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Auto loans go interactive
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September 22, 1998: 3:08 p.m. ET
Surfing around for auto financing rates can pay off for consumers
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NEW YORK - Car shoppers scouring the Internet for price information and tips on outsmarting the dealer might want to add one more task to their online list: auto financing.
Loan rate information from banks, credit unions and finance companies can all be found online. And auto loan applications are starting to hit the scene. The hook? A hassle-free loan process with low rates: Often 7 percent to 8 percent for new and used car loans. The national average for a 36-month, used-car loan is 9.63 percent, 8.6 percent for a 48-month new car loans, according to an analysis by Bank Rate Monitor.
Who's involved?
The players in this new field range from industry heavyweights like Chase Manhattan (CMB) and NationsBank (NB) to start-ups like PeopleFirst Finance.
People buying cars through online dealer autobytel.com may apply online for a new car loan from Chase Manhattan.
CarFinance.com offers new and used car loans from NationsBank for people shopping at any franchised auto dealer -- any dealer that sells new vehicles for at least one domestic or imported brand.
And PeopleFirst offers new and used auto loans for people with excellent credit history. Customers who apply for loans online receive 1,000 frequent flyer miles from American, Delta, Northwest or United airlines.
Easy applications
Most online auto loan applications can be filled out in five minutes. Some lenders respond to applications in 15 minutes, others take an hour or a day. Checks can often be delivered the day following a loan approval.
"Some people feel the most important thing is the disclosure of the documents at home. So they're reading the fine print in their living room," said Robert Ferber, president of CarFinance.com. "Sometimes people are very cynical and cautious when it comes to buying and financing a car. They're not very trusting of dealers."
If you're distrustful of applying over the Internet, many lenders also take applications over the phone.
At PeopleFirst, 5 percent to 10 percent of the company's loan applications are taken over the phone. As with online applications, customers are guaranteed a response in 15 minutes. The ease of the loan process has attracted a wide range of customers to the company.
"We see people in their 70s, which is a surprising sector to me," said Dave Zeller, president of PeopleFirst. "We see people 25 to 40 years old. It's really across the board."
Growth expected
While the number of financial institutions with online auto loan applications is still small, at least one consulting firm believes that will soon change.
Killen & Associates, a market research firm based in Palo Alto, Calif., believes strong advertising and strong acceptance by buyers will fuel as many as 2.5 million Internet-based auto loans by 2001. 
-- by Bank Rate Monitor for CNNfn
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Bank Rate Monitor
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