Car Buying Questions

Bank Lending Restrictions
For Used Car Loans

Hi Justin,

My name is Dave and I recently found your site and it has been a huge help! Thanks for all the tips and info!

I am looking to buy a used car and am trying to secure financing myself, as you suggested. My problem is that I live in Pittsburgh. From what I can tell, I am not able to apply for a loan from a place like Bank of the West, which is not near Pittsburgh.

Question: Are banks restricted to only being able to loan to people in their geographic area? If this is true, why so? Why is it not possible for me to obtain financing from any financial institution that does not have a presence in the Pittsburgh area? Isn't there such thing as an internet where I can apply anywhere? Or is there some sort of banking regulation that doesn't allow me to do so?

Many thanks for your help!!

Cheers,Dave

Answer:

Hi Dave,

Banks, including Bank of the West, can loan money in whatever states they are licensed in. That I'm aware of, they don't have to have an actual physical location in the state they are licensed.

With regards to Internet sites where you can apply, the only one's I've found are through loan brokers and then you get to pay their fees.

There are of course the individual bank websites, Bank of America, Capital One, Bank of the West, etc...where you can apply separately to each different lender, but each bank will have their restrictions as to where and to who they will and won't loan money to.

If you apply direct you stand to save the most money. FYI, the rates listed on my site are through a dealership after all applicable discounts are applied.

Some Pitfalls to watch for...
1) If you apply directly with the lender you may not receive as low a rate, because dealerships get the "Wal Mart" discount so to speak. In other words, a volume discount.

2) If you do apply through the dealer there is no guarantee that they will give you all the available discounts. If they do, then they make no money arranging the loan and they usually won't work for free.

The used car loan rates I show on my site are really more of a gauge for customers to have an idea of when a dealership is trying to "lay them away" (see crack) with a huge rate mark up.

My suggestion to you would be to try a local credit union, usually better than banks for used cars loans, get pre-approved and make the dealership compete to beat that rate.

I've found that customers, whether for a new or used car loan, that use this approach oftentimes get the lowest rate the dealer can offer.

Dealerships have access to 10, 15, 20 or more lenders, including Bank of the West, and will know where to go to beat your pre-approval, which is beneficial for you.

You could also take a look at My Auto Loan. They are one of the "middle men" that I mentioned before, but due to their size I think they get the same if not better wholesale rates that dealers do.

Check them out here -> Apply for an Auto Loan Now. They offer some really attractive rates and I believe their lenders are nationwide, so there should be no bank lending restrictions.

Hope this helps,
Justin

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