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You’ve come to the right place for a car loan application!

Dealer financing may sound tempting, but dont compare apples to oranges (photo: flickr.com)

Dealer financing may sound tempting, but don't compare apples to oranges (photo: flickr.com)

It’s fast and hassle-free to get pre-approved for a loan at Car Deal Expert. If you have just a few minutes to spare, you have everything you need to apply.   It costs nothing, there’s no obligation, and it doesn’t matter whether you have good credit, bad credit, or no credit at all.

And we have the lowest auto loan rates!

Car Deal Expert networks with reputable and established lenders who specialize in car loans for all kinds of credit situations.  Even if you have a bankruptcy filing in your credit history, at Car Deal Expert you’ll find the best possible loan your credit score will allow.  The application process is private and secure, so even on the off chance that you don’t qualify for a loan, no one will know but you.

Fill out an auto loan application before you buy

No matter where you plan to shop for a car, it’s best to get pre-approved for an auto loan first.  Dealer financing can sound tempting, especially if there’s a promise of zero-percent financing. But no one really loans money for free.  Zero-percent financing usually requires that you have perfect or near-perfect credit; and it also generally means that you’ll be paying a higher purchase price than you would if you were financing with an outside lender.

Zero down and “auto bad credit loan” don’t go together

Similarly, whatever interest rate a dealer offers you may not be the best rate because a higher interest rate can mean a bigger sale commission.  When you’ve been pre-approved for a loan before you visit a dealer, you can compare loans (see below) and know for certain whether the dealer’s offer is fair.  And when you’re pre-approved for a set amount, dealers are less inclined to try to over-sell your stated limit.

How to compare auto loans

If a salesperson claims that he or she can get you a better deal than your pre-approved auto loan, make sure you’re not comparing apples to oranges.  For example, a higher interest rate over a longer term may result in a lower monthly payment, but you may pay more for the vehicle than you would with a higher interest rate over a shorter term.  Here are some basic facts about vehicle loans that will help you compare your pre-approved online car loan to the financing offered by a dealer:

Principal. The principal amount of a loan is the amount of money you borrow.  It does not include interest or finance charges or any amounts paid by you upfront.  For example, assume that you plan to buy a $30,000 automobile and that taxes and title fees are $2500, which brings the total to $32,500.  Your deductions, which include a trade-in vehicle worth $5,000, a cash down-payment of $3,000, and a dealer incentive or rebate of $2000, reduce the total to $22,500.  The principal amount of your loan will be $22,500 and interest will be calculated on that amount.

Interest Rate. The interest rate on a vehicle loan is the annual rate of return a lender receives on the principal amount. The interest rate is the bottom line for a lender, but it is only one of many possible finance charges or costs in your bottom line.  As the borrower, when you’re assessing loan costs or comparing loan offers, your relevant measure is the Annual Percentage Rate (see below).

Annual Percentage Rate (APR). Lenders are required to provide a Truth-in-Lending Disclosure, which includes the APR, within three days after the date you apply for a consumer loan, (although today the disclosure is generally provided the minute you apply). The APR is the annualized cost of the credit, including interest and all other finance costs.  Dealerships and other lenders charge many different kinds of fees when they finance cars, including loan points or origination fees, participation fees, and monthly service fees.

The APR allows you to compare one financing offer to another and make an informed choice without having to identify and analyze each individual finance charge.  Remember that the APR is the cost of a loan expressed as a yearly rate, and different loans have different terms (lengths).  To determine the overall cost of a loan you must consider the loan term as well as the APR.  For that reason, Truth-in-Lending Disclosures show you the total loan payments and the total finance charges as well as the APR.

Loan Term. The loan term is the length of the loan, which is usually described as a number of months, (36, 48, 60, etc.).  All else being equal, a longer loan term will result in a lower monthly payment, but it will increase the actual cost of the loan, (see Annual Percentage Rate (APR), above).  Keep in mind that, all else being equal, the longer the loan term, the greater the actual debt.

Also, the longer the loan term, the more likely it is that as your vehicle depreciates, you will owe more on the loan than your car is worth (i.e., you will be “upside down” on your loan).  When shopping for a loan, your goal should be to get the lowest APR and the lowest total loan payments as shown on the Truth-in-Lending Disclosure, and not necessarily the longest loan term or the lowest monthly payment.

How to negotiate with a car dealer for low auto loan rates

1.  Get pre-approved for an easy auto loan at Car Deal Expert before you visit a dealer. The dealer will be less inclined to try to sell you more than you can comfortably afford.

2.  Focus on the price of a vehicle rather than the monthly payment.  Don’t be tempted to spend more just because the dealer offers financing that can be stretched out over a longer term.

3.  If you have a trade-in vehicle and circumstances permit, consider selling the vehicle on your own.  Doing so may involve some effort on your part, but you’re likely to get a higher price.

4.  Put as much cash down as you can.  Ten percent is the norm, but it may take 20 percent to avoid becoming upside down later in the loan term.