It’s best to buy a car with cash—but not everybody has saved up thousands of dollars when the need for new transportation strikes. Although car shoppers have several options for financing a new or used car, including many online lenders, buyers with middle-of-the-road credit may want to consider another option available to them—peer-to-peer auto loans of up to $25,000 like those available from Lending Club.
Why Choose Peer-to-Peer Auto Loans?
Loan is Unsecured. Hopefully you’ll never run behind on any of your loan payments. But if you fall behind on an auto loan, the lender can repossess your vehicle—you know, send two scary looking armed repo guys to your house at 4 a.m. to tow your car. Peer-to-peer loans are unsecured, meaning they can’t take your car if you pay late. (Paying late will still hurt your credit, of course, you just won’t risk losing your wheels).
Pre-payment Advantage. Some car loans may not allow prepayments, or will penalize you for paying down the loan early which, of course, you should do if you can afford it. With a peer-to-peer auto loan, any additional you pay each month is automatically applied to the principal, making it easy for your to pay down your loan as early as you are able—saving you a load on interest.
Ability to Shop Like a Cash Customer. Perhaps the biggest advantage of using a Lending Club loan to buy your next car is that you can walk into the dealership as a cash customer. This gives you considerably more room when negotiating for your car because the salesperson can’t use one of the auto industry’s favorite tricks–quoting prices as monthly payments instead of total price. You’ll be able to draw a hard and fast line with the dealer as to what you’ll pay.
Sidestepping Big Banks. Peer-to-peer auto loans are just what they sound like: Average people loaning other average people money. You can feel good that the interest you’re paying is going straight to ordinary investors, not lining the pockets of national bank execs. This may or may not matter to you, but personally I like it.
Peer-to-Peer Auto Loans from Lending Club
Lending Club is a leading peer-to-peer lending site that provides 3- and 5-year loans of up to $35,000. To start a loan application, you’ll need a credit score of at least 640 (check your credit score for free now).
Next, you’ll need to apply for the loan amount you want on Lending Club and wait for the loan to be funded. If it is, you’ll get the loan distribution directly into your bank account. Then, you can shop for your next car with “cash”.
Use our Loan Payoff Calculator to see how different payments and interest rates affect your loan.