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Online Auto Loans: Instant Preapproval Even With Bad Credit

Michael Jones

Auto Loan Expert

Online Auto Loans

If you’re in the market for a new vehicle, you’re probably considering your different options for financing. Many people use loans to cover the full cost of their vehicles – with current auto loan rates so low, it makes sense to finance your next car purchase. But choosing the right lender can be hard; you need to make sure you get the best deal possible on your auto loan.

Interest rates often seem small, but they add up to a lot of money in the long run. It’s important to shop around for loans if you’re looking to save money. Cars are expensive, so don’t be neglectful of the amount of money that you can save if you choose right loan. Instead of heading to a traditional lender, you can now go online and apply for financing from a range of other lenders.


Many people head online to apply for credit cards and personal loans, but people often don’t realize they can do the same for an auto loan too. It’s just as easy to apply for an online auto loan as it is to apply for a credit card. In this article, we’re going to take a look at online auto loans to help you get a better idea if they’re the right form of finance for your next auto purchase. We’ll explore the concept of online auto loans and compare them to other forms of finance currently available in the industry. We’ll also give you some tips on how to increase your chances of approval!

Online Lending: The New Frontier

In the past, you’d typically head to a traditional lender to get an auto loan. In many cases, some auto companies also offer their own in-house financing options. For decades, these options were the only credible way to receive financing for a new vehicle. Over the past few years, online lending has exploded. There are thousands of lenders online that provide a range of different financing offers.


You no longer have to spend your valuable time heading to a bank or credit union to apply for a loan. You can sit in the comfort of your own home, and shop and compare rates from various lenders online. Best of all, many auto loan lender provide you with instant approval if you end up qualifying for their loans. With some traditional lenders, you may have to wait days or weeks to receive an approval for a loan.


Also, you no longer need to bring mountains of paperwork with you to apply for a loan. Many online lenders have quick processes that reduce the amount of paperwork that you need to apply for their financing. Online financing opens the doors to more competitive rates, without the added hassle of traditional lenders.

In-House Financing: The Drawbacks

If you go to purchase a vehicle from a large dealership, you’ll probably be offered in-house financing from the lending team at the dealership. In recent years, auto dealerships have become extremely focused on providing their own loans for vehicles you purchase. 

Online Auto Loans

In many cases, they’ll even add extra incentives or bonuses if you purchase a vehicle using their financing. In fact, salesmen may even have an economic incentive for getting their customers to sign up for in-house financing.


It’s important to ask yourself why dealerships are so keen to sign up people for their in-house financing. A lot of in-house financing is actually just a dealership negotiating a partnership with a large lender. They’re basically acting as a broker for a loan. Lenders have added incentive to work with dealerships because they then receive bulk borrowing requests from the dealership.


As with any partnership, there has to be a mutual benefit that allows the dealership to profit. In most cases, a dealership gets a cut of the deal – meaning that you’re paying for them to arrange the finance for you, often without realizing it. In fact, many dealerships don’t make much money out of their vehicles at all; they rely on financing and other deals to provide a lot of their income.


In addition, you don’t get to shop around for different rates – the dealership will provide you with the rate their partner gives them. If you use an online lender, you don’t have to accept financing terms if you want to shop around for something cheaper. The reality is that many people use dealership financing because it’s very convenient. While it’s true that dealers can quickly sort out financing for you, it’s important to remember that you can save a lot of money by taking the time to head online.

Preparing for Your Application

As with any financial application, it’s important to prepare for an online auto loan application. Because online lenders provide quick decisions, the process is typically automated. This means there is an emphasis on your credit score in the decision process. In this section of the article, we’re going to take a look at how you can prepare yourself to improve your chances of being approved for a loan.


  1. Check Your Credit Report – The first thing you should always do before applying for an online auto loan is check your credit report. While you may already know your credit score, it’s important to actually check your report. Not doing so may mean that you don’t see mistakes on your report – they’re more common than you realize. You can receive a free credit report from any of the three major reporting agencies – they have to provide you with a free report once a year by law.
  2. Fix Mistakes – If you do find any problems on your credit report, it’s important to fix any mistakes. This may be holding your credit score back and may result in an inability to receive a pre-approved car loan. You can request that mistakes be removed from your report – though you will have to provide evidence that it is a mistake. If you’re having a tough time getting items removed, you can use a credit repair company to help you. These companies charge fees, but they can help give you the strength to remove items from your report. Many will refund you if they are unsuccessful.
  3. Pay Down Credit Card Debt – Another quick way to improve your chances of gaining approval from an online lender is to pay down your credit card debt. The amount of available credit that you use will have a huge impact on your credit score. If you can afford to pay down some of the debt, you can see a quick improvement in your score. Lenders typically send updated credit reports to reporting agencies at the end of every monthly billing cycle. You’ll need to wait till then to see your score improve.
  4. Apply with Lenders You Have a Chance With – The last step to making sure that you get approved for an online auto loan is to apply with a lender that accepts similar applicants to you. If you apply for a loan you cannot obtain, you will only have yourself to blame if you end up being rejected. Ask lenders what their minimum credit score acceptance is for a used auto loan. If they won’t tell you, head online and research on credit forums to see what other borrowers have been approved with.
Online Auto Loans

Advantages and Disadvantages of Online Auto Loans

If you’ve read all this article, you probably already know most of the information in this section. But sometimes it’s good to get a bird’s eye view of everything when you’re making an important decision. In this section of our article, we’ll take a brief overview of the pros and cons of using online auto loans – make sure to give it a read!

Pros of Online Auto Loans

Below are some of the most common advantages of using online auto loans:


  • Convenience – You can apply for an online loan from the comfort of your own home. You won’t have to worry about heading into a lender and filling out a long and complicated form – online lenders typically have short and easy applications. If you’re someone who is always busy, it’s a great option to avoid running into time wasting.
  • Quick Decisions – Many online auto loan companies provide quick decisions – they may offer you a rate on the spot. This is much better than some banks or credit unions that may take ages to provide you with approval or your applicable rate.
  • Variety and Comparison – There is a wide variety of different lenders online – the space is continuing to grow. If you’re looking for a way to compare different quotes and lenders, you can do so much easier by looking online. In the past, you would have to go to different lenders and ask for quotes face-to-face. This long and arduous process meant that it was too much effort to do a solid comparison.
  • Varying Credit Requirements – If you use a traditional lender or a dealer lender, you may be restricted from access to finance if your credit score is too low. Instead, you can head online and find plenty of lenders that provide money to individuals with poor credit histories. You can find an online auto loan application for bad credit car loans via certain lenders. Don’t let your credit history prevent you from purchasing a much needed vehicle. Just be careful not to work with any predatory lenders.
  • Quick Funding – Many lenders not only provide you with quick decisions, they can also get you money to fund your vehicle quickly. Some online lenders can get you the cash within 24 hours – it can help you purchase your vehicle quickly.

Cons of Online Auto Loans

While there are plenty of benefits to working with online auto loan companies, there are also some disadvantages. If you want to check out some of the issues with online auto loan companies, look below:


  • Lack of Personal Service – Unfortunately with online lenders, there tends to be a lack of personal service with your loan. If you head to a traditional bank to get an auto loan, you can typically meet with a lending specialist face-to-face and ask questions about your loan. This can be nice if you’re someone who prefers to meet with lenders and make a decision over an extended period of time.
  • Scams – Because there are so many different lending companies online, you have to make sure that you work with the right ones. People try and scam others online, so it’s important to be aware of this when you’re searching for any form of finance online. Make sure to do your research about any companies you enter into agreements with.

Additional Tips and Tricks

If you want to get the most out of an online auto loan, it’s important to understand a few additional tips and tricks. First, you need to research any lender that you work with to ensure they’re a solid company to work with. Head to the Better Business Bureau or Consumer Affairs to check user reviews – if past customers don’t enjoy your lender’s services, there’s a high chance you won’t either! You should always check auto loans online reviews.  The best online auto loans come from reputable companies.


Second, always make sure to compare rates with other lenders. Use an auto loan payment calculator to determine affordability. While you may not be able to see the final rate until you receive approval, compare the rates advertised or see if they will provide you with a quote. Some lenders may provide auto loan pre-approval online. Don’t apply for multiple loans at once, this will result in you receiving damage on your credit report – multiple inquiries can lower your score!


As you can tell, there are plenty of benefits associated with obtaining an online auto loan. Make sure to consider all the information stated in this article if you’re planning on applying online. As a top resource for auto loans, we provide our readers with as much information as possible. We want borrowers to be more informed when they begin the borrowing process. Make sure you choose the best place to get an auto loan online.


Make sure to remain wary of small lenders with little-to-no online presence. It’s important to protect yourself when making financial transactions online. If you want more information on auto loans, make sure to check out some of the other articles on our website. We have everything you need to know about auto financing!

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