Shopping for an Auto Loan

Shopping for an auto loan is usually about price and loan terms -- which lender is offering the lowest interest rates and best rebates, for example.

When you buy an auto from a dealer, it is likely to direct you to a lender, often one that specializes in making auto loans to buyers of a particular make of auto.

You can find online lenders on the Internet that focus on auto loans. Other lenders are aggregators, which act as a kind of wholesaler or broker to pull together the best loan rates and terms from a variety of lending institutions. In exchange for identifying potential customers, lenders pay a fee to aggregators. As a result, you should be skeptical if a loan aggregator seeks payment from you.

Buying an auto is a major financial deal. However, it has gotten easier as technology has improved the loan underwriting process and the auto industry has grown more aggressive in its sales tactics.

Similar to other online transactions, applying for an auto loan online requires you to complete an online application and trust the lender or aggregator to use secured-sockets-layer (SSL) or similar encryption technology. If in doubt, read the lender's privacy policy.

If you have an existing auto loan, you may want to check with your current lender, either through a visit to its Web site or a visit to a retail branch.

Your lender may be willing to negotiate a reduction in the loan rate if your payment history has been good. Your current lender is also most familiar with your credit history. If your lender stonewalls you, you may be able to find better loan terms with other institutions.