Should You Get a Car Loan Quote From LendingTree?
Imagine you’re expecting a baby and need to trade in your trendy sports car for a more practical minivan. Or perhaps you’re moving away from your hometown — and its reliable public transportation — and into a new city that requires owning a car. Or maybe you have been driving the same set of wheels for 5 years when a shiny new SUV at your local auto dealership catches your eye.
Perhaps you’re one of the lucky few who has the tens of thousands of dollars required to purchase a car outright saved up in the bank — and if so, congratulations! But if you’re like most people, a new car will only come if you take out a car loan.
While you could take the dealership up on its offer for a line of credit to purchase the vehicle, you may suspect you can get a better deal elsewhere — and you’re probably right. You’ve heard from a friend that they recently got a great rate by searching for an auto loan through LendingTree, and you’re curious as to whether or not you should use it to find a loan of your own. Should you?
The Makings of a Car Loan
Before we discuss LendingTree and whether or not it’s the right option for you, it’s important to understand what goes into and comes out of a car loan. The total cost of the loan will be the amount you’re borrowing (the principal) in addition to the money you will pay for the privilege of using someone else’s money to pay for your car (the interest rate). The higher your down payment and the cheaper the vehicle, the lower the principal will be. The higher your credit score and, in general, the shorter the length of the loan, the lower your interest rate will be.
What Is LendingTree and How Does It Work?
Think of it like a matchmaking service. In contrast to a traditional loan from a financial institution, LendingTree lets you shop around. It is an online exchange that allows you to compare rates for loans from different partners they work with — banks, lenders, and credit partners. LendingTree is not a financial institution and does not make loans themselves — rather, the service they provide is a convenient brokerage hub for finding loans. LendingTree was founded in 1998 and has facilitated more than 32 million loan requests since.
Why Would I Want to Use LendingTree?
If you’re going out of town and want to stay in a hotel, chances are — if you are a savvy traveler — that you’ve used a travel fare aggregator site to find the best deal. When you’re shopping for a big investment like an auto loan, the stakes are even higher — the difference between the terms of different loans won’t necessarily make or break your financial future, but the right loan could definitely save you several thousand dollars over the life of your loan. Many people find the aggregation service LendingTree provides to be useful because it makes shopping for loans a little easier.
Are Lending Club and LendingTree the Same?
No. Lending Club matches individuals seeking a loan with individuals looking to loan money. LendingTree matches individuals seeking a loan with financial institutions looking to loan money. In other words, Lending Club matches little guys with little guys while LendingTree matches little guys with big guys.
Shouldn’t I Just Take the Financing Offered to Me at the Dealership?
Would you rather take the advice of a surgeon who is paid based on the quality of patient care or paid based on how many expensive operations he or she will perform? In general, car dealerships will offer financing that will cost you way more than a loan from a financial institution, so take their offer for what it is: an offer that you should compare to other loans you’re approved for.
Why Should I Shop Around for a Car Loan?
The more research you do, the better your chances of getting the best terms on your loan. If you know what kind of car you want to buy and how much money you’ll be able to put down from the get-go, you might be able to get pre-approved for a loan on LendingTree — and then you’ll be in a perfect position to drive a hard bargain at the aforementioned auto dealership. However, it is best to shop around for loan quotes in one fell swoop, as having your credit score examined multiple times by seeking quotes on many different loans in a short period of time could indicate to credit reporting agencies that you’re desperate for money — and it could negatively impact your credit score.
Is LendingTree Risky?
The only risk you take when using LendingTree to look up loans is that your credit score will be penalized — and this is only a possibility if you’re doing a lot of searching for financing in a short amount of time.
How Long Does It Take to Get a Car Loan Quote?
I took it for a quick test drive just for you — and was pleasantly surprised. It took me about 4 minutes to answer the short survey needed to see car insurance rates. They ask for your name, current address, income, assets, and the type of car you’re buying in addition to information on how much you’d like to be lent and the amount of down payment you can afford to make.
What If You Have Bad Credit?
In an ideal universe, we’d make all of our credit card payments on time and never carry a balance, have a high income, and not borrow very much money. However, life is not perfect, and chances are, neither is your credit score. If you have another means of reliable transportation and do not need to buy a new car right away, it is definitely a good idea to focus on paying down the balance of your other debts, making payments on time, saving up for a downpayment on your vehicle, and improving your credit score.
If you really can’t wait to buy a new set of wheels, don’t despair — there are still things you can do to get a car loan with bad credit. Try to find the most affordable vehicle you can that will still safely get you where you need to go. Consider asking a friend or relative who is more financially stable to co-finance your loan. If all else fails, though you will definitely pay a higher interest rate, there will likely still be financial institutions who provide loans to “riskier” people with low credit scores — and LendingTree can often connect you with these companies through their site.
Will I Save Money Getting an Auto Loan Through Lending Tree?
It depends on so, so many things. As of mid-July 2017, the average car loan for a 60-month loan to purchase a new car came with an interest rate of close to 4.48 percent, and the average credit score for new car purchases was 714, according to Bankrate.com. According to LendingTree, if your credit score is 695 and you’re looking to take out a $25,000 60-month loan, your interest rate could be as low as 3.19 percent — a savings of nearly $1,000 over the 5-year term of your auto loan. However, as you know, an advertisement claiming your rate could be “as low as” is much different from an advertisement claiming your rate will be “as low as”.
Like with any other type of loan, the better your credit score, the better your offered interest rate will be because people with higher credit scores are always viewed as “less risky”.
How Does LendingTree Make Money?
Don’t worry — it’s free to shop for a car loan. LendingTree makes its money each time they connect a lender to a lendee in the form of referral fees paid by the lenders every time someone applies for a loan that found the application by searching on LendingTree.