Getting a car loan from an online auto loan company is not always abargain. There are definite pros and cons about going with an online auto loan company to obtain financing for a car purchase. While theconvenience of being able to shop for a car loan in your pajamas might be a real positive, the cons may have you getting dressed and heading out toyour local bank or finance company.
As mentioned above, one of the advantages of shopping for car financingat an online auto loan company is being able to do it at your convenience. No matter the time of day or your attire, you can fill out applications whenever you feel like it. Also, the results are usually received quickly, and they often offer lower interest rates because there are many finance companies vying for your business.
On the negative side is the fact that there is no face-to-face relationship like you might have if dealing with your local bank. Also, despite the fact that you might be pre-approved immediately, receiving the actual approval and funding can often take days or even weeks. Then when the loan in finally approved, you might be required to pay extra for overnight shipping of the loan check.
Another huge disadvantage to obtaining financing from an online source, is that you don’t always know how legitimate or reliable the company really is. Additionally, when there’s a problem, customer service can be poor or even non-existent.
For some people the advantages far outweigh the disadvantages. For them, the promise of a lower interest rate combined with the convenience makes going with an online auto loan company the best choice. Below is the personal testimony of someone who discovered first hand both the pros and cons of going with an internet car financing.
“Approximately, 10 months ago I tried getting financed from an online auto finance company. This company had everything I was looking for, and saved the headache of actually going to the bank or dealing with obnoxious car salesmen.
The form was 3 pages long, was easy to read and understand and I couldn't believe it was just that simple. With a few clicks of filling out the online application, I received the confirmation page and an email detailing that my application was on its way to a lender they worked with.
They guaranteed financing no matter what my credit was. Being that I had a fairly good score, I had no worries going into this process.
However, within the next few days, I began to notice a large number of inquiries on my credit report. All of these inquiries had declined me financing, which reflected negatively on my credit report.
By the end of the week I had a total of 20 inquiries and only one bank had approved me for financing. That bank offered such an absurdly high interest rate, that naturally I decided NOT to take advantage of that financing option.
I would not recommend going to an online car loan company unless you realize that once they have your information, they are free to distribute it to whomever they choose, even if they say they won’t. Carefully and thoroughly do your research and check the reputation of the company you have in mind. Otherwise you will end up like me with a large number of credit checks declining you for credit and no car in the end.”
Probably the biggest problem about going with an unknown online auto loan company is the fact that you have given them permission to run credit checks. An unscrupulous company will shop around your application resulting in a lot of fruitless hits to your credit report.
The second problem is that the bank that finally did approve the loan, only did so at a high interest rate. It didn’t matter that the applicant had a decent credit rating, the “low interest rate” advertised by the online car loan company was not what was offered by the actual lending institution.
The online auto loan company is not always a bargain, and is definitely a “buyer beware” proposition.
Source: http://www.articlealley.com/article_554821_31.html