If you're a well-prepared car buyer, you can eliminate all the unnecessary extra charges ("underpainting" or whatever else they try to tack on to a car's price); drive down the actual cost as low as possible; and drive up the trade-in price as high as possible. But even with all those accomplishments and all your preparation, you can still get taken for a ride by a dealer if he sells you an expensive financing package.

Securing Your Financing

Most major online auto sites offer financing features. We explore some of them in this chapter, but you also want to take a look at some of the other general automotive e-commerce sites that we mention in this site. As usual, you want to comparison shop. You're buying a car, but in a very real sense, you're also buying a loan. If you think of the process that way, you may take the time to get the best possible rate, which means obtaining quotes from various sources. (Even interest-rate figures, however, are subject to manipulation. See the sidebar "When accountants get inspired" before you proceed any further.)

All the online auto-financing sites we tested put you under no obligation if you request a loan offer. If you don't like what you find out, you can simply decline the offer. If they've sent you a check, you can simply tear it up. Filling out the application forms takes only a few minutes. The sites affirm that the information is secure. (It usually goes out encrypted via SSL, or secure sockets layer — a popular security measure that encrypts data such as Visa card numbers before they are sent over the Internet.)

What's most surprising is the rapid response — you generally receive an e-mail message offering you the loan (or, if the news is bad, refusing to offer you a loan) within a matter of minutes after you submit your request form. The AAA site that we describe in the section, "AAA's 15-Second Loan (Talk about Rapid!)," later in this chapter even states that most of its decisions take only 15 seconds. You can't reserve a library book online faster than that. Typically, the online lender then sends a check to you (as quickly as the next day), and you fill it in for the amount you want to borrow, up to the limit of the loan for which you receive online approval.

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Don't neglect to find out what kind of interest rate the auto dealer can offer you if you finance the vehicle through him. Sometimes dealers use low-interest loans as one of their come-ons. Check with your credit union, too, if you belong to one. These nonprofit organizations can often undercut the current loan rates that other lenders offer.

WARNING!
Some lending institutions use the Internet somewhat differently than we describe in the preceding paragraphs: You can fill out the application form online, but you must later follow up with additional forms or even meet with a human representative to complete the loan. We don't describe these hybrid loan processes in this chapter.

According to statistics, the average new car loan is for $17,000, and buyers use it to purchase a $22,000 car. (The average used car costs $10,000.) Consider your loan with care and check out several of the sites that we mention in this chapter or other promising sites that you may locate as you search the Internet.
As you fill out an application for an online loan, you usually need to provide the following several facts:

- How long you've lived at your current address

- How long you've had your current job Your gross income

- Your mortgage or rent payments

- Whether you're requesting the loan by yourself (as an individual) or with someone else (a joint loan)

- The car that you want to buy and how much it's likely to cost

- How much you're likely to get for your trade-in

Remember that these financial institutions make their money by loaning, so they want to offer you a loan. To get a quick, positive answer, however, you generally need a relatively lengthy and relatively strong credit rating.

Fast Financing through eAuto

The eAuto Web site (www.eauto.com) offers you financing services (or links to services) that enable you to get your financing in place before you approach the actual purchase. The eAuto site also points out that you get additional benefits if you finance with eAuto online: The rates are low; you make no down payment and pay no fees or closing costs; you get your answer in a few hours and the money, in most cases, the next day; and you can buy from any franchised dealership of your choice.

Go to the eAuto Web site and click the Click here to get a FREE rate and payment quote link. You then go to the CarFinance.com Web site.

Fill in the information that the E-Loan form requests and click the Search button. You then receive a quote of monthly payments that the company bases on several loan periods.

If you scroll down the page, you find a short form that you can fill in to actually apply for a loan through the company. According to eAuto (and for simplicity, we're just referring to eAuto from here on, although the logo switches to E-Loan), the loan form that you fill out is secure and confidential and puts you under no obligation. The site uses SSL (Secure Socket Layer) to keep your credit and other personal information secure.

TECHNICAL STUFF
SSL is an encryption scheme that Netscape (a company that makes Internet software) developed. SSL facilitates sending encrypted (coded) information over the Internet so that no one except those to whom you're addressing it can actually read it. Internet Explorer and Netscape's Communicator both support SSL, which encrypts data by using a private key scheme. If you ever see a URL that begins with https rather than the usual http, that's your cue that the page uses SSL.

Seeing results in 15 minutes

We filled in the eAuto loan application — it's brief and takes only a few minutes. A notice appears on-screen telling you that the company has received your application and that you can see the results by clicking the Status link on the eAuto home page or that you're going to receive a confirmation e-mail soon.

Fifteen minutes later, we received an e-mail message containing the loan approval. (Your experience may, of course, differ.) In the e-mail, the company told us the maximum that it was willing to loan (the amount exceeded our request), the name of a personal loan representative we could e-mail or phone, that the loan approval was valid for two months, how much mileage the car could have (if we chose to buy a used car), and how many years old the car could be. Additional information told us what to do if we decided to wait until later and how to contact them or respond to various situations — such as calculating exact payments, speaking to someone on the phone, and so forth. All in all, it was a very fast and very pleasant way to get auto financing.

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If you're really in a hurry, you can opt for the overnight service. If the company approves your loan, it sends a check draft to you the next business day via Airborne Express. The charge for this rush service is $12.

Exploring other eAuto features

The eAuto Web site isn't just a good place for financing a loan. Go to its home page (at www.eauto.com) and you find a plethora of links leading to various features.

Among the other elements in the eAuto galaxy of car-related information and features that you can access from its home page (in addition to the financing service that we explore in the preceding section) are the following services:

- A car-buying service

- An off-lease (returned after the lease was over) car-buying service

- An auto-insurance service

- A vehicle-history reporting service

- An extended-warranty service

Autoweb's Financing Options

The very popular Autoweb site (www.autoweb.com on the Web) also includes a financing feature. Click the Finance link and you go to the PeopleFirst.com page.

Click the Check our low rates and simple terms link at the bottom of the page.

Click the Apply Online link to view the Basic Requirements, which include:

-You must have an "EXCELLENT and SUBSTANTIAL credit record" (quoted from the site).

- You must reside in a state where the company provides vehicle loans. (Currently, the company provides loans in all states except Hawaii, New Hampshire, and North Dakota. Motorcycle loans aren't available in those three states or in Arkansas, Illinois, Kentucky, Oklahoma, or Wyoming.)

- Your loan must be for an amount between $7,500 and $75,000 (with the exception of required lower limits of $10,000.01 in Arizona and $15,000.01 in New Jersey and Kentucky).

Auto-loan terms can range from 12 to 72 months; motorcycle-loan terms can range from 12 to 60 months. If the company approves your online application (which takes only minutes during business hours), you can use its check to buy a new or used car, light truck, SUV, or motorcycle. You can buy from a new vehicle dealer, an individual person, or another authorized dealer or broker, or you can choose to refinance a current vehicle loan with a different lender.

AAA's 15-Second Loan (Talk about Rapid)

If you're really hot to trot about a car — and want an answer instantly — try the Web site of the AAA (American Automobile Association). This company says that its service is available 24 hours a day and that most loans are "rendered in 15 seconds."

Go to the AAA home page at www.aaa.com and enter your ZIP code and click Go. The AAA divides its site into states, so after you provide your ZIP code and click the Go button.

If you click the Visitors link, you see a page listing the various options available, which can include travel, a travel agency, insurance, financial services, discounts, safety issues, news, and others. Move your mouse pointer over the Financial services link and a pop-up menu appears. Click the Auto loans and leases option.

Click the Click Here portion of the online auto-loan application link.

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A Click here to use a home equity loan to buy a car link also appears on the AAA Financing page. Some people prefer to borrow against their home because they can save money that way. How? Home-mortgage interest payments are one of the few remaining tax deductions available to the average person. (If you consider refinancing your home in this way, however, make sure that you pay close attention to the fees. In some cases, the fees such a loan involve can erase any savings that you get from possibly lower interest rates and the tax deduction. Do the math, or you may take a bath.)

CarPoint by Microsoft

If you visit the CarPoint MSN Web site (at www.carpoint.msn.com/tinance_insurance), you find several interesting financial features. Try clicking the Interest Rates link and then selecting your state from the drop-down list box. (You don't need to click a Go button; as soon as you choose a state, you go to the appropriate Web page.)

The page that appears displays the highest, lowest, and average loan rates for your state (for both new and used cars).

Click the various Local Markets links for the rates in your city, as various lending institutions list them, including any fees, the percentage that you must put as a down payment, and other data.

At the main MSN auto-finance page (at www.carpoint.msn.com/finance_insurance), you also find direct links to such lenders as PeopleFirst Finance and CarFinance.