Rates are as of 2/28/2019
When you’re ready to buy a car, you can walk into a dealership, go on a test drive and get your vehicle and financing in one place. Dealerships can encourage this because they may make a profit on the car — and then again on the financing.
Unfortunately, as you sit at the dealership, you may have no idea if you’re getting the best deal on the car, the financing or both. You wouldn’t buy a car from the first place without checking deals elsewhere, so why get a car loan without shopping around?
Instead of taking whatever financing the dealership offers, consider shopping for a loan and getting preapproved before you set your sights on a car. One way to do that is through CarFinance.
CarFinance, founded in 2011, is an online purchasing and financing platform run by Flagship Credit Acceptance. CarFinance is headquartered in Irvine, Calif., and is authorized for direct lending in every state but Massachusetts and Nevada, according to a company spokesperson. It originates loans on behalf of its network of lenders.
Unlike lending comparison sites that help you find several lenders from which to choose, CarFinance makes you one loan offer based on your case. After your loan is active, it is serviced by Flagship.
You can use CarFinance to purchase a vehicle or refinance an existing loan.
CarFinance: At a glance
Consider these factors about CarFinance loans before you apply:
- APRs vary by lender: In 2018, CarFinance began originating for lenders beyond Flagship. The APR for Flagship loans is typically 10% to 12%, with some as low as 4.99% or as high as 18%. Ranges were not available on Flagship loans originated for other lenders.
- Available terms: CarFinance offers terms of 24 to 72 months to repay your loan.
- Loan size: CarFinance loans are typically around $18,000 to $20,000, with very few falling below $7,500, according to a company spokesperson. Your loan amount is limited by your ability to repay the loan, the value of the car and other factors.
- Vehicle requirements: The car you want to buy or refinance must be for personal use, be eight years old or newer and have 100,000 miles or less. CarFinance does not provide loans for all-electric cars, heavy-duty or super-duty trucks or certain luxury and other makes and brands of vehicles.
- Age: You must be 18 or older to qualify for a loan.
- Minimum credit score: Typical CarFinance borrowers have average credit scores just above 600, according to a spokesperson. Most applicants should have a credit score higher than 500, the spokesperson said, but requirements vary by lender.
How to apply for financing
If you have a half-hour or so, you have time to apply for a car loan or refinancing. Here’s how:
Gather your documentation: You may be asked to provide:
- Driver’s license or other state-issued identification
- Proof of income, such as a most recent pay stub or last year’s tax return
- Proof of residence, such as current identification with your correct address, a utility bill with your name on it or a lease agreement
- Personal references
Apply on CarFinance.com. The CarFinance LoanDriver tool lets you upload your documents, track progress and complete the deal, all in one place. If you apply during business hours, you should have an email response to your loan application within 30 minutes.
Consider the offer. Read everything carefully. Be sure to consider all lender fees and any early prepayment penalties, as well as the APR.
Go shopping with your purchase certificate. If the loan offer looks good, accept it and print the certificate. Or you can take your smartphone to the dealership with the purchase certificate, which is good for 30 days after approval. Negotiate the price of the car before you discuss financing with the dealership. The dealership then submits vehicle and financing details online. When it is approved, you receive a text and email from CarFinance so that you can e-sign your contract.
What if the dealership offers a lower rate, or 0% financing? You’re not obligated to use CarFinance if you find a better deal, or even if you decide not to buy a car. If the dealership offers financing, compare it to your CarFinance deal.
Be aware that, in some cases, you may qualify for a manufacturer’s cash rebate if you don’t use the low-interest or 0% deal. Ask your dealer if you’re not sure.
How is the refinancing process different? If you’re looking for a new loan on your existing car, you can apply for your loan online — just change to the “Refinance” tab when you get started. There are no fees for applying for a refinance loan.
The fine print
According to its website, CarFinance does not charge fees for its loans.
You still need to read the fine print for both your auto purchase contract and your loan. Watch out for extra dealership charges. After you negotiate the price of a vehicle, it’s not unusual for fees or other costs to be added to the amount you pay. (You’ll also pay sales tax.)
For example, dealers may charge documentation fees for filling out paperwork, as well as additional costs for accessories and warranties. It’s fine to pay for extras if you know what they are — and you accept them. It’s not fine to have the total price turn out to be a lot more than expected.
Make it clear in the negotiation stage that you want to know the total sales price, including fees, from the start. When you are handed your sales contract, look carefully for any charges for which you did not agree.
Pros and cons of financing through CarFinance
Always compare deals from more than one lender. Like any other business, CarFinance has highlights and lowlights. Depending on your situation and needs, it may not offer you the best deal possible.
Highlights of CarFinance auto loan financing
- Availability to most borrowers: CarFinance has lower income and credit score requirements than some other lenders, meaning you may get a loan with it even if you don’t qualify elsewhere.
- No fees: CarFinance doesn’t charge you anything extra to apply for or take out a loan.
- Almost-instant loan decision: CarFinance advertises that you’ll receive a decision on your loan in less than 30 minutes if you’re applying during business hours.
- No down-payment requirement: If you don’t have cash for a down payment, you may still qualify to buy a car.
- Ability to lock in interest rate: You don’t want a surprise APR on your preapproved loan when you’re ready to buy. CarFinance locks in a rate for 30 days when you are approved for a loan.
- Customer service: When a loan application is being processed, you can contact CarFinance by phone or email. After you have a loan, you can call Flagship, which services the account, or fill out a form on its website.
Lowlights of CarFinance auto loan financing
- No in-person help as you apply for a loan: CarFinance offers online loan application. If you prefer to have someone to walk you through applying for a loan, CarFinance may not be for you.
- CarFinance gives you one financing offer: If CarFinance is the only place you apply for a loan, you don’t know if you could have gotten a better deal elsewhere.
- Limited business hours: CarFinance’s hours are 9 a.m. to 8 p.m. Central time Monday through Friday.
- No options to lease: CarFinance does not currently offer vehicle leasing.
- Better Business Bureau rating of B-: CarFinance’s BBB score is lowered by two complaints to which they have not responded.
- Refinancing lower limits: You can’t refinance your existing car if you owe less than $7,500.
The bottom line: Who is CarFinance best for?
CarFinance is a quick and relatively easy way to get preapproved for a car loan before you go shopping for a car. With a preapproval in hand, you can concentrate on getting a good deal on the right car for you instead of trying to negotiate the car deal and financing at the same time.
CarFinance has in the past been known for helping car buyers with less-than-excellent credit scores and other credit factors who may otherwise have trouble getting a car loan. These buyers typically pay higher interest rates because lenders take a higher risk lending to them.
But in the past year, CarFinance has been focusing more on competitive loans for buyers in all credit score ranges, according to Blair Rohlfing of Harris, Baio and McCullough in Philadelphia.
Whether your best car financing deal is at CarFinance, your dealership or with another lender, the only way to be sure is to shop around. Make sure you’re getting the best deal before you commit to financing your next car.