Consumer Bankers Association’s Paul Wible: Get educated about car loans
Paul Wible, chairman of the Automobile Finance Committee at the Consumer Bankers Association (CBA), a trade group, knows a thing or two about car loans.
InsuranceQuotes.com caught up with Wible – senior executive vice president of the Bank of the West’s National Finance Group – to ask him about the ins and outs of auto financing and his tips for consumers who are shopping for a car loan.
How is auto finance different from other financing?
Auto financing is a very competitive industry. There are many actors all trying very hard to serve your needs as a borrower, including lending websites, local banks and car dealerships. That level of competition is unique in lending.
What are the most important things consumers should know before applying for financing on a new or used car?
Most importantly, a consumer should realize that he or she needs to get educated and be responsible for understanding the terms of the transaction. Often, people are reluctant to negotiate a loan, and they shouldn’t be. There’s a lot of help available to learn how to do that and learn what fair prices are. The most common mistake is not taking the time to educate yourself about the car-buying and financing process.
Is it always a good idea to obtain financing through the dealer, or is it ever wise to seek outside financing?
There are many financing choices for consumers, and an informed consumer will be able to find the best solution for their financing needs. Each option comes with specific expertise and benefits. For instance, a dealer will have many choices available and will be very convenient for the consumer. Other people prefer to obtain financing through their local bank. Others choose the online route. The best choice is the one made by a customer who takes time to get educated.
What are some common pitfalls or mistakes that consumers should try to avoid when shopping for an auto loan?
The most important thing a consumer can do is make sure that the credit they are agreeing to accept is going to be a successful credit experience for them. Again, it all comes back to becoming informed. Understand your monthly payment and your budget.
How would you define a successful credit experience?
A successful credit experience means the consumer is agreeing to a loan that doesn’t go beyond what they can pay back. You need to know how much you can afford to borrow and what a reasonable interest rate looks like for your financial needs.
How has the auto financing experience changed for consumers in the past 10 years?
The biggest change is the speed at which banks and dealers can work together to provide financing the customer needs at the time of their purchase. So much of the process has now has been automated, and that has led to a quicker financing transaction and lower prices for the consumer.
How do you see the auto financing market evolving in the coming decade?
If I knew that, I probably wouldn’t have the job I have (laughs). What I would say is almost all lenders and dealers and banks are focused on providing the right product at the right time that matches the consumer’s needs. I think the application process will only continue to get faster, and I think even more information will become available to more people.
More and more of this process is moving to the online space. That means consumers will have quicker access to more information about the loan they are applying for and the financial context of borrowing. What’s more, consumers are going to have an increasing number of options when it comes to lenders, and more competition usually means a better deal for consumers in the end.
Any final piece of advice for consumers looking for auto financing?
Make sure you are informed, educated and have good financial literacy. Understand the transaction you are involved in. Take as much time to research the financing as you do researching the car you want to buy. If you do, you will come away with the most satisfying experience possible.s to mirror what already said several times.