Financing Cars Online

Cars are a big expense, and many of us take out some sort of loan so we can afford them. That means you're not just shopping for a car, but you're shopping for the best available loan term rates too. Charlie Vogleheim, Executive Editor at Kelley Blue Book, says one option is to log onto the web to look for your loan.

Where to Look

Vogelheim says many people shopping for a car already do some loan research online. Mostly people are checking on interest rates to make sure they're getting a competitive rate.

Now, he says, you should try sites like Eloans.com or CapitalOneAutoFinance.com to find deals on car loans.

Robert Wagnon financed a car through Capital One. He liked the experience so much he financed another car with them two weeks later. "It was so easy and so simple and rates were so low, that I said, let's just go ahead and do both of them," he says.

How it Works

Both Vogelheim and Robert agree that one of the best parts of getting an auto loan online is that you can do it on your own time. Vogelheim says you simply log on to one of the sites and begin filling in your information, including the amount you would like to borrow.

Bright Idea! Applying
The application process only takes five to fifteen minutes, but, "They're going to be asked a number of rather specific questions about their financial status," Vogelheim says. To save you some time, you should have any basic information about the loans you already have by your side when you start applying.

Once your information is submitted, you should receive a confirmation email from the company telling you they are processing your application.

Getting An Answer

Vogelheim says that response times vary depending on the company you apply with. "It can be as short as fifteen minutes, sometimes it's a couple of hours, sometimes it's a couple of days," he adds.

Robert received an email stating he had been approved the morning after he applied. He confirmed with the company that he would like to proceed, and within a week, he received documentation in the mail stating he had a loan.

At the Dealership

Once you're at the dealership, Vogelheim says the financing process is as easy as handing the paperwork over the financing people. With most online loan companies, you are issued documentation stating you have a loan and the money will be paid to the dealership. Your monthly payments will be going directly to the online company.

"I was surprised how easy it was and how familiar everybody involved in the transaction was with it," Robert says.

Interest Rates

Vogelheim says you can find competitive rates on these websites. For example, Robert's rate was less than three percent! Most of the sites will give you a free rate quote by simply filling in certain information before you even fill out an application.

However, Vogelheim says that you should check with dealerships too. They may have some zero percent financing offers or cash rebates that may be a better fit for your wallet.

The Terms

Although an interest rate under 3% sounds great, you will have to agree to certain conditions to lock that interest rate in Vogelheim points out.

For example, if you apply over the phone rather than online, "You'll be penalized about a quarter percentage point," Vogelheim says.

You may also have to agree to payment terms. Many of the online loan companies want you to agree to the automatic payment option. If you don't, you're hit with another half a percentage point on the loan rate.

Bright Idea! Fees
Read the fine print for other terms and conditions. Vogelheim also suggests checking for extra fees the lenders may charge you, like application fees. He says that information should be clearly listed on the website.

Dealer vs. Online

Dealers can offer you some great incentives when buying a car. Sometimes, Vogelheim says those deals maybe better for you than financing your car on the web. When you're deciding between financing online versus 0% financing, the Kelley Blue Book website offers some information you should keep in mind.

Shorter Loans and Higher Payments
Kelley Blue Book says that many times, if you choose 0% financing you will end up with a shorter loan period, and therefore, higher monthly payments. Dealers put a three-year maximum on most 0% finance loans. That means you're paying off the car a lot faster with higher payments. If your pocketbook can't handle it, then you should probably consider other options.

Your Credit
Kelley Blue Book says many 0% financing deals hinge on you having an "A" credit rating. But they do add that soon, some may be opening the offer to the next levels of credit ratings. Make sure you read the fine print before committing to a deal.

Limitations
You've found your dream car, but chances are the 0% financing offer may not apply to that make or model. Kelley Blue Book says in many cases dealers only allow 0% financing on certain makes and models that sometimes don't include option packages or certain models.

Cash vs. 0% Financing
Offers of cash rebates and 0% financing are enough to get many consumers in the dealer's door. But Kelley Blue Book says be prepared to choose one over the other. Many times, dealers will give you a choice- cash rebate or 0% financing. Do the math and see which one is better for you.

Negotiating if you Qualify
Kelley Blue Book suggests standing strong with the dealer when it comes to applying for your 0% financing. If you qualify, make sure you have negotiated the price of the car before the dealer applies the 0% financing. Doing this helps make certain you got the best price as well as the best loan terms.

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