Use care if searching for car loans on the internet, particularly if you have less than perfect credit.
“Beware the middleman”
If you have excellent/good credit:
You should check with your bank, credit union, or your current lender for a competitive interest rate
(or "APR"). These lenders are most familiar with you and may offer the best rate. Also consider
checking with other local banks, credit unions, etc. for rate quotes. "Internet only" sources of car
loans are often not lenders, but are “middlemen”, and their rates may be higher than what you can
find on your own.
If you have less than perfect credit:
If you have less than perfect credit, and you have been unable to find a lender who will “directly”
provide you with a car loan that is acceptable to you, you may have the Dealership arrange your car
loan. If you decide to arrange your car loan through the Dealership, be aware that they are a
“middleman”. Any loan a Dealership arranges for you will usually be “sold” to a specialty finance
company and the Dealership will receive compensation. This compensation paid by the finance
company may result in a higher rate to you.
As previously mentioned: You should avoid discussing your credit situation or allowing access to your credit reports
until you have successfully negotiated the purchase price, trade-in, add-ons, and warranty.
Websites offering to help those with less than perfect credit:
Websites offering to assist those with less than perfect credit, bad credit, bankruptcies,
repossessions, or those with severe credit problems should be approached with caution. Many of
these websites are providing “referral only” services to dealerships that have agreed in advance to
pay them a fee. Here's how they work:
After submitting your personal information and the website company accesses your credit report, the
website company will then pass this information on to a Dealership in your area. The Dealership
evaluates your credit risk and contacts you to schedule an appointment. If this is the case, what is
the benefit to you? You can contact any dealership you wish and schedule an appointment. The
Dealership selected may not have any vehicles of interest to you, but now has your personal financial
information. How might they use that information? Might they share that information with others?
What if the Dealership is one that you don’t trust based on past experience?
If you decide to try one of these websites you may wish to consider the following:
1) Review the website thoroughly, read all web pages available before submitting any personal
submitting any information. Of course the policy is only as good as the website company.
3) Is this website well known? The more prevalent websites have a strong incentive to maintain
4) Does the website provide a phone number you can call before you submit your personal
information? If you cannot talk to a live person prior to submitting your personal information, you
should consider avoiding this website. Do you trust the website with your personal information
based solely on the appearance of the website?
5) Look for a street address on the website. You may wish to verify that the street address is
6) Is this a “referral only” website (also known as a marketing website)? What services does the
7) Does the website company actually arrange for loan approval prior to visiting a dealership?
Call and Ask. Can they quote an APR prior to your visit to the dealership?
8) If the website claims to represent multiple lending sources, and you are approved, will the
lenders allow you to purchase a car at any franchised new car dealer? Call and Ask. If they say
the loan is only good at “select” dealerships in their “dealership network” then they may be a
“referral only” website.
9) What dealerships do they represent in your area? If numerous Dealerships are represented,
how do they determine which ones to send your information to? Do you want many Dealerships to
receive your personal information and call you to schedule a visit?
10) Do you want any Dealership to have your personal information prior to negotiating purchase
price, trade-in, etc.? Shouldn’t you at least make a determination that the dealership has vehicles
of interest to you?
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