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Indirect Auto Loans

Many people end up paying far too much for an auto loan because they get their auto loan financing from the dealer rather than using indirect auto loans. A lot of car buyers don’t realize it but a person can find their own auto loan and take it to the dealer to buy a car.

Almost all new and used car dealers will let buyers arrange their financing. Indeed many dealers like it when a buyer arranges an indirect auto loan because it reduces the hassle and paperwork that the dealer has to do.

An indirect auto loan is an auto loan arranged by a party other than the dealer such as a bank, a credit union, an internet lender or an auto loan broker. Indirect loans often come with much better terms and lower interest rates than traditional auto loans from the dealer.

Sources of Indirect Auto Loans

One excellent source of indirect auto loans is your existing bank or credit union. Most banks and credit unions offer auto loans and often give established customers a better deal on an auto loan than a car dealer. Credit unions in particular will give their members a really great deal on indirect auto loans.

Another good source of indirect auto loans is auto loan brokers. Auto loan brokers are professional individuals or services that arrange loans for a living. Loan brokers can arrange loans with a lower interest rate and better terms than other lenders. Loan brokers often give buyers access to a much wider variety of auto loans than they would normally get.

The internet is also a great source of indirect auto loans. There are a large number of online lenders that offer indirect auto loans. These loans often come with lower interest rates and better terms than traditional auto loans.

Using Indirect Auto Loans

One big advantage to indirect auto loans is that they give car buyers the freedom to negotiate with the dealer. A person who is approved for an indirect loan can tell the dealer that they will take their business elsewhere if they don’t get the price they want.

Contrary to popular belief car prices are not set in stone. Dealers and sales people can and do lower car prices to close a deal, particularly if they need a payday. Car sales people only get paid if they actually sell cars, if they don’t sell cars, they don’t get paid. This gives a person with indirect auto loans leverage to get a better deal on a vehicle.

Another advantage to indirect auto loans is that a person can compare the loan deals being made at the car lot to those available from other sources. A person can go loan shopping instead of getting stuck with an expensive loan from the dealer.

What to Look for Indirect Auto Loans

The main thing that a person should look for in indirect auto loans is the lowest interest rate possible. The interest rate determines the cost of the loan so the lower the interest rate the less the borrower will pay for the loan.
The next thing a person should look for in an indirect auto loan should be good terms. The terms dictate how the loan is paid off so getting good terms can make life easier. Getting fewer payments, a grace period or lower down payments.