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NationsBank and CarFinance Reports Visitors Applying for Financing

By Jim Bruene on July 5, 1998 8:16 AM | 0 Comments

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).

How it Works

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).
Analysis

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.

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Mortgage Lending Resources in Previous Issues

By Jim Bruene on April 17, 1998 7:37 AM | 0 Comments

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PNC Bank’s AutoWeb Connects Residents with Auto Dealers

By Jim Bruene on March 31, 1998 8:38 AM | 0 Comments

PNC Bank

www.pncbank.com

PNC Bank’s new AutoWeb connects Pittsburgh residents with area auto dealers.

PNC Bank (Pittsburgh, PA; $78.8 billion; 1.6 million ATM cards) links the Pittsburgh online community with participating auto dealers at www.pncbank.com/autoweb/index1.html Users are promised a quote from up to three dealers by the end of the next business day. Naturally, users can apply online for financing with PNC.
Contact: Tom Kunz is VP Electronic Banking, (412) 762.8770).

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Categories: Auto Financing, PNC Bank

Automotive Information Online is Crucial to Originating Car Loans

By Jim Bruene on March 27, 1998 8:14 AM | 0 Comments
Use Non-Financial Content Areas to Support Your Online Strategies with: Auto Center

With 30% of Web users already searching for automotive information online online car information is crucial if you are serious about originating car loans online You can build a completely private-branded site using services from Cendent or others, or simply provide guided links to major car research outlets www.yahoo.com/Recreation/Automotive/Buyer_s_Guides Another approach is demonstrated by PNC Bank , which created a simple auto price quote service using its contacts with Pittsburgh auto dealers.

Whatever approach you take, make sure you include a link to the used vehicle prices at the online version of Kelley Blue Book <www.kbb.com>. This free service provides the trade-in and resale values you’ve been giving away for years.

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CarFax Marketing Relationships Key

By Jim Bruene on December 16, 1997 4:02 PM | 0 Comments

Carfax

www.carfaxreport.com

The CarFax Web sells VIN reports for $12.50.

Information about buying and selling new and used cars is one of the hottest areas of the Web. Even Microsoft has invested in this area with its CarPoint Web site www.carpoint.com . The latest information service on the Web is CarFax. For $12.50, payable online by credit card, CarFax will search its database of 382 million records to see if your Vehicle Identification Number.

(VIN) shows up on any public records as salvaged, damaged, etc. You can also get odometer readings to verify the accuracy of current setting. The same report can be ordered over the phone, but the price is $7.50 more ($20).

Carfax has marketing relationships with two of the most-visited automobile sites on the Web, Edmunds www.edmunds.com and Kelly’s Blue Book www.kbb.com . Carfax, Inc. is owned by Blackburn Marketing Services.

Dick Raines is President of Carfax in Fairfax, VA, 800.346.3846.

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Categories: Auto Financing, Carfax

Online Lending from the Big Three Car Manufacturers

By Jim Bruene on October 13, 1997 12:36 PM | 0 Comments

Online financing is now available through Detroit’s big three captive finance companies. Chrysler and GM offer engaging, well-formatted Web sites that feature online applications and a variety of financial information and tools. Though GM has a serious flaw in its application process, one that if not corrected, could cause a black-eye with consumer advocates. Ford is the only one offering online account access.

 

General Motors
www.gmacfs.com


GM’s credit application is easy to use with a short application divided into three steps

GM’s application is formatted as well as any we’ve seen online. It’s divided into three steps: (1) personal information including social security number; (2) general information including date of birth, a personal reference, and a few questions about the automobile purchase under consideration; (3) vehicle and dealer selection. The flaw is in the processing of withdrawn applications.

In testing the application, I went through all three steps of the application process, but chose not to submit it after reviewing the information. Apparently, GM collects the information even if the users abandons the process…that in itself is probably OK, though it should be more clearly disclosed. The serious problem is what they do with the information collected. Despite the fact that I withdrew the application, GM went ahead and checked my credit and sent me a “lease preapproval” package. I probably would have considered it merely a coincidence, had I not been a subscriber to Experian/TRW Credentials, which sends me a notice whenever an inquiry is logged on my file at their credit bureau. Low and behold, GMAC took a look at my credit the same day I withdrew my application online. I am sure this is an inadvertent programming error on the part of GM, but it needs to be fixed.

 

Chrysler
www.chryslerfinancial.com


Chrysler sports the best looking Web site of the big three.

 

Ford
www.fordcredit.com


Ford is the only one of the big three with online account access including last payment received and pay-off information web.fc.ford.com.

Ford’s Web is a bit outdated graphically, but it’s the only one of the three that provides online account access, a real selling point for their financing programs. Unfortunately, Ford’s application cannot be submitted online, it must be printed out and walked in to the dealer.

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Web-Based Indirect Lending

By Jim Bruene on October 2, 1997 9:16 AM | 0 Comments

Web-based indirect lending follows the business model used by financial institutions marketing installment loans at auto, boat, RV and other dealers of high-ticket items. The successful lenders will integrate their lending presence tightly with the end-product Web site itself.

Not surprising the first bank/merchant partnerships have sprung up in the online car sales marketplace, already a multi-billion dollar business in the United States.
Auto-By-Tel, the granddaddy of virtual auto sales (screenshot below), processes nearly 75,000 automobile purchase requests per month. At $20,000 each that’s $1.5 billion per month. Financing is provided by Chase Auto Finance, Key Corporation, and Triad Financial. Leases are from GE Capital.


ABT features “One-Click Financing and Leasing.”
Note the customer testimonial below the menu:
The Auto-By-Tel Acceptance Corporation rate was one and one-half points lower than the bank I’ve used for 25 years!

Collin Wood
Hood River, Oregon

 


CarFinance.com is featured on CarSmart’s front page.

Another example of Web-based indirect lending is at the popular car information site, CarSmart www.carsmart.com (screenshot below). Visitors to this online emporium will naturally be drawn to the CarFinance.com logo featured prominently on the CarSmart site. The financing site is operated by Barnett Bank at www.carfinance.com (screenshot below).


CarFinance.com is operated by Electronic Vehicle Remarketing, a subsidiary of Barnett Bank.

 


 

But, you don’t have to be a Barnett or Chase to become an indirect cyberlender. According to the latest count on Yahoo (below), there are 241 Auto Buyers’ Services and 143 Automobile Buying Directories online. In addition, 4,493 dealers are listed online. By comparison, there are only 125 financing sources listed and 93 of those are lease agents. Among the remaining 32, only two are insured depository institutions; one is a non-bank financial services provider; and five are the captive financing arms of car manufacturers (see table below).

AutoCredit04.jpg
AutoCredit041.jpg

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