The Basics of Online Car Loan Shopping

Online auto financing can be one of the cheapest ways to buy. And whether you're buying your first car or your fourteenth (!), knowing a few tricks of the trade will save you some serious money.

This guide:

  • Explains the basics of used and new auto financing

  • Outlines exactly how to design your loan to fit your needs.

  • Provides a multi-purpose calculator


But first we'll run through some of the restrictions and requirements of online financing. After this word from our sponsor...

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Online car loan restrictions

Borrowing online can save you a bundle, but it's not for everyone.

In order for online lenders to offer the low rates and fast customer service they do, they need to be a little selective about the loans they fund. Here's what to expect when you shop online for financing:


  • Purchase restrictions. Lenders who offer very low interest rates need to see their investments protected if they want to stay in the black. For this reason, most will either want to see you buy from a dealer or will require a pretty good credit rating if you intend to buy from a third party.


(Keep in mind that if you're buying a classic car or motorcycle, loan products will be limited and carry more restrictions; you can read more about motorcycle loans here).


  • Loan Amount. The loan amount you're looking for will also affect your chances of qualifying for low-rate financing. Online lenders generally won't fund loans for less than around $7,000 or for more than $75,000. So if you're looking at either you're neighbor's 1977 beater or a brand new Rolls, you'll probably have to arrange financing somewhere else.


  • Credit Restrictions. These depend on how you're making the purchase. If you're buying from a dealer, you'll be able to secure a loan pretty much whatever your credit situation. (Of course, the worse your credit, the higher the interest rate you'll pay.) But if you need a person-to-person loan, your credit profile will need to be pretty clean.

But if you do have credit problems, don't worry. We won't leave you out in the cold. There are great lenders who offer higher risk loans, they just come with more restrictions. For more help, read our guide to poor credit auto financing.

You can also check your credit for free with Equifax

Information required when applying online

Applying for any financial product is a hassle, and auto financing is no different. You can make the whole process a lot easier and faster by applying online. Speed it up even more by having all you required info on hand.


Here's a general list of what you'll need to apply with Capital One, our partner lender:


  • Most lenders will want about two years of employment and residence information. You'll need to be able to verify your income with pay stubs, tax returns, or other legal documentation. Self-employed applicants need the same. If you're applying for a joint loan, you'll need this information from both parties.

Residence information refers to your housing costs. Lenders simply want to know if you own your home or rent it, and what your monthly rent or mortgage payments are. This helps them calculate how well you can handle the loan you want.

  • Information about other sources of income and assets may also be requested. This is usually optional, but you can establish your ability handle more debt than your primary income would suggest.

  • Lenders also ask for information about the vehicle you want to purchase. If you haven't yet decided on a vehicle, don't worry, this section is strictly optional.

If you can, specify the make and model, whether the car is new or used, and what size down payment if any, you intend to make. (Of course, one of the very big advantages of direct financing is that you won't need to make a down payment.)

  • Finally, you'll be asked what size and term loan you need. If you haven't yet decided this, we can help. Read how to choose a loan term and size to fit your needs, and use our calculator to figure your payments.


Next: learn more about used car financing or new car financing.

Learn how to save even more:

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