Online Auto Loan Applications

Rule No. 1. If the site says everybody is approved, click away immediately. Simply put, there are people in this country that after bankruptcies and liens and criminal convictions and such who will never be able to get a loan. That's not a bad thing; that's the truth.

Rule No. 2. Most car loan folks are going to funnel you toward an established, franchised auto dealer. That's not a bad thing either. People are used to the advertising slogan (you've heard it -- "banks compete, you win") but such bidding competition is more in the mortgage industry than the car loan industry.

Here's why: When you're talking about a car loan to an auto dealer, you're actually not talking about a car loan at all. In truth it's known as a RISC -- Retail Installment Sales Contract -- and once the details are wrapped up on your deal, the dealer will shop the RISC through a series of electronically linked finance companies, banks, etc. They'll compete, all right, but it's the dealer who wins, not you.

Now get this. Imagine that dealer hears from a bank "I'll
do that loan at 14 percent." Now imagine the salesman
coming back to you and saying "Good news. I've got
a bank that will do your loan at 16 percent."

Not only could the dealership keep that
extra interest, IT'S PERFECTLY LEGAL!

In the business it's known as the "dealer
reserve," and while there have been all kinds
of lawsuits over the practice in recent years,
it's still in play at dealerships across the country.

Be prepared to ask questions in the F&I office.
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