Do you want to get an auto loan without the hassle of paperwork and rejection? Then you might be thinking about online auto loans as an alternative.
But you might also be apprehensive about the validity and trustworthiness of getting a loan online. When you are dealing with tens of thousands of dollars, you want to be sure that your financing is rock solid.
So let us lessen your fears and show you the truth about online auto loans.
A Quick History of Auto Loan Financing
Before we talk about online auto loans, we first need to discuss vehicle financing in general. Today, it is perfectly normal to finance a car through a bank, credit union, or lender, even if some are apprehensive about financing through an online lender. But it has not always been this way.
In the 1920s, people were afraid that financing a car at all would handicap Americans from purchasing other goods and saddle people with debt.
In response to these fears — the governor of the Federal Reserve, D.R. Crissinger, said it best:
“…the family will sacrifice other convenience, every other luxury and often necessities rather than give up the automobile.”
Here’s why this matters:
Cars are expensive. But despite this fact, we need them. Back in the 1920s, most people could not afford even the most reasonably-priced vehicle. So entrepreneurs and smart business people figured out a way to make cars accessible to the average American by offering financing options.
Thus, automotive financing was born. And today, to make auto financing more competitive and reasonable for the average American, the industry has set its sights toward online auto loans.
The Basics of Online Auto Loans
So what exactly is happening when you get a car loan online?
First, your lender is buying your vehicle. That means, until your pay off your loan, your lender actually owns your car.
Second, you need to consider three major variables when getting a car loan:
- The loan amount. A car salesman will often point out monthly payments as the most important factor in a negotiation. But this isn’t true, you should consider the overall price first and monthly payments second.
- The annual percentage rate (APR). When getting a loan, you pay the lender interest. In exchange for improving your financial mobility, a lender asks you to pay them this extra amount because they are taking a risk that you might not pay them back.
- The loan term. This is how long your loan is. The usual timeframe is between 36 and 72 months.
Why Online Auto Financing is Now a Smart Choice
Getting a loan is a hassle. There is just no way around it.
You have to fill out paperwork, argue with lenders about interest rates, and fear hidden costs you might not understand.
Why is the industry still like this? Because people don’t want to spend numerous hours shopping around and talking to lenders. It’s the same as buying a car and talking to a salesman. You get worn out eventually. You just want to pick one because you are too tired to see what rates are out there.
Here is how online auto financing changes that:
It’s fast. Here at TRED, our financing process is virtually paperless. We can do that because our platform offers Real-Time Identity Verification and Background Checks which let us take the same precautions that an in-person lender would.
Other companies like RoadLoans and Bankrate also offer online loan applications. That means you can shop around and find the best interest rate for you in minutes, not days.
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Whether you are at work, home, or even on a train with a mobile phone, you can get pre-approved financing right now without a professional haggling you for every penny.
Should You Consider Getting an Online Auto Loan?
With our recent partnership with Ally Financial and Autopay, people who finance with TRED can get rates as low as 2.69%. But here’s why getting an online auto loan from TRED is convenient: we offer loans for used vehicles.
There is a new shift in the industry. Cars now last much longer than they use to. You can expect to drive more than 100,000 miles in some cars before any major repairs are needed. Because of this, lenders have more confidence in giving out loans for used cars.
Here’s the overall impact of this fact:
The average person will own 13 cars in their life. If each car costs $25,000, you pay $325,000 total. But new vehicles come with baggage: the moment you drive it off the lot, it instantly depreciates by 20%. Those $25,000 new vehicles are actually valued at $20,000 after you buy it. After about one year of driving, that new car is now devalued by about 30% and now worth $17,500.
If you buy used cars instead, you could save $97,500 or more over your lifetime.
That’s a major amount of savings that you can spend on more important things like a home, investments, or your kids.
More than 60% of our customers finance through TRED instead of other lenders, here’s why:
- On average, cars on our platform are 15% cheaper than at dealerships,
- We offer a 150-point inspection on all vehicles to ensure quality, and…
- You don’t have to do any paperwork… it’s easy!