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Ally Bank Auto Loan Review

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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Ally Bank is one of the most popular online banks, thanks to its sky-high deposit rates. But it is more than a place to keep your money. The bank also offers loans, including auto financing, though most car buyers will only be able to apply through a dealership. Are Ally’s lending terms as impressive as its deposit accounts? This review will cover all the key details along with how to apply with Ally Bank.

About Ally Bank

Ally Financial Inc. is one of the largest automotive lenders in the country. Even though its bank is only 10 years old, its history in auto financing goes back a century thanks to its General Motors Acceptance Corp. roots. GMAC was the financing arm of General Motors from the early 1900s leading up to the financial crisis. In 2009, it switched from an industrial loan company into a bank holding company and changed its name to Ally. To this day, General Motors and Fiat Chrysler dealers make up a little more than half of Ally’s auto finance business.

Ally offers loans and leases for both new and used vehicles. However, you don’t apply with Ally directly for auto financing. Instead, you need to visit a local dealership that works with Ally and apply through them.

You can apply for a loan through Clearlane, a subsidiary of Ally. Clearlane does not actually set up auto financing itself but generates offers from lenders from which you can choose. Through Clearlane, you can refinance an existing auto loan or set up a lease buyout if you’re interested in buying a vehicle you’re currently leasing. However, Clearlane doesn’t offer new loans or leases.

Ally Bank auto financing: At a glance

  • APRs: Not listed on either website since rates depend on the dealer or the marketplace lender.
  • Terms available: Up to 75 months for Ally retail loans. For Clearlane, terms depend on which lender you qualify with.
  • Amounts financed: Not listed
  • Minimum credit score required: Not listed, though Ally notes it has products for both prime and non-prime applicants. The average FICO Score is 689, squarely in “good” credit territory.

Neither Ally Bank nor Clearlane offer many specifics online about their auto loans. Your actual loan terms will depend on the dealership you apply for Ally or the lenders who make you an offer through the Clearlane marketplace.

How Ally Bank auto financing works

To apply for Ally auto financing, you first need to find a participating dealership. On the Ally website, you can enter your location and the type of car you’d like to buy/lease, then Ally will give you the names and addresses of nearby dealers that offer its products. You can then decide on the vehicle you’d like to buy and apply for your loan/lease.

The exact application process and requirements will depend on the dealer but expect to submit the typical documents for an auto loan, including:

  • Proof of identity: Driver’s license, a state ID or passport
  • Proof of income: Pay stub or W-2 form
  • Proof of residence: A recent bill, bank statement, mortgage/lease statement or other addressed mail
  • Banking and credit history: The dealer could ask about your current financial situation, including what kind of debt you owe and how much you have in savings and investments.

As part of the application, the dealer could pull up your credit report through a hard inquiry. Since the dealership is setting up your financing, there is no guarantee that it will recommend an Ally loan, especially if the dealer finds a better option.

Ally even suggests that you shop around before visiting a dealership as it acknowledges the benefit of comparing multiple lenders ahead of time.

How Clearlane auto financing works

With Clearlane, you start the application either online or by calling one of its representatives. They’ll first ask whether you want to refinance your existing loan or to buy your leased vehicle.

From there, the preapproval application will ask for the details about your existing vehicle (type and mileage), the amount you’d like to borrow, your contact information, income and whether you own or rent your home.

With this basic information, Clearlane will research lenders willing to make you an offer. You do not need to submit your Social Security number, which means Clearlane will not do a hard pull on your credit during this preapproval process.

If you receive an offer that you like, you can formally apply with the actual lender and it will pull your credit. The lender will also ask for the loan documents like proof of income, address and identity. The actual requirements will depend on the lender.

Ally Bank auto financing products

Traditional retail financing – For regular auto loans, Ally offers financing for both new and used vehicles as well as certified pre-owned vehicles that are up to 10 model years old and have no more than 120,000 miles. Ally’s loans also offer specialty vehicle financing to help cover special needs like wheelchair lifts and right-hand drive capability.

SmartLease® – Ally also offers leasing for both new and used vehicles but only certain types of used vehicles from a list of approved models found here.

Clearlane auto financing products

Clearlane refinance – Under the refinance program, you could replace your existing car loan with a new one that potentially has a lower APR and monthly payment. According to Clearlane, its average monthly payment savings for refinance customers is $107/month.

Clearlane lease buyout – With the lease buyout program, you replace your vehicle lease with an auto loan so you can eventually own the vehicle outright.

Clearlane publishes little information about its auto financing products, as it is a marketplace. Vehicle restrictions, terms, payment option and interest rate will all depend on the lender with which you’re matched.

What we like about Ally Bank auto loans

  • Marketplace system lets you pick the best offer: With Clearlane, it uses your application to track down offers from a list of lenders nationwide — you can pick the one you like best.
  • Convenient mobile access: Ally has developed a mobile app that you can use to schedule loan payments, track how much you still owe and check your FICO credit score, free.
  • No hard pull for Clearlane: You can receive initial loans offers through Clearlane without a hard pull of your credit report, which knocks points off your score. You only need to go through a hard pull if you accept an offer from a lender.

What we don’t like about Ally Bank auto loans

  • Few specifics available online – Both Ally and Clearlane have bare-bones websites that do not cover many details about their loans. You essentially need to apply to learn what you can receive.
  • Terms determined by the lender/dealership: The actual terms of your auto financing will depend on what you qualify for with the dealer or lender.
  • No face-to-face support: While Ally offers phone and online customer service, you can’t get help face-to-face.
  • No specialty vehicle financing: Ally Bank only offers regular auto loans. They don’t provide financing for motorcycles or RVs.

Who Ally Bank auto financing is best for

You may encounter an offer from Ally, especially if you buy your next car through General Motors or Fiat Chrysler Automobiles. You may seek out a loan directly through Clearlane if you’re interested in refinancing your current auto loan or buying a car you’re leasing.

With Ally, you need to apply for financing through one of its approved dealerships where the dealer may end up recommending another lender if the terms seem better. This can put you at a negotiating disadvantage — it’s always a good idea to walk into the dealership with your own preapproved auto loan. If the dealer can beat with an Ally loan or other offer, great, you’ll know you’re getting the best deal.

While Clearlane lets you compare offers, it only works for refinancing existing loans and lease buybacks.

Alternatives to Ally Bank

To research your options even further, you could compare Ally’s rates with those from other lenders offering new and used auto loans. Some of the lowest rates can be found at credit unions, and membership might be easier than you think

There are also several other high-quality auto refinance marketplaces besides Clearlane. If you’ve got an existing auto loan and want better terms, rateGenius is another marketplace that focuses only on loan refinances.

LendingTree, AUTOPAY and iLendingDIRECT are three companies where you can apply online and receive preapproval on quotes for auto loans and loan refinancing. (Note: LendingTree is the parent company of MagnifyMoney.) Whichever marketplace you use, collecting more quotes ahead of time now will help you qualify for better terms on your future auto financing.

The information in this article is accurate as of the date of publishing. 

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

David Rodeck
David Rodeck |

David Rodeck is a writer at MagnifyMoney. You can email David here

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Auto Loan

How to Pay Off Your Car Loan Faster: Here’s What to Consider in 2020

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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There are several ways to pay off your car loan faster, several of them without shelling out an extra dime. Auto debt not only accounts for about 9% of all consumer debt in the U.S., it’s growing: monthly payments are larger, terms are longer and APRs are higher for new and used cars than they were five years ago. Paying off your car as fast as possible frees up that money for other things.

How to pay off your car loan faster without paying more

The faster you pay off your car loan, the less you’ll pay in interest. But it may not always be possible to throw more money at your monthly payment. Here are some ways you may be able to pay off your car faster without paying additional money on the loan.

Refinance

This is the process of applying for a new auto loan to pay off your existing loan, hopefully with a better interest rate or term.

Pros. A refinance loan could help you pay your car off sooner and with a lower interest rate. Maybe your credit score has improved since your original auto loan — the best rates tend to go to those with the best credit. Average rates dropped at the end of 2019 with an average APR of 5.5% for a new car loan versus 6.0% at the same time in 2018.

Cons. Downsides should be few except for the time spent shopping for the best rate and any fees you might have to pay such as those to your state’s department of motor vehicles to transfer your car’s title to the new lender. These costs should be low, under $100.

Who it may be good for. An auto refinance loan may be a good option for you if:

  • You have a high interest rate and either your credit has improved since you signed for the auto loan or you’re not underwater on the auto loan, meaning you do not owe more on your car than it is worth.
  • If you do not face high penalties for paying off your current loan early.
  • You got the auto loan through a dealership, especially a “buy here, pay here” establishment. The average hidden interest rate added by dealers is 2.47% and “buy here, pay here” businesses are known for predatory lending practices.

How to do it. Call your lender to find out how much you owe and your APR. Refinance lenders usually ask for this information, so it’s good to have it on hand. Then you can look for the best auto refinance companies and find potential auto refinance offers.

LendingTree
APR

As low as
3.79%

Terms

24 To 84

months

Fees

Varies

SEE OFFERS Secured

on LendingTree’s secure website

LendingTree is our parent company

LendingTree is our parent company. LendingTree is unique in that they allow you to compare multiple, auto loan offers within minutes. Everything is done online. LendingTree is not a lender, but their service connects you with up to five offers from auto loan lenders based on your creditworthiness.

Cancel any add-ons

Common auto loan add-ons include GAP waivers, service contracts or extended warranties, tire and wheel warranties and more — you may have agreed to these when you bought your car without understanding the full cost. Canceling them will decrease how much you owe on your auto loan, allowing you to pay off your car loan faster.

Who it may be good for. Anyone who has add-ons may be able to cancel them. The less you owe, the less you pay.

How to do it. Check your car contract, call your lender or call the dealership to see if any add-ons are listed on your paperwork. If there are any, find out what they are and consider canceling them to get a prorated return. You may need to fill out some paperwork to officially cancel the add-ons, but a few hundred dollars may be worth it.

Special note. If your car has a history of needing repairs, take that into consideration before deciding to cancel an extended warranty. If you are underwater on your car loan, think carefully before you cancel GAP, which is made to protect upside-down borrowers.

Make payments every two weeks

Instead of paying once a month, take your existing car payment and split it in half. Paying every two weeks means your loan balance is continually decreasing, which has the effect of paying less interest over the course of the loan.

Why it can be good. This is a way to essentially make an extra payment without forking over extra money.

Who it can be good for. By doing this, you’re not paying any more than you normally would, but it has the effect of making an extra payment a year, so it may be especially good for someone on a tight budget.

How to do it. Check with the lender to be sure you won’t run into any prepayment penalties. If not, make a half payment every two weeks instead of one full payment each month. You could automate your checking account to send the payment, or give permission to the lender to automatically pull the payment.

How to pay off your car faster with the most bang for your buck

Have extra cash to put toward your auto loan? While the methods above are good, the fastest way to pay off your car is to increase the amount you’re spending. Almost all of these tips involve making extra payments to the principal, the amount you owe on the car not including interest. But first check with your lender that you will not be penalized or charged a fee for prepaying your loan.

Make extra payments to the principal

Why it can be good. Auto loans have simple interest, which means that for every dollar you put toward the principal, you pay exponentially less interest to the lender.

Who it can be good for. Anyone who has an auto loan from a lender who doesn’t penalize early payoff or payments to principal.

How to do it. Call the lender and ask how you can make extra payments to the principal only. You should do this because extra payments not to the principal means you’re paying interest — all you’re doing is giving the bank money early. If you make payments to the principal, you’re not paying as much in interest, which is very good.

Round up

If you find it difficult to save money or you don’t have quite enough cash to make a whole extra payment, check out this round-up method.

Why it can be good. You could pay off your auto loan early without changing how often you make your payments.

Who it can be good for. If you have a hard time saving money, this is a good way to do so.

How to do it. If the lender will not charge a prepayment penalty, you have nothing to lose by doing this and you can do it in two ways:

  • Simply round up your monthly payment. For example, if your monthly payment is $350, round up and pay an even $400.
  • Use an app, such as Acorns, to round up what you pay on all of your purchases to the nearest dollar and then pay that money to the auto loan. For example, if you got gas for $15.30, the app would round the charge up to $16 and $0.70 could go into your savings account. A little goes a long way and by the end of the month, you may have $50 you could put toward your auto loan.

Avalanche versus snowball

We’re not talking about the weather; these are two popular methods used to pay off debts faster. The avalanche method prioritizes paying off high-interest debt first. The snowball method involves paying off your debts starting with the lowest amounts. You can read about more debt payoff methods here.

Why it can be good. These are methods that could help you pay off all your debts, not just your car loan.

Who it can be good for. If you have multiple loans or debts, these methods may help you organize them and pay them off.

Snowball method: how to do it. This is a three-step pattern that should allow you to “snowball” your money to pay off your car loan faster.

  1. Look at your loans and rank them from lowest to highest.
  2. Then focus on that smallest loan, paying it off as quickly as you can with any extra cash available while making minimum payments on your other debt.
  3. Once it’s paid off, congratulations! You no longer have that payment to make. Choose another loan and repeat the process, using the money you would have paid on the loan you paid off.

Avalanche method: how to do it. This method prioritizes debt with the highest APR. For example, if you’re paying a higher interest rate on credit card debt than your car loan, you may be better off using any extra cash to pay that down first.

  1. Look at your loans and rank them from highest APR to lowest.
  2. Determine how much extra cash you can put toward the debt with the highest interest while making minimum payments on your other debt.
  3. Once it’s paid off, roll the money you were using to pay down that debt into the next one.

Windfalls

Regular extra payments may not always be realistic for your budget, but if you get any money outside of your budget that you didn’t count on, using that money as one-time extra payment toward the principal could really help.

Why it can be good. Any “windfalls” you have, such as a tax return, a refund, a bonus, a big tip or a pay raise, can be put toward the principal on your auto loan.

Who it can be good for. If you were not counting on the windfall, the extra money you got is just that — extra money. By using it as a payment to principal on your auto loan, you’ll save more money because the less you owe, the less interest you’ll pay.

How to do it. It might take some self-control, but use the windfall cash to pay the auto loan. The sooner you’ll pay it off, the more money you’ll have later to spend on things you’ll enjoy.

Make extra income

If your regular paycheck isn’t able to stretch any further, consider a side hustle and put the earnings toward your auto loan.

Why it can be good. A part-time job a few hours a week could add up to enough cash to make a significant dent in what you owe.

Who it can be good for. Anyone with some extra free time may be able to find a part-time job, temp work, freelance assignment or other gig.

How to do it. Depending on what you’re willing and able to do, you could sign up at a temporary work agency, look on job sites and/or talk to people you know about any job opportunities. Just remember to spend the money you make on paying off the principal of the auto loan. You can check out 15 legitimate places that will pay you to work from home and 5 ways to make extra money that don’t take much time.

Remove extra expenses

What are you willing to cut out of your budget or give up to pay off your car loan faster? Again, every bit helps, if the extra cash goes toward the principal of your auto loan.

Why it can be good. If you aren’t willing or able to make more income, spending less can be an equally good option and, as a bonus, you can keep doing it even after your car is paid off and save the money.

Who it can be good for. Practically anyone could do this.

How to do it. Take a look at your credit card statement or write down what you buy so you can see your spending habits in black and white. Then, decide what you could cut out or possibly get a better deal on — it might add up to more than you think. Maybe you could eat out once a week instead of every day. Maybe you could find cheaper auto insurance. Then apply that savings to your auto loan principal.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Jenn Jones
Jenn Jones |

Jenn Jones is a writer at MagnifyMoney. You can email Jenn at [email protected]

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Auto Loan

Dealer Fees to Know When Buying a Car in 2020

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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Don’t pat yourself on the back too early if you’ve just negotiated a great price on a new car. No, you’re not done yet — not when auto dealers can add thousands of dollars in the form of fees and products to the price of that new car, truck or SUV.

After all, there’s a reason why the term “sticker shock” comes from the auto dealership world. The good news? You don’t have to take onerous dealer fees lying down.

Sure, there are some new vehicle fees you’ll have to pay. There’s no getting around destination charges and fees that may be required by your state or county, such as title and registration costs. There are, however, good reasons to steer clear of — or negotiate — dealer add-ons such as extended warranties and GAP insurance. This story will help you understand the differences between fees you’ll have to pay, what’s negotiable, and fees you should avoid at all costs.

The auto dealer fees you must pay

You’ll see these fees on your final auto purchase bill and there’s no way around it – you have to pay them:

Destination fee

New vehicles don’t drive themselves to dealer lots (although that day may be coming).

For now, the auto manufacturer delivers the vehicle to the dealership and there’s a fee to be paid for that — one that you, the buyer, have to pay. Expect to pay hundreds, or as much as $1,000-plus, for the mandatory destination fee.

You’ll see the destination fee listed on the window sticker and there’s no point in negotiating it with the dealer, though it should be noted that some manufacturer destination fees are higher than others. You should read the sticker carefully to make sure the dealer is keeping mandatory destination fees separate from negotiable “delivery” fees. These so-called secondary destination fees, such as delivery inspection or dealer preparation fees, are negotiable. We’ll discuss them in more detail later.

Title, tag and registration fees

These are also mandatory, this time by your state or county. These fees funnel through the dealer, typically to your state’s department of motor vehicles, stamping you as the owner of your new vehicle and pays for your temporary tags that get you roadworthy.

Expect to pay as much as $250 to register and title your car, dependent on the state where you reside.

Documentation fee

Another “must pay” fee, the documentation fee is the fee the dealer charges for handling all the red tape and generating the administrative documents needed to process your new car acquisition.

You’ll see this fee in advance on your new vehicle contract and, depending on your home state, the fee can cost between $100 and $500. Some states cap the fee. You have to pay this fee, but there’s no rule that says you can’t ask the dealer to lower the price of the vehicle by the exact amount of the documentation fee. Learn more about how to negotiate car price.

Sales tax

In most states, you’ll need to pay a sales tax on your new car, truck or SUV, but the amount charged not only depends on the state where you reside, it also depends on whether your state charges for the full price of the vehicle, or the total price minus the value of any trade-in vehicle that was included in the deal.

If you purchase your vehicle out of state, you’ll pay the sales tax when you receive the vehicle and you register the vehicle in your state of primary residence.

Your sales tax depends on the tax charged by your state, but sales tax fees can generally range from 3% to 9% across the U.S., including county and local sales taxes. Many dealerships will roll sales tax into the title and registration fees we discussed earlier into one TT&L (tax, title and license) fee. Some dealers say to expect to pay between 8% and 10% of the sales price in taxes and fees. This rule of thumb applies to new and used cars.

How much car can you afford? This story might help.

Vehicle inspection fee

A new vehicle must pass certain inspections before it can be sold, based on the standards and criteria mandated by the state where the vehicle owner resides.

The fee, which is paid for by the dealer and passed on to the customer, doesn’t amount to much (about $7 to $30 per vehicle, dependent on your state.) The low fee isn’t really worth the trouble of negotiating it off of the total car price, but it is a fee that has to be paid.

These auto dealer fees should be avoided, contested or closely considered

You may see these auto dealer fees on your new vehicle contract but in most cases, you can avoid them, or at least contest them.

Advertising fee

You might think that it’s up to the dealership to pay for its own advertising and promotional costs, but you’d be wrong. The fact is, an advertising fee can appear on your new car invoice listed as a component of the vehicle’s manufacturer’s resale price or it can appear on your contract as a separate cost.

You can contest this fee and negotiate directly with the dealer — it’s not mandatory. If you don’t, you may pay several hundred dollars for the fee.

Extended warranty

Technically a product, an extended warranty covers any significant repairs needed on the vehicle after the original manufacturer’s warranty expires.

You don’t have to pay for an extended warranty, so feel free to avoid it altogether.

If you change your mind, and decide that an extended warranty is worth the cost, you can also go back to the dealer and buy the warranty later, but before the original warranty expires. The cost of an extended warranty isn’t cheap — anywhere from about $1,000 to several thousand dollars — but compare that with the cost of paying $4,500 for a new engine after the original warranty expires.

Dealer preparation fee

Often, auto dealers will charge a dealer preparation fee for cleaning up the car for you before you drive it off the lot. There is absolutely no need to pay this fee, which can range from $100 to $400.

Think of the fee this way — why should you pay extra for a fee to clean up a new vehicle that you just paid $35,000 to purchase? Shouldn’t the car appear clean, shiny and free of any problems at closing? Take the mindset that, yes, it should, and fight the fee accordingly.

Rustproofing and undercoating fee

Dealers will also try to stick you with so-called “treatment” fees that protect against Mother Nature and rocky roadways. The fee, which can cost around $800 to the dealer, aren’t really necessary in this day and age, as manufacturing technology has provided better protection for undercarriages and vehicle exteriors.

The dealer may also charge for other “appearance” packages including window tinting and tire and wheel warranties. These are also optional, so consider each one carefully, including cost and how important they are to you.

GAP insurance costs

In some cases, buying GAP insurance if you’re buying a new vehicle and want to add extra protection may be a good idea — it can cover the “gap” between an auto insurance claim payment and the amount of money owed on a heavily damaged or destroyed vehicle.

The thing is, you don’t have to buy it from the lender or dealer. In doing so, costs can be as high as $700 or more and is rolled in to your car loan, which also includes interest paid on the total loan, boosting the GAP insurance price up higher. Better to shop around among insurance companies who’ll likely offer you a better deal and cut out the dealer altogether from GAP insurance.

VIN etching fee

Your dealer may also try to sell you a theft-protection tool called vehicle identification etching, or “VIN” fee, which covers the cost of etching your VIN on the vehicle’s front window to thwart auto thieves.

While it’s always a good idea to protect your vehicle anyway you can, there’s no reason to have the dealer do the etching for $200 or more, when it only costs them $25 to do the job. A mechanic can do the job for much less. Some counties will offer the service free, so check with your local government office.

Stand your ground

When you’re in the throes of love for that brand-new vehicle you just purchased, it’s easy to gloss over fees and extra costs that dealers love to charge to pad their bottom line.

Don’t fall for many of those fees. While some extra costs are mandatory, there are plenty of new car dealer fees than can and should be avoided.

Stand your ground and use the tips above to make sure you’re not paying more than you should for your new car. Dealers also love to pad your APR, so in addition to the fees we described here, don’t make these common mistakes when shopping for an auto loan. Before heading to the lot, research the best auto loan rates.

LendingTree
APR

As low as
3.99%

Terms

24 To 84

months

Fees

Varies

SEE OFFERS Secured

on LendingTree’s secure website

LendingTree is our parent company

LendingTree is our parent company. LendingTree is unique in that they allow you to compare multiple, auto loan offers within minutes. Everything is done online. LendingTree is not a lender, but their service connects you with up to five offers from auto loan lenders based on your creditworthiness.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Brian O
Brian O'Connell |

Brian O'Connell is a writer at MagnifyMoney. You can email Brian here