not a lender; rather, they serve to match you with prospective lenders. A finance agent at a dealership is an example of a car loan broker. They do not approve the financing themselves, but generally receive a commission for sending borrowers to particular lenders. A dealer is an example of a broker. One of the best benefits about finding a third party lender is that you are going directly to the source of the financing, rather than through someone else, ultimately saving you money.

3 Car Dealerships that Take Road Loan Finance

If you're about to buy a car on credit, it is good to know the car dealerships that take road loan finance in your area. Road loan finance is similar to an auto loan, but with this type of loan you are usually only allowed to borrow a small amount of money to contribute to the cost of the car. Because it is too much trouble to deal with such small loans, some car dealerships don't take road loan finance. A list of three popular car dealerships that take road loan finance around the United States is given here.

New Honda Dealers
Honda is well known as a manufacturer of economy cars. Since many of the cars produced by Honda are in a lower price range than most cars sold in the US, Honda dealers are more likely to accept road loan finance. Although, whether or not a specific dealership accepts this type of credit depends on the size and leadership of the organization, it is safe to say that most Honda dealerships in the United States do.

Toyota Dealerships
Like Honda, Toyota manufactures many lower price range cars to be sold in the United States, so Toyota dealers are also likely to accept road loan finance. Toyota dealers are common throughout the US, so most likely there will be one in your area.

Nissan Dealers
Although Nissan manufactures a few more expensive models, it also offers a wide selection of cheaper vehicles. This means that Nissan dealers are also likely to accept road loan finance. Since there is no way to tell for sure whether or not a dealer particular will take road loan finance, a good rule to follow is that budget car dealerships are more likely to take it.

5 Types of Auto Loan Companies

Of the many firms involved with the auto loan process, the types of auto loan companies are quite numerous, second only perhaps to the many car dealers themselves. Besides banks and credit unions, which make auto loans only one part of their service, there is a whole array of companies and individuals involved in car finance, from car loan brokers to car loan lenders. Getting a car loan becomes much easier when you know the difference between the many types.

  • Car loan broker. This is someone who connects potential borrowers with potential lenders. They do not actually approve the loan, they simply bring the two parties together.
  • Car loan lender. An agent or a firm who approves or denies car loan applications is a car loan lender. They can work for a bank or credit union, or one of the many auto loan companies found online and elsewhere. They are in business to lend money for car loans.
  • Car refinance lender. This is a lender who specializes in the refinance of existing auto loans. When a borrower has an unfavorable interest rate or an unsustainable monthly payment, if their credit is good, they are usually eligible for refinance. Car refinance is basically the process of trading in your current loan for a new loan with a better interest rate and lower monthly payment.
  • Bad credit car loan lender. This type of lender makes loans to people whose credit is bad or non-existent. The interest rates are typically higher than for someone with good credit, but it is a necessary service to allow people to buy a car, even if their credit rating is poor.
  • Instant car loan lender. An instant car loan lender makes cash available for people to purchase a used car. The loans are smaller, the rates are high, and good credit usually isn't a requirement.

It is important that you are aware of the distinctions between the different types of auto loan companies and the services they offer. The difference between a car finance lender and a car refinance lender is wide, just as a lender offering bad credit car loans has different requirements from a lender of prime rate loans. If you don't want to go through a middleman, don't contact a car loan broker. This knowledge helps you sort through the many types of players involved in car loan finance.

Auto Loan Companies Worth Looking Into

Armed with the proper information, begin your shopping with an estimate of what you expect to pay in interest, and how to obtain financing from a trustworthy source. Here are four lenders to begin your search for the best car loan.

  • Bank of America. While Bank of America can be seen on many intersections of most cities, you can also apply for a car loan on their website. Visit the bank's Auto Loans page to read helpful information, locate rates and fill out an online application. You can also use this website to locate a Bank of America authorized dealer in your local area.
  • Capital One. Capital One may be best known for extending credit via credit cards, but this lending giant also offers car loans. Visit their Auto Finance page to find current rates for new car loans, as well as loans for used cars or refinancing options. Capital One offers a 'blank check' option, and you can search a list of dealers who readily accept this type of financing.
  • Chase. The Chase Auto Finance online page offers similar information on rates and local dealer searches. On this website, you can view possible interest rates in detail for different loan types and terms, take advantage of several auto loan calculators and conveniently apply for a car loan online.
  • CarsDirect. CarsDirect not only offers access to daily updates on new and used car listings all over the country, it also gives you access to finding lender and rate comparisons to secure the best car loan possible. Search CarsDirect for one-stop and hassle free shopping for the car you want, and instant access to financing for good credit or bad credit, through their national network of lenders. Apply Now

Comparing Auto Loan Companies
You can perform online loan comparisons on sites such as Bankrate.com. Online comparisons help you find and compare a number of loans, to determine the best rate of interest offered. You can check the annual rate percentage, the term of the loan and other factors such as whether you can pay off the loan early without incurring any penalty. You can thus evaluate the entire transaction, including any rebates or discounts offered, and compare the total you would pay under each loan. These factors can help influence your selection of a loan provider.

Bad Credit Car Loans
If you have bad credit, your best bet is to find an auto loan company, online or otherwise, who offers sub-prime auto loans. These are car loans especially designed for people with a credit score of 650 or less. Sub-prime auto loans offer a second chance for consumers to get into an automobile and start to repair their credit at the same time. There are a few things to remember when deciding to apply for a car and personal loan, as lenders will take an assessment of your recent financial capabilities to determine your rate of interest.

CarsDirect helps more credit-challenged customers find car loans than any other website in the country. The company works with a network of dealers who specialize in car loan financing. The dealer has access to a number of financial institutions and will shop around to find you the best deal. Just fill out a simple application and you will be on your way to receiving a car loan.

Credit Rating
Take the initiative to improve your credit score before applying for a bad credit car loan. Errors or mistakes in your credit history play a determining factor in the approval process. Such errors also leave a bad impression with lenders, and may result in a higher risk classification and higher interest rates as well. Try to keep up with debts and monthly payments, and pay past due balances immediately. These activities will be evident in your credit report, and serve as a good sign to lenders. For those with extremely bad credit ratings, a website that specializes in credit repair should be consulted.

Proper research is essential for the potential car buyer, and should be undertaken before applying for a loan. When deciding to purchase a new car from the dealer, be wary of variable loan rates that increase over time. This kind of payment scheme will increase the amount of monthly payments as the loan progresses. A quick look at various websites will give you an idea on the variety of payment schemes and options offered by lenders, banks or credit unions. The market is competitive, and various companies offer flexible financing terms, even when in the state of bad credit.

Payment Terms
Try to make a bigger than usual down payment for your new or used car purchase, to lessen the amount that needs to be financed. This allows you to take advantage of a shorter loan term. A loan term of 12 to 36 months is adequate for most. A longer term may be offered by various lenders and could reach to as long as 72 months.

The market is never short of lenders and credit unions that offer various loans, even to individuals with bad credit. Make the intelligent decision to compare quotes and prices before applying for a loan.

Make a List of Auto Loan Companies for Bad Credit Loans
Almost all auto loan companies have programs for people with bad credit, helping them purchase the cars they need at prices they can afford. However, there are companies that specialize in bad credit car loans. When looking to finance a car with bad credit, it's important to verify what is on your credit report. Challenge anything you don't agree with. Auto loan companies require certain pieces of information in order to calculate your interest rate and monthly payments. Some of the information these companies will require are your social security number, personal identification information such as previous addresses, employment and income information and current phone numbers. Below are a few auto loan companies that specialize in bad credit auto loan financing.

  • Auto Credit Express. Auto Credit Express is a company that specializes in bad credit car loans. ACE is a relative newcomer to the auto loan financing game, being in business since 1999. They specialize in providing bad credit car loans online. According to their website, ACE has provided over one billion dollars in bad credit financing. Most of the loan agents working for ACE have multiple years of experience in providing the best bad credit auto loans possible.
  • AutoLoans.us. AutoLoans.us is a nationwide auto finance broker firm, specializing in finding bad credit car loans. This means they don't write the actual loans, they find lenders that will work with you when you have bad credit. AutoLoans.us specializes in bad credit and post bankruptcy car loans. With their network of over 1,000 lenders nationwide, AutoLoans.us will be able to find you bad credit auto loans that fit your budget. AutoLoans.us is one of a growing number of auto loan companies that provide complete online application systems. One thing of note is they have loan programs for people with bad credit that don't require any down payment to qualify for the loan.
  • RapidCarLoans. RapidCarLoans.net is another one of the many auto loan companies specializing in bad credit car loans. This company, using a large network of subprime lenders, is able to find you the best loan rate possible, no matter what your credit rating is. This network of providers allows these lenders to compete amongst each other to provide you with the best possible loan terms. RapidCarLoans is a completely online auto loan financing company. It is a nationwide company, so no matter what state you live in, they can help you find the best loan possible.
  • See what kind of interest rates you can get >>

Expect Higher Interest Rates
As a bad credit customer, you have to expect higher interest rates, but there are means by which you can reduce this. For example, you can start by paying a larger down payment that will reduce your loan amount, and which will also get the interest payments down. You can also choose to take on a co-signer that will reduce the rates even more. Just make sure your co-signer is not designated as a borrower too, unless they accept the designation. You should also avoid choosing the car first and then getting your loan approved. As a precaution, get the bank or credit union to set up pre-approval, so you will have a set amount to work with. This means you now know how much you can afford, and which car to buy in that price range.

Negotiate Until You Drop
It's not necessary for you to sign up with the first car loan company you find. Make sure you compare and contrast the cost of the loans. Read the fine print completely. Do not be pressured into taking on additional features like window VIN number etching, insurance, extended warranties and other incidentals that will be included in the annual interest rate you are paying.

Fast Online Car Loan Approval

If you try to apply for a loan at a bank or an auto loan company, there are going to be delays. Most auto finance companies will ask for your personal information, document proofs and other paperwork that can prove frustrating. This is where an online company can come to your rescue. Most online auto loan companies will do all their work online. The process is simple, straightforward and considerably simpler.

Auto Finance Companies
There are many online auto loan companies, but you have to be careful. Avoid applying for loans from companies that are out of your state or country. Make sure that the company you choose is approved by the Better Business Bureau. Even if they are approved by the BBB, check the company by searching for online reviews from other customers. Look for results regarding the customer service of the company. Each company will have good and bad reviews, but more than 10 poor reviews is a bad sign. If possible, get in touch with your state government, to find out whether the company has any outstanding complaints against it.

Personal loan companies also offer car loans. It's best to find loan companies that have other branches as well. For example, if the company also deals with personal and home loans, then you can be more assured that it is a legitimate company.

Approval Process
Start the process of asking for a loan by getting in touch with the online company. This can be as simple as filling in an online form. Add all the information that is pertinent to the loan and the car that you want to buy. Once you have filled in the form, the company checks through it and sends you a quote of what they can offer you. After checking the quote, you have to read the fine print. Most online auto companies will charge higher interest rates to customers who are desperate for a loan. Make sure that you negotiate the interest rate, add up any discounts that you are eligible for and remove any prepayment penalties that you might have to pay. If you are satisfied with the quote, you can send your banking information to the online auto loan company. The company will set up a repayment option for you, and you are then sanctioned for the loan.

Payment Options
You will have to sign a loan contract and set up a repayment option on the approved bank account. The company may ask for auto-pay for the amount decided on. The loan amount is also credited either to you or the car company that you are buying the vehicle from.

Rates, Fees and Penalties
Online auto loan companies will usually offer you a quote for free, requiring no obligation on your part. Remember to obtain at least 3 quotes to weigh your options. Because there is so much competition, the chances that you will find a great interest rate are high. Not only that, but you can often avoid costly finance fees that might be tacked on at a car dealership or bank. Look for an online auto loan lender that does not penalize you for paying off your loan early. It is wise to pay more than the minimum payment each month, and you should not be charged extra for it.

Do your homework, and you will find that online auto loan companies offer the same services as traditional lenders, but sometimes at less cost to you. Consider all of your options before you commit to any auto loan.

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