Auto Loan Reviews

Auto Loan Reviews

As with any type of machinery, automobiles eventually break down or become obsolete. A first time, refinance or other auto loan from a trusted financial institution can quickly get your current vehicle back on the road or put you behind the wheel of a new one.

Reviews That Provide Negotiating Power

Before you even think about applying for an auto loan, you should have a solid understanding of how the process works. Our consumer reviews about lenders and their loan products provide you with the knowledge and tools needed to make informed decisions so that you can negotiate a loan that both fits your needs and costs you less than if you performed little to no research. Each review contains a borrower's experiences through a written summary and interest, fee, service and satisfaction ratings. Our website offers positive and negative reviews written by consumers from different walks of life. We believe that each visitor to our site should be able to find information that best applies to them and their unique situation.

Our Focus Area Recommendations

As you scan our reviews, you will begin to notice certain details beyond the four ratings area about various financial institutions, loan products and the entire process. We recommend that you focus your research on at least the following:

  • The Application
    Banks, credit unions and other auto loan lenders look at a wide variety of factors before approving a loan, including your credit history and score, other loans and debt, work history and current income. If you are interested in refinancing or a trade-in, they look at your existing loan's interest and fee details, monthly payment amount, loan term and repayment history. They also check your driver's license and Vehicle Identification Number. Although loan products exist for people with less than perfect credit, bad credit and no credit, people who have a credit score of 720 or higher get the best deals. Otherwise, you must show that you can make enough money and posses the income stability and work security to make on-time consecutive payments.
  • Down Payment
    Whether you have a great credit score or not, you should try to make a down payment of at least 20 percent of the total loan balance to prevent yourself from being "upside down" or "underwater," which means that you have "negative equity" and you owe more than your vehicle is worth. If you fail to have a down payment and choose smaller monthly payments over a longer loan period, which is often the case for people who have credit problems, you build up equity at a slower rate, remain underwater longer and pay more as the vehicle depreciates year-to-year with natural wear and tear. Negative equity can turn into a big problem if you want to trade-in or sell the vehicle early or if the vehicle is totaled or stolen. For example, if your vehicle is only worth $8,000 at the time of one of these events, but you still owe $11,000 on your auto loan, your negative equity would be $3,000.
  • Loan Insurance
    A lender might require that you set up loan insurance through them or an insurance company to safeguard against being upside down. One type of loan insurance to consider is Guaranteed Auto Protection insurance or GAP insurance that covers the difference between the value of the vehicle and amount that you still owe. GAP insurance is perfect for borrowers who fail to make a down payment because it prevents them from being stuck underwater during a total vehicle loss situation. Another option is "credit insurance" that pays off your loan if you die or covers your payments during unemployment and disability. Even though the lender will be added to any insurance plan as the vehicle lien holder, remember that the best deal usually comes from setting up these types of insurance protections directly with an insurer instead of a lender
    Your existing insurance carrier can likely offer special bundled savings and other deals. On the other hand, the lender will probably add the insurance amount to the total loan balance and apply interest to it.
  • Interest Rates
    You pay interest on an auto loan for the privilege of using a lender's money. The amount you pay depends on a lot of different factors, including your credit and repayment histories, loan discounts and the financial institution. Keep in mind that some lenders offer low interest rates and make up the difference by offering longer loan repayment periods so that borrowers still pay higher amounts than necessary. Although you can find loan products that offer variable, fixed and hybrid rates, always try to get the lowest possible rate in a fixed arrangement. Also, always get the rate in writing to prevent market changes from adversely affecting the amount of money you can say that you have available when you start negotiating with a dealer.
  • Potential Fees
    It can't be said enough that financial institutions use all loan products to make money. As a result, you can expect to see a lot of fees attached to an auto loan product beyond taxes, including charges by the lender for handling the application, checking your credit history, preparing the loan paperwork, managing your account and processing payments. Some lenders even charge a fee to guarantee in writing that you will receive the rate promised. You might also receive an extra charge if you later pay more than you owe each month or pay off the loan in total. You can typically convince financial representatives to waive one or more of these fees. For example, a lender might waive a fee if you can show that another financial institution that you are considering does not have the fee or you can leverage a loyal customer history with your current financial institution. The trick when trying to reduce fees is to not discuss them line-by-line until you have had time to review them in writing. Asking for all interest and fee information in writing to be provided upfront helps you to prevent attempts by the lender to roll the amount of a waived fee into another fee or interest.
  • Loan Discounts
    You must go into the loan process with a certain mindset where you are focused on preventing the lending institution from making up monies it loses via discounts through higher fees, interest or longer repayment periods. You can convince a lender to give you one or more auto loan discounts even if you have bad credit. To start, consider your social status, career and hobbies. Most lenders automatically give discounts to students, teachers, active military members, veterans, retirees and public servants. You might find a better loan through a financial institution that partners with an career-related union or other professional organization or hobby club. Many lenders also offer "green" incentives where they waive fees or reduce interest for borrowers who want to invest in energy-efficient vehicles.
  • Loan Terms
    Since longer loan repayment periods make you pay more than your vehicle is worth, look for one that extends no more than three to five years. Before you agree to anything, take all loan offers home, review them at your own pace and then get clarification about anything in the main text or fine print that you do not understand in writing. Never allow a lender to use sales tactics to convince you to sign on the spot. You can all too easily find yourself paying for things written into your loan contract that you were told verbally would never happen because a loan agent told you that if you took too much time to decide the interest would change or the offer would expire. All paperwork should make it easy for you to compare and understand loan terms. Also, locate the credit date. Some lenders only credit payments on the same day when you make them during their business hours. Outside of those hours, the credit can pend until the next business day and in certain circumstances result in a default.
  • Cosigner Release
    If someone decides to help you out by cosigning the loan because you are not yet 18 years old or your have income or credit problems, you can make certain that they are not responsible for your loan after your age or situation changes by searching our reviews for financial institutions that offer a cosigner release option. Although you will likely have some sort of insurance to repay the loan in the event that your situation changes in a negative way, a cosigner release prevents the cosigner you needed initially from becoming responsible for your loan through the entire span of the loan repayment period. Most banks, credit unions and other lenders who offer a cosigner release typically require that you make a certain number of consecutive and timely payments or improve an unsteady income situation.
  • Loan Transfers
    Lenders usually frown on attempts by borrowers to transfer their loans to others people. That said, our reviews can help you find examples of lenders who approve various types of transfers. For example, if you decide to sell the vehicle, a lender might allow you to simply pay off the total of the remaining balance and the prepayment penalty amount, if applicable, with cash from the buyer. If you have a cosigned loan, a lender might allow you to transfer the loan entirely to your cosigner. If you need to transfer because you can't afford the loan or need a different vehicle, you can find refinancing and second loan options. In all of these situations, you can expect additional fees. Another type of loan transfer involves the financial institution selling your loan or transferring responsibility of it to a loan servicing company, debt collector or other third party. Watch out for lenders who disrupt borrowers' lives with poor communication about these types of transfers and errors that result in missed payments, extra fees and time wasted cleaning up the mess.
  • Customer Care
    The best auto loan lenders provide borrowers with stellar customer care in the form of highly secure online account and loan management tools that supply all of the most important information about a loan, including the current balance, payment date and repayment details, and tools to better manage the loan and money in general. Customer service access should include phone, email and/or chat support with minimal wait times and emergency agents ready to help you any time day or night.

Additional Auto Loan Recommendations

Credit checks and loan applications can impact your credit score. When applying through different lenders, submit all applications around the same time so that credit bureaus automatically assume that you are comparing loan options instead of experiencing a bad financial situation.

We can't emphasize enough that the total amount of your loan is more important than the monthly payment amount. Lenders try to distract borrowers with small payments so they can charge more over time. Additionally, always seek preapproval where the bank literally hands you a check or equivalent to use as cash while you shop instead of conditional financing that can fall through if you fail to meet the lender's terms.

Before you refinance, trade-in or sell your vehicle, use a trade-in calculator to determine its true value. If you need a new vehicle, look to incentives like cash back rebates to cover the amount you still owe on your loan.

The Freedom of the Open Road

A lot of drivers go into the first-time auto loan or refinancing process without taking the necessary steps to guarantee that they get the best deal possible. Our auto loan reviews and tips can help you save thousands of dollars before you even walk into a dealership and even more money during sales negotiations.