PITTSBURGH -- In less time than it takes a traffic light to change, car buyers can find out if they qualify for an auto loan. And they don't have to talk to a bank officer, either.
The speed and anonymity of the Internet make it all possible.Borrowers who happen to be members of the American Automobile Association can log on to an Internet site, punch in their Social Security number, various personal and financial information, and click on "continue." The site can be found at www.financial.aaa.com.
Filling out the loan application takes about 15 minutes. A "yes" comes back in as little as 15 seconds.
"Fifteen seconds? That sounds like it's hard to beat," said Kenneth Reed, spokesman for the Consumer Bankers Association in Arlington, Va.
The truly lazy buyers, though, still have to drive to one of the 106 AAA offices equipped with loan-check printers. (Not all of AAA's 41 million domestic members, however, may be close enough to an office with a printer, so the program may not be practical for everyone.)
If the loan is approved, car buyers will be assigned a loan reference number and given a telephone number to call. After contacting the AAA office, applicants can drive there, give their reference number and pick up a check. The whole process can be completed in about an hour.
If you can't get to the office, a check can be mailed.
PNC Bank, the lender in the AAA auto loan program, protects itself by verifying an applicant's identification at the office. It helps that AAA members tend to be relatively affluent and computer literate.
Executives of the auto club and the bank believe their "lightning fast auto loan" program is the first of its kind.
Most industry experts don't know of a faster process, although Reed noted that in the past five years, the time it takes to get an answer on any loan application has fallen because of automation at the three major credit bureaus.
David Weisman, group director of research at Forrester Research Inc. in Cambridge, Mass., says the program is an original way to market banking services. He compared it to Citibank's plan to install automated teller machines at Blockbusters Video stores.
"It's certainly another example, and a creative example, of banks moving beyond bricks-and-mortar physical presence," Weisman said.
The AAA loan program was tried first in California, Michigan, North Carolina and South Carolina and went national on Oct. 23.
Encryption software guards against computer hackers who might otherwise retrieve the personal information and use it to steal money.
About 20 percent of the applicants receive the 15-second approval.
Paul Bronkar of Los Angeles, who borrowed $33,000 to buy a $37,000 used Mercedes E320, was one of them.
He said he was satisfied with the 7.9 percent interest rate on his auto loan as well as the speed of the transaction. He and the seller finalized the deal right at the AAA office.
"We got right to it. We were out of the office probably within a half an hour, 45 minutes," Bronkar said.
Had Bronkar not qualified for the loan, however, he would not have been rejected outright. If the answer is "maybe" or "no," the applicant receives e-mail within an hour asking for more information.
Any lender looks closely at an applicant's income when considering whether to grant a loan, but debt-to-income ratio is also important, Reed said.