It's no surprise that 90 percent of Capital One
Auto Finance customers opt for automatic payments.
Wherever you finance your auto loan, it's a good
idea to ask about interest rate reductions for automatic payments.
Here's another tip. When shopping for auto financing, don't
overlook the financial institution that handles your mortgage
or checking account. Some banks and credit unions offer interest
rate discounts to auto loan customers with additional accounts.
While surfing the Web for auto loans, it's important
to realize that not all online lenders offer rock-bottom rates.
Some banks offer the same interest rates offered in the branch
to customers that apply online. So being Web-savvy may not make
much of a difference to your auto loan rate.
Watch out for fees. Application fees, paperwork
fees, administrative fees, all kinds of fees can turn up on
an auto loan contract. Be sure to ask about fees before you
apply for an auto loan over the Web.
Another thing that people like about online auto
loans is the quick response time. Filling out a five-line application
and getting an approval within minutes feels great.
The speed of an
online application may be nice, but it's far from everything.
If you end up paying an extra $2,000 in interest
costs, does it really matter that your financing was approved
online in less than 15 minutes?
Shopping around the Web
Why not take a couple days to comparison shop and scope
out the best possible rate available for someone with your credit
record?
"Who cares in the real world if it take two
days longer to save $2,000?" says Remar Sutton, founder
of the Consumer Task Force for Automotive Issues.
And not all online auto loans give you an answer
within minutes anyway. Some online responses may take hours,
even days. And not all online applications are quickies, either.
Some applications are quite thorough and will take more than
a couple minutes to complete.
So do yourself a favor and give yourself plenty
of time to shop around for financing on the Web.
And shop early. Beat the bushes for an auto loan
on your own and then ask what a dealer can do for you.
Dealing with dealers
These days, dealers are able to offer financing to just
about everyone, even folks with bruises on their credit reports.
More than anything, dealers want you to buy the
car, and they have relationships with so many lenders that they'll
be able to find financing for most car shoppers, even those
with less-than-stellar credit.
The only way you'll really know if the financing
offer from the dealer is the best deal for you is by shopping
around for a loan ahead of time. "You know what you're
paying for financing and if the dealer can give you a better
rate, more power to the consumer," says Brian Reed, director
of the Internet channel at Capital One Auto Finance.
Not enough car shoppers enter the dealership with
the power of pre-approved financing in their back pockets.
Lots of folks fall in love with a car or are so
wiped out from shopping that they let the dealer dictate their
financing.
"It's amazing how many people allow themselves
to be told how to finance," says James Walsh, author of
Smart
Wheels, Hot Deals: Buying, Leasing and Insuring the Best Car
for the Least Money.
That's not a good idea. Let's face it. Dealers
are in business to make money. And they will make a nice chunk
of change off your financing if you let them. For more on the
ins and outs of dealer financing, check out this
Bankrate.com article.
That's not to say that dealer financing is all
bad. Far from it.
Dealers are privy to zero-percent
financing, which from an interest rate standpoint is impossible
to beat. All those folks who snapped up zero-percent financing
offers got quite a deal.
But was it the absolute best deal available to
them? Maybe not. Many may have been better off scooping up a
hefty cash rebate and landing a low-rate financing deal off
the Web.
Use Bankrate's rebate
vs. interest rate calculator to decide which is the better
way to go.
Now if you signed on for an auto loan with a dealer
in the past year or so and you're unhappy with the rate you
agreed to, you may want to consider refinancing.
Use the Web to check out used car rates in your
area. Bankrate.com's auto
loan search engine is a good place to start.
And don't overlook credit unions in your area.
Digital Credit Union in Marlborough, Mass. has been offering
online auto loans since 1995. As with many credit unions, you
won't pay extra interest for financing a used car. Used car
loans are available at new car rates.
"We typically save people $1,800 to $2,000
on interest over the length of their loans," says Tim Garner,
vice president of marketing and strategic planning at Digital
Credit Union.
There's a good chance you prowled the Net for
auto pricing and reliability studies before you bought your
car. Why not use the Web to knock down the interest rate on
your loan?
"Some of the rates being offered by companies
are extremely competitive, extremely good," says Ted Brown,
auto finance practice manager at BenchMark Consulting International.
"Why not take advantage of it, especially on used cars?"
