back to articles | October 07, 2020 | Dale Peterson

Categories: Tips & Insights For Car Buying Auto Loans & Financing Buying & Selling Cars

Direct to Consumer Auto Financing

What a great time to be looking for a new or used car! Rates are down, and a flood of cars are coming off leases which makes shopping pretty exciting.


What a great time to be looking for a new or used car! Rates are down, and a flood of cars are coming off leases which makes shopping pretty exciting. What is also exciting is how obtaining a used car loan can help reduce payments, cancel any negative equity and get a great rate while doing so. Add to that how it can allow you to have a choice in selecting the best auto loan financing that fit your needs.

Direct to Consumer Car Loans

Maybe you haven’t been thinking of buying a new or used car. OK, no worries. Did you know that you can cancel or reduce negative equity you might have with a used car loan? If you do then you know you are making a smart financial decision. A new car can lose 10 to 20 percent of their value the moment you drive off the lot. For many people, that means acquiring negative equity on their car loan balances right from the start. By buying a good used car, you can avoid this negative equity trap.  Use our rate calculator to see how much you can save by using a direct to consumer website like For over 17 years, has been providing financing opportunities to consumers and has maintained an A+ rating all that time.

Just in case your are not familiar with the term, what is negative equity? Negative equity is the amount over a car's value that a person owes on it. For example, if Karl owes $30,000 on his brand-new car, but after driving it off the lot, it's worth only $27,000, he has acquired $3,000 in negative equity. The more Karl drives his new vehicle, the more it depreciates – as miles add up, value goes down. Because of this, Karl is going to find it difficult to reduce his negative equity unless he pays more than his car loan requires.

Karl may not feel the impact of this negative equity for many years; however, when he eventually goes to trade in the vehicle, he may get a surprise. If his $2,000 negative equity amount remains even, he may try to trade the vehicle in while owing $10,000, only to discover it is worth $8,000. He now must cover some of that negative equity or, upon the purchase of another vehicle, his negative equity hole will grow well beyond $2,000. Eventually, there will come a day of reckoning, where Karl must cover the whole negative equity amount or be unable to purchase another vehicle.

When you opt for a used car, you create much less negative equity at the time of purchase. If you buy it close to its fair value, you may have some negative equity, but you're still in pretty good shape. The smaller amount of negative equity can be more easily covered with a down payment. Making extra payments on a used auto loan is another way to eliminate negative equity.

Making a Smart Move

How much interest consumers pay on their used auto loans makes a huge difference in the amount of negative equity they generate. Right now, with interest rates being the lowest they’ve been in years, it is an absolutely great time to find a used car and finance it. By choosing a used vehicle, you make one smart move. Make a second smart move by opting for a used car loan direct to consumer, available from money-saving sources like  Seriously, they will save your money over a dealer loan.

Used car loans direct to consumer save you the most money because you deal directly with the bank. When you obtain auto financing through a dealership, the dealer makes profit on the loan by adding up to 3-percentage points to the interest rate, known as the reserve. In addition, there may be dealer fees tacked on the loan, which you must finance at the higher interest rate.

We all know that adding hundreds or thousands of dollars to an auto loan balance never helped anyone avoid the negative equity trap. So, what can you do? Look to a get approved for a used car financing loan direct from the lender before even setting foot on a car lot. Getting preapproved and having financing in hand before car shopping not only saves you on the financing, it also gives you negotiating leverage.

Purchasing from a private party with direct to consumer used car financing provides one of the best ways to prevent negative equity. Check out our finance guide – It will cover all the bases and will help you select the best lender for your purchase. By getting both the car and financing much cheaper than possible through a dealer, you create the least amount of negative equity or possibly none at all.  Want to learn more?

A direct to consumer used auto loan can also be used for private party purchases. has been assisting with all types of auto loans for over 17 years. Experience counts when you are looking for the best rates and terms.

People who opt for used car loans direct to consumer save the most money and have the least negative equity. Having a choice of financing is real empowerment! That’s what gives you. When you avoid the depreciation of a new car and the extra financing charges of the dealership financing, you put yourself in a vastly better financial position. Paying off a negative equity car loan hurts and can become difficult to do. To keep negative equity minimized, obtain used car financing direct from one of the lenders at You will be glad that you did!