How to Identify Online Auto Loan Scams

Getting an online auto loan can save you time and hassle over applying for loans in person. Online lenders tend to have alternative options whereby a borrower pays a little more in exchange for convenience. Since the lenders charge more, they can extend financing to lower-than-average-income or credit borrowers. Unfortunately, despite these advantages, there is also a good chance the online lender is running a scam. The lender may be fishing for personal information for identity theft or simply writing predatory loans. Protect yourself with a detailed research process.

Shop Around

Do not talk to just one lender; in fact, you should talk to multiple lenders online and in person to get an idea of average loan quotes. Try speaking with a representative at your local bank. While you may not want to take the time to meet in person, these meetings can be very quick or even handled over the phone. You do not need to get into detail, but ask about current interest rates and loan limits for auto loans. This will give you an idea of what you can expect from the average lender on the market today.

Research Lenders

Once you have identified a few lenders offering the options you would like, you will need to research these lenders. Look for a physical address and phone number on the website. Even online lenders should have a home office. You can check with a local Chamber of Commerce o find out if the address and phone number listed are consistent with the business name on the website. Then, you will want to research the website URL very quickly. There are a number of places where you can find out who owns a URL. One free resource is Whois.com: http://www.whois.com/

Withhold Personal Information

When you are first speaking with an online lender, protect your personal information. Do not input your social security number or any bank account information at the initial point. You will first want to get a quote from the lender. Most fake lenders operating identity theft operations will not provide you with the quote, so this will be a red flag to walk away from the lender. If all of the steps have checked out, and you receive a fair quote, you may be comfortable enough to enter your personal information in order to allow a credit check. Record the name of the business you are working with in case you do learn of loan scams in the future.

Ask Questions

Before you sign a loan document, take the time to ask a lender a few questions. Most online lenders will at least permit questions over email or in a live online chat. If possible, speak with an agent over the phone. Get confirmation that the interest rate is fixed, all loan terms are disclosed, and the loan has been approved for processing as soon as you sign the document. If you take all of these steps, you can confidently move forward to shop for a car knowing you have located financing online.

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