How Does Financing Work When Buying a Car Online?
By Steve Wedig
A New Experience: Buying a Car Online
Buying a car used to require a trip to the dealership. Haggling was a hallmark of the experience, and you could count on going back and forth with a salesperson about things like pricing and interest rates. If you’ve watched TV lately you have probably noticed several companies offering a new way to buy a used car. These companies allow you to do all of the tasks associated with buying a used car from the comfort of…well, anywhere you have an internet connection.
Some Steps Still Apply
Even if you choose to buy your next used car online, the steps of car buying haven’t changed that much. You will still need to compile a short list of potential cars you are interested in buying and then research those makes and models. The internet can speed this process up because you don’t have to visit tens of car lots to find what you are looking for. Just remember to keep in mind that the cars on your list should reflect your needs as a car owner. If you’re a parent with three kids, your vehicle choices might be more influenced by priorities like cargo space and cabin roominess. Empty nesters may be looking for transportation that fits the grandkids or a convertible two-seater.
As you continue your research, you are going to give your potential car a good looking over, especially since you’re not visiting the lot. Many online sites offer you an extensive view of the interior and exterior of the models they have to sell. Additionally, your research will give you a rough estimate of each car’s price. This will be helpful, because before you get too deep into the process, it’s a good idea to figure out how much car you can afford.
How Does Financing Work?
Believe it or not, buying a car online is not any harder than the traditional method, and the payment options that you are used to still exist. As always, you can always pay with cash (if available) and avoid financing altogether by paying for your vehicle in full by transferring the funds directly from your bank account. The shopping sites themselves will offer financing options and will say they can get you the best rate because they work with so many different banks. This may be true. However, just remember that you always have the option of financing your used car purchase with your local bank.
If you’re financing the vehicle, you can wait to negotiate directly with the seller or apply for preapproval for a loan beforehand from a third-party lender like a bank or credit union. But remember, preapproval is conditional and doesn’t guarantee loan approval. Contact several lenders to shop around and compare terms, like interest rates, financing terms and maximum loan amount. This can help you save money in the long run. Many online car selling service offer the option to finance with your bank, as long as you have an existing approval. This approval process is pretty simple. Just let us know what you are looking to buy and how much you think you will be spending. Our lenders can help you through this approval process and provide you with a pre-approval letter the online seller may require. If you have additional questions about a car loan, the friendly lenders at Federated Bank are always here to answer your questions. Contact us and let us know how we can help.
