Auto Loan Marketplace

The auto loan marketplace can be a great way to secure financing for a new or used vehicle or to buy out a current lease. Using an auto loan can be a great tool for people looking to purchase a vehicle but don’t want to put up all the cash at once.

An auto loan works by providing you a chunk of money which you will then pay back monthly. This service comes at a because you will pay interest on the money borrowed, and the vehicle you purchase with the loan will be used as collateral. 

Trying to find the best rates and auto loan providers can be a tough decision. Auto loan marketplaces will search the internet to find you the most competitive offers. If you are looking to refinance an already existing auto loan, service providers like MoneyLion also offer an auto loan refinancing marketplace.

How Does an Auto Loan Marketplace Work?

Marketplace lending is a fairly new type of lending, also known as peer-to-peer lending or platform lending. An auto loan marketplace is an online platform where lenders and borrowers connect. The main difference between marketplace lending and traditional lending is that the marketplace platforms aren’t lending their own capital. Rather they connect you with institutional lenders or individuals willing to give you money and charge a fee in exchange for this service. 

Convenience 

One of the biggest benefits to using an auto loan marketplace is the convenience. Rather than having to search and compare the hundreds of different auto loans on the market, an auto loan marketplace will automate this process for you. Even better, the search will not just be limited to traditional institutional lenders. Through a loan marketplace, you will have access to additional lenders like individual investors who are willing to loan you funds. 

Competitive Rates 

Typically you will find much more competitive pricing with marketplace loans compared to traditional lenders. Marketplace lenders allow customers to borrow at significantly lower annual percentage rates (APRs) by cultivating a wider range of lenders as well as using technology that is more efficient at risk assessment, looking beyond just a consumer’s FICO score. 

Furthermore, traditional bank loans come with hidden fees, like the origination fee, and stricter credit score requirements. Generally to access the competitive rates that banks advertise, you need to have a minimum FICO score of 660. With marketplace loans, you will find yourself saving with fewer fees and access to more and cheaper borrowing options because your FICO score isn’t the only factor taken into consideration. 

Quick Turnaround 

Thanks to technology, marketplaces have been able to reduce friction throughout the loan application process. Loan approvals are much faster, and users are able to have a seamless online experience. Furthermore, these loans are much more accessible to consumers as anyone can apply for borrowing online.  

Ease of Use

One of the main benefits of using a loan marketplace versus a traditional bank is that marketplaces tend to be much more straightforward and easy to understand. A key aspect that marketplaces focus on is providing customer-friendly conduct. These benefits include disclosing loan terms in plain English, capping fixed APRs at 36% and providing loans with fixed installments, fixed rates and longer terms.

How to Make the Most of an Auto Loan Marketplace

Using an auto loan marketplace comes with many advantages. Take full advantage of the benefits by following these tips.

Compare Your Options: While loan marketplaces will work to find you their most competitive lenders, different marketplaces will have access to different pools of lenders. Therefore, take the extra step of using multiple marketplaces to see of their competitive lenders, who has the most affordable option. 

Get Expert Guidance: Marketplaces will offer different additional services. If you are unsure on how to get started or have never taken out a loan before, try choosing a marketplace that offers expert guidance through the application process. 

Know What Your Need: Auto loan marketplaces are set up to tailor the perfect loan for you. To get what you want, you need to first determine what that is. Some people may prioritize the speed at which they can secure funding, and others are more focused on the size of the loan or the interest rates at which they can borrow. Whatever it may be, a loan marketplace will have something to offer you. 

When Should You Visit an Auto Loan Marketplace?

Unlike the traditional way of getting loans, loan marketplaces are generally always fully automated. No matter when you apply for a marketplace loan, you will have the same chances of being approved. Typically with traditional loans, it is recommended to send in applications at the beginning of the month as this is when lenders process the new applications.With auto loan marketplaces, you need not time application submissions, and you don’t have to worry about lessening your chances of getting approved. 

Frequently Asked Questions