Online Auto Loans

An online auto loan is an alternative to traditional car loans. Often, they're quicker, more convenient, and offer lower interest rates than traditional loan methods—but they can present disadvantages like dealing with disreputable online loan companies and taking advantage of car buyers with bad credit.

What Is an Online Auto Loan?

An online auto loan is exactly as its name implies: a car loan you apply for online.

You can apply for car loans with various online loan companies, and perhaps even with your own personal bank or credit union if it offers the service.

Pros & Cons of Online Car Loans


Some of the benefits of working with online loan companies include:

  • Online auto loans take the guesswork out of working with dealerships and their affiliated financial institutions. Once you get a car loan online, you enter the dealership already knowing your budget and interest rates.
  • While you'll still want to do your research, many big-name financial lenders offer online car loans, making things a bit safer for you in terms of finding a reputable lender.
  • Shopping for online auto loans gives you a chance to use an auto loan calculator to determine factors of your car loan.
  • When you shop for auto loans online, you can compare loans, interest rates, and monthly payments from various online loan companies much faster than you could if you personally visited each bank.
  • Many financial institutions offer lower interest rates for car loans online than other traditional loan methods.


There are potential disadvantages to online car loans:

  • Unless your personal bank or credit union offers online loans, you'll be dealing with an otherwise unfamiliar financial institution; thus, it's crucial to research the new bank or credit union first—especially in terms of their reputation for providing online auto loans.
  • You must be aware of any additional fees associated with an online auto loan; they're not necessarily a given, but they can exist.
  • Understand that some smaller and/or newer loan companies are at risk for going out of business, which means your loan could be sold to collectors. Always check with more reputable online loan companies first.
  • Some online loan companies advertise to buyers with poor credit.
    • Get more information about your credit score in our section on credit reports.
  • Some buyers prefer face-to-face interaction. If you're more comfortable talking with your trusted bank or credit union representative, it might be a good idea to skip online auto loan applications.

How to Get an Online Auto Loan

Your exact application process depends on the online loan companies you use, but keep these pointers in mind as you apply for online auto loans:

  • Research the cost(s) of the vehicle(s) you want. This helps you determine both how big of a loan you need and how much of a down payment you should put forward. A good resource for finding new and used car prices is the Kelley Blue Book (KBB).
  • Use an auto loan calculator to determine how much you need to finance.
  • Shop around with various online loan companies to find the best auto loan rates and monthly payments for you.
  • Be prepared to enter personally identifying information such as your:
    • Name.
    • Address.
    • Social Security number.
  • Also be prepared to provide basic information such as your:
    • Employment information.
    • Annual income.
  • Determine whether you need a co-applicant or cosigner for your auto loan, and carefully read the instructions for that process.
  • Always talk with a live representative if you have ANY questions. If no live representatives exist or it's extremely complicated to get in touch with customer service, this might not be the online loan company for you.
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