NationsBank/CarFinance.com

www.carfinance.com

CarFinance.com’s interactive home page.

Adding Interactivity to the Home Page

At first glance, CarFinance.com’s home page (above) seems cluttered and out-of-control. It even commits a Web faux pas with two scrollable frames even on a 17-inch monitor. But other than the scrolling problem, the home page is very clever, engaging users with several interactive elements. It’s almost impossible to leave the site without checking out their auto financing service. In fact, the company reports some 3% of visitors end up applying for financing.

The heart of the home page is an interactive questionnaire designed to give you a financing quote within seconds of hitting the site. The lefthand frame shows examples of popular cars, such as the new Beetle, and the monthly payment under its user-friendly “$0 down” program.

NationsBank’s (Charlotte, NC; $310 billion; 9.2 million ATM cards) CarFinance.com unit, acquired in the Barnett Bank merger, is blazing a new trail in auto finance with zero down payment, preapproved and prefunded car loans with APRs as low as 6.99% for new car loans with a 36-month term.

The conundrum for financial institutions looking to expand their car loan business is how to fight the indirect and captive programs that snap up the financing while the buyer is at the car dealer. Even with 12.5 million adults searching out car information on the Web last year (source: Cyberdialogue, 6/98), all but a few hundred thousand ended up at a dealership at some point in the process to finalize the purchase and pick up the car. And if you’ve bought a new car in the past 10 years, you know the final step of any car buying “adventure,” a pressure-packed interview with the finance guy (or gal) pitching financing, extended warranties, and whatever else is on the commission schedule that month. CarFinance.com may have invented a better way, though it doesn’t always work (see box below).

1. Users entering CarFinance.com are greeted with a five-question form that results in an initial financing estimate complete with APR, payment amount, and savings compared to the national average loan rate (see screenshot right). Final APR is determined after a full application.

2. Users submit an online mini-application (see table at right for details).

3. Once approved, a purchase draft is mailed to the user (via overnight mail if necessary). The draft is good for purchasing a new or used vehicle from any nationally franchised new car dealer and a few major used car dealers. Any car or truck can be purchased providing the price is less than or equal to the amount of the draft.

Never Give a Reporter a Car Loan

Apparently the process looks better on paper than it really is. In order to cash the draft, dealers must fax paperwork to NationsBank including proof of insurance, proof of buyer’s income, and bill of sale. InfoWorld Net Prophet columnist Dylan Tweney recently wrote about the glitches he experienced using CarFinance.com to finance a car at a Toyota dealership in Silicon Valley.

The dealership deposited the check without faxing the necessary documents. The check bounced and the dealer freaked out and initially refused to honor the deal. The reporter had to run interference between NationsBank and the dealership, even faxing documents himself over the course of a stressful week of negotiations before finally getting the loan closed.

He indicated that CarFinance.com’s customer service personnel were ill-equipped to deal with the situation. It left him very disillusioned with online lending. You can read his full story at www.infoworld.com/cgi-bin/displayIcommerce.pl?/prophet/980615prophet.htm

The story has a happy ending. In a follow-up conversation he reported that several readers told him that the process has worked fine for them. And CarFinance.com president called to explain how customer service issues were being addressed. It’s not called the bleeding edge for nothing.

The results from the initial questionnaire are shown in an easy-to-read table. Terms of up to 84 months are offered with a sliding rate scale beginning at 6.99% APR for 36 months to 10.5% for 84 months. They offer a unique 66-month term priced at just 100 basis points above the 36-month rate. The righthand column includes the savings over the life of the loan compared to national averages compiled by Banx Quote.

4. Buyers head to the dealer with the money literally in their back pocket. It can simplify dealing and insures the customer gets a competitive rate on car financing. Users can still see whether the car dealer can beat the NationsBank rate.

Questions in CarFinance’s Mini-Application

•  name
•  address
•  email
•  social security number
•  length of residence
•  type of residence
•  rent/mortgage payment
•  day phone
•  evening phone
•  employer
•  occupation
•  gross pay
•  length of employment
•  other income source
•  other income amount

Approval is promised within 48 hours with email notification, but the customer testimonials listed on the site talk about same-day approval. Checks can be sent by overnight mail so that applicants can buy the car within 48 hours of applying. Applicants also select a password so they can check back on their loan status.

The only limitations on what can be purchased with the draft are:

•  Must be purchased from a franchised car dealer representing a major automobile manufacturer, or certain used car chains.
•  Used cars can have no more than 75,000 miles and be no older than 1992 (terms of 61-72 months may be no older than 1994).

The program is simple to understand, easy to use and only takes 60 seconds to complete the application. There is no down payment required and few rules and regulations to master. Good for users, and very good for the bank. If they can resolve procedural problems with dealers, they may have invented a new way to finance a car.

Indeed, CarFinance.com’s application volume is encouraging. In early June, NationsBank SVP Joe Martucci said that the company was closing loans to 1.5% of visitors to CarFinance.com, an impressive number. But the company won’t reveal traffic counts.

Contact: Robert Ferber is President CarFinance.com; Joseph Martucci is SVP of Consumer Credit Policy in Jacksonville, (904) 987-2074.