Finding
Financing Online
If you're a well-prepared
car buyer, you can eliminate all the unnecessary extra charges
("underpainting" or whatever else they try to
tack on to a car's price); drive down the actual cost as
low as possible; and drive up the trade-in price as high
as possible. But even with all those accomplishments and
all your preparation, you can still get taken for a ride
by a dealer if he sells you an expensive financing package.
Securing Your Financing
Most major online auto sites offer financing
features. We explore some of them in this chapter, but you
also want to take a look at some of the other general automotive
e-commerce sites that we mention in this site. As usual,
you want to comparison shop. You're buying a car, but in
a very real sense, you're also buying a loan. If you think
of the process that way, you may take the time to get the
best possible rate, which means obtaining quotes from various
sources. (Even interest-rate figures, however, are subject
to manipulation. See the sidebar "When accountants
get inspired" before you proceed any further.)
All the online auto-financing sites we tested
put you under no obligation if you request a loan offer.
If you don't like what you find out, you can simply decline
the offer. If they've sent you a check, you can simply tear
it up. Filling out the application forms takes only a few
minutes. The sites affirm that the information is secure.
(It usually goes out encrypted via SSL, or secure sockets
layer — a popular security measure that encrypts data
such as Visa card numbers before they are sent over the
Internet.)
What's most surprising is the rapid response — you
generally receive an e-mail message offering you the loan
(or, if the news is bad, refusing to offer you a loan) within
a matter of minutes after you submit your request form.
The AAA site that we describe in the section, "AAA's
15-Second Loan (Talk about Rapid!)," later in this
chapter even states that most of its decisions take only
15 seconds. You can't reserve a library book online faster
than that. Typically, the online lender then sends a check
to you (as quickly as the next day), and you fill it in
for the amount you want to borrow, up to the limit of the
loan for which you receive online approval.
TIP
Don't neglect to find out what kind of interest rate the
auto dealer can offer you if you finance the vehicle through
him. Sometimes dealers use low-interest loans as one of
their come-ons. Check with your credit union, too, if you
belong to one. These nonprofit organizations can often undercut
the current loan rates that other lenders offer.
WARNING!
Some lending institutions use the Internet somewhat differently
than we describe in the preceding paragraphs: You can fill
out the application form online, but you must later follow
up with additional forms or even meet with a human representative
to complete the loan. We don't describe these hybrid loan
processes in this chapter.
According to statistics, the average new car
loan is for $17,000, and buyers use it to purchase a $22,000
car. (The average used car costs $10,000.) Consider your
loan with care and check out several of the sites that we
mention in this chapter or other promising sites that you
may locate as you search the Internet.
As you fill out an application for an online loan, you usually
need to provide the following several facts:
- How long you've lived at your current address
- How long you've had your current job
Your gross income
- Your mortgage or rent payments
- Whether you're requesting the loan by yourself
(as an individual) or with someone else (a joint loan)
- The car that you want to buy and how much
it's likely to cost
- How much you're likely to get for your trade-in
Remember that these financial institutions
make their money by loaning, so they want to offer you a
loan. To get a quick, positive answer, however, you generally
need a relatively lengthy and relatively strong credit rating.
Fast Financing through eAuto
The eAuto Web site (www.eauto.com/carfinsvc.shtml)
offers you financing services (or links to services) that
enable you to get your financing in place before you approach
the actual purchase. The eAuto site also points out that
you get additional benefits if you finance with eAuto online:
The rates are low; you make no down payment and pay no fees
or closing costs; you get your answer in a few hours and
the money, in most cases, the next day; and you can buy
from any franchised dealership of your choice.
Go to the eAuto Web site and click the Click
here to get a FREE rate and payment quote link. You then
go to the CarFinance.com
Web site.
Fill in the information that the E-Loan form
requests and click the Search button. You then receive a
quote of monthly payments that the company bases on several
loan periods.
If you scroll down the page, you find a short
form that you can fill in to actually apply for a loan through
the company. According to eAuto (and for simplicity, we're
just referring to eAuto from here on, although the logo
switches to E-Loan), the loan form that you fill out is
secure and confidential and puts you under no obligation.
The site uses SSL (Secure Socket Layer) to keep your credit
and other personal information secure.
TECHNICAL STUFF
SSL is an encryption scheme that Netscape (a company that
makes Internet software) developed. SSL facilitates sending
encrypted (coded) information over the Internet so that
no one except those to whom you're addressing it can actually
read it. Internet Explorer and Netscape's Communicator both
support SSL, which encrypts data by using a private key
scheme. If you ever see a URL that begins with https rather
than the usual http, that's your cue that the page uses
SSL.
Seeing results in 15 minutes
We filled in the eAuto loan application —
it's brief and takes only a few minutes. A notice appears
on-screen telling you that the company has received your
application and that you can see the results by clicking
the Status link on the eAuto home page or that you're going
to receive a confirmation e-mail soon.
Fifteen minutes later, we received an e-mail message containing
the loan approval. (Your experience may, of course, differ.)
In the e-mail, the company told us the maximum that it was
willing to loan (the amount exceeded our request), the name
of a personal loan representative we could e-mail or phone,
that the loan approval was valid for two months, how much
mileage the car could have (if we chose to buy a used car),
and how many years old the car could be. Additional information
told us what to do if we decided to wait until later and
how to contact them or respond to various situations —
such as calculating exact payments, speaking to someone
on the phone, and so forth. All in all, it was a very fast
and very pleasant way to get auto financing.
TIP
If you're really in a hurry, you can opt for the overnight
service. If the company approves your loan, it sends a check
draft to you the next business day via Airborne Express.
The charge for this rush service is $12.
Exploring other eAuto features
The eAuto Web site isn't just a good place
for financing a loan. Go to its home page (at www.eauto.com)
and you find a plethora of links leading to various features.
Among the other elements in the eAuto galaxy of car-related
information and features that you can access from its home
page (in addition to the financing service that we explore
in the preceding section) are the following services:
- A car-buying service
- An off-lease (returned after the lease was
over) car-buying service
- An auto-insurance service
- A vehicle-history reporting service
- An extended-warranty service
Autoweb's Financing Options
The very popular Autoweb site (www.autoweb.com
on the Web) also includes a financing feature. Click the
Finance link and you go to the PeopleFirst.com page.
Click the Check our low rates and simple terms
link at the bottom of the page.
Click the Apply Online link to view the Basic
Requirements, which include:
-You must have an "EXCELLENT and SUBSTANTIAL
credit record" (quoted from the site).
- You must reside in a state where the company
provides vehicle loans. (Currently, the company provides
loans in all states except Hawaii, New Hampshire, and North
Dakota. Motorcycle loans aren't available in those three
states or in Arkansas, Illinois, Kentucky, Oklahoma, or
Wyoming.)
- Your loan must be for an amount between
$7,500 and $75,000 (with the exception of required lower
limits of $10,000.01 in Arizona and $15,000.01 in New Jersey
and Kentucky).
Auto-loan terms can range from 12 to 72 months;
motorcycle-loan terms can range from 12 to 60 months. If
the company approves your online application (which takes
only minutes during business hours), you can use its check
to buy a new or used car, light truck, SUV, or motorcycle.
You can buy from a new vehicle dealer, an individual person,
or another authorized dealer or broker, or you can choose
to refinance a current vehicle loan with a different lender.
AAA's 15-Second Loan (Talk about Rapid)
If you're really hot to trot about a car —
and want an answer instantly — try the Web site of
the AAA (American Automobile Association). This company
says that its service is available 24 hours a day and that
most loans are "rendered in 15 seconds."
Go to the AAA home page at www.aaa.com
and enter your ZIP code and click Go. The AAA divides its
site into states, so after you provide your ZIP code and
click the Go button.
If you click the Visitors link, you see a
page listing the various options available, which can include
travel, a travel agency, insurance, financial services,
discounts, safety issues, news, and others. Move your mouse
pointer over the Financial services link and a pop-up menu
appears. Click the Auto loans and leases option.
Click the Click Here portion of the online
auto-loan application link.
TIP
A Click here to use a home equity loan to buy a car link
also appears on the AAA Financing page. Some people prefer
to borrow against their home because they can save money
that way. How? Home-mortgage interest payments are one of
the few remaining tax deductions available to the average
person. (If you consider refinancing your home in this way,
however, make sure that you pay close attention to the fees.
In some cases, the fees such a loan involve can erase any
savings that you get from possibly lower interest rates
and the tax deduction. Do the math, or you may take a bath.)
CarPoint by Microsoft
If you visit the CarPoint MSN Web site (at
www.carpoint.msn.com/tinance_insurance),
you find several interesting financial features. Try clicking
the Interest Rates link and then selecting your state from
the drop-down list box. (You don't need to click a Go button;
as soon as you choose a state, you go to the appropriate
Web page.)
The page that appears displays the highest,
lowest, and average loan rates for your state (for both
new and used cars).
Click the various Local Markets links for
the rates in your city, as various lending institutions
list them, including any fees, the percentage that you must
put as a down payment, and other data.
At the main MSN auto-finance page (at www.carpoint.msn.com/finance_insurance),
you also find direct links to such lenders as PeopleFirst
Finance and CarFinance
