With dealer-arranged financing, the dealer collects information from you and forwards that information to one or more prospective auto lenders. If the lender chooses to finance your loan, they may authorize or quote an interest rate to the dealer to finance the loan, referred to as the “buy rate.” An online car loan works a lot like any other financing except that it’s faster than more traditional methods, and puts you in control of the process.
With bank or other lender financing, you go directly to a bank, credit union, or other lender, and apply for a loan. Be sure to compare the financing offered through the dealership with the rate and terms of any pre-approval you received from a bank, credit union, or other lender. Choose the option that best fits your budget.
When you apply for a loan, the lender will check your credit report. This check places an inquiry on your report. Multiple inquiries within a short period of time can be viewed negatively by lenders and could potentially lower your chance of being approved for a loan. However, the occasional inquiry should have no negative impact on your credit.