Are online auto loans legit?
If you Google how to get a car loan online, you’re probably bombarded with ads and websites vying for your business. It’s pretty simple, like most things people do online these days, you fill out some information and a lender contacts you with a yes or no. But are these online lenders legit? Here’s what you need to know.
Online car loan options
There are plenty of options for getting a car loan online, whether you go with a car company like Carvana or Vroom, an online bank like Capital One, or a fintech company, there’s no shortage of places to look for a loan. on line. Online auto loans come in many forms like personal loans and car loans.
While you can technically use a personal loan to buy a car, it’s best to look at car loan options specifically designed for buying a car. They therefore usually come with lower interest rates than personal loans and sometimes longer loan terms. In many cases, online car loans have lower rates than traditional loans from a bank, but your interest rate will vary depending on your situation.
As with any loan, it’s a good idea to evaluate the prices and see who can get you the lowest interest rate for your situation. Rate shopping means applying for multiple loans of the same type, such as a car loan, within a short period of time, usually around 14 days.
Some online lenders may offer prequalification which does not affect your credit score. Approval also depends on your situation and the online lender.
When online auto 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 may be an option to get the vehicle you need.
Online car loans can make sense if:
- You were declined by a bank or credit union
- You must quickly get into a vehicle
- You want contactless transactions
Many online lenders also specialize in subprime loans, so you may have better luck with these entities if you have poor credit.
Is it safe to apply for a car loan online?
Online loans can be as safe as going to a bank for a face-to-face loan. But, since the whole process is done digitally, you should be comfortable providing your personal and banking information online. If you are not comfortable with this, online car loans will not be a good option for you.
As with everything you do online, it’s important to know how to track a legitimate site and how to tell when a website isn’t up to scratch. To this end, it is essential to do your homework and know which lenders are reputable and which are not. There are many sites that rank lenders online, making it easy to see who appears in multiple lists.
Also beware of online lenders if you can’t find any reviews or information about them. Small sites that do not have a BBB or TrustScore should be used with caution. If in doubt, do not provide personal information to a website that you cannot verify is legitimate.