Auto Repair Financing - A Guide for Consumers
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Auto Repair Financing - A Guide for Consumers

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Automobile repairs are aggravating and are hardly ever anything less than a nuisance. After all, it is difficult to predict mechanical failures and fender benders, and auto repairs, however expensive, ...

Automobile repairs are aggravating and are hardly ever anything less than a nuisance. After all, it is difficult to predict mechanical failures and fender benders, and auto repairs, however expensive, are often necessary to keep the vehicle in pristine condition. For some the cost is negligible. However, for many people, unpredictable car repairs can lead to financial, and ultimately personal, distress.

The often unforeseeable and substantial nature of automotive repairs opens the market for automotive repair financing. What financing options are out there? In this whitepaper, we examine the major auto repair credit cards available to consumers.

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    Auto Repair Financing - A Guide for Consumers Auto Repair Financing - A Guide for Consumers Document Transcript

    • AUTO REPAIR FINANCING A GUIDE FOR CONSUMERS
    • 2 © 2013 Corporate Insight, Inc. Auto Repair Financing: A Guide for Consumers www.corporateinsight.com Follow us on Twitter @CInsight TABLE OF CONTENTS TABLE OF CONTENTS........................................................................................ 1 INTRODUCTION..................................................................................................... 3 TALE OF THE TAPE ..............................................................................................................3 CREDIT CARD REVIEWS...................................................................................... 4 CITIBANK GOODYEAR CARD ..................................................................................................4 GENERAL ELECTRIC CAPITAL CARCAREONE CARD.......................................................................5 CREDIT FIRST NATIONAL ASSOCIATION CARD.............................................................................6 AUTO REPAIR FINANCING TIPS FOR CONSUMERS .................................... 7 CORPORATE INSIGHT THOUGHT LEADERSHIP.......................................... 8 ABOUT CORPORATE INSIGHT .......................................................................... 9 The enclosed material may be freely transmitted but may not be reused, copied or repurposed without the express permission of Corporate Insight, Inc. “Monitor Services” are service marks of Corporate Insight, Inc., all rights reserved. Corporate Insight is open to information from its reports and research being cited in marketing efforts. Should you wish to cite your company’s recognition or any report content, please contact us at PR@corporateinsight.com to coordinate approval.
    • 3 © 2013 Corporate Insight, Inc. Auto Repair Financing: A Guide for Consumers www.corporateinsight.com Follow us on Twitter @CInsight INTRODUCTION Automobile repairs are aggravating and are hardly ever anything less than a nuisance. After all, it is difficult to predict mechanical failures and fender benders, and auto repairs, however expensive, are often necessary to keep the vehicle in pristine condition. For some the cost is negligible. However, for many people, unpredictable car repairs can lead to financial, and ultimately personal, distress. The often unforeseeable and substantial nature of automotive repairs opens the market for automotive repair financing. What financing options are out there? In this whitepaper, we examine the major auto repair credit cards available to consumers. Tale of the Tape The table below breaks down the interest rates, fees and key features offered by the three largest auto repair credit cards in the industry: GE Capital CarCareONE CFNA Citibank Goodyear Card Interest Rate 29.99 22.8 28.99 Annual Fee None None None Min Finance Charge None $1.00 None Late Fee Up to $36 $15 – $35 $25 or $35 Cash Advance Fee ---------------------- --------------- 5% or $10 Cash Advance APR ---------------------- --------------- 29.95 Benefits  Optional Card Security  Can be used at Exxon or Mobil  6 Months Special Financing on purchases of $299 or more  No annual fee  Accepted at over 16,000 CarCareONE locations  Accepted at all U.S. Exxon and Mobil stations  Online account management  Service history at any store  Online Account Management  No interest if balance is paid off within 6 months  No Annual Fees  Low monthly payments  Nationwide acceptance  Special offers and savings  Optional Card Security  Discounts  Online account management  No interest if monthly balance is paid off on time  No annual fee  Low monthly payments  Online Account Management  Cash advancement
    • 4 © 2013 Corporate Insight, Inc. Auto Repair Financing: A Guide for Consumers www.corporateinsight.com Follow us on Twitter @CInsight CREDIT CARD REVIEWS Below, we take a closer look at the three major auto repair credit cards. The reviews analyze strengths and weaknesses and provide our overall assessment of the credit cards. Citibank Goodyear Card Overview: Citibank issues The Goodyear credit card, which can be applied at non-Goodyear locations, most of which are smaller retail locations with Mr. Tire being the most notable. The Goodyear card can be used for tire purchases as well as general automobile services, and customers can receive exclusive promotions and rebates through Citibank. The Good: Although not as versatile as the GE card, the Goodyear card can still be used nationwide at over 5,000 locations, including retailers distinct from Goodyear. Applicants will generally receive a decision immediately upon submitting the application. The option to connect a personal bank account with a Goodyear account, which can be set up to send payments automatically, makes account management incredibly easy. The Bad: The interest rate for the Goodyear card is 28.99%, and thus places pressure on cardholders to pay off their balance regularly and on-time. Additionally, Goodyear is not as versatile as the CarCareONE or CFNA cards. Although it can be applied at any of the 4,500 Goodyear locations, it is limited by its lack of access to other major retailers. For those that want financing options for their car but are not necessarily Goodyear fanatics, there are more retail options available on the GE Capital and CFNA cards. The Verdict: The Goodyear card is great for anyone that needs an immediate line of credit and prefers Goodyear retailers to others. Approximately 60% Goodyear credit card holders have a FICO credit score of below 700, so Citibank does not mind taking risks on customers, which is likely why the APR is on the higher-end. The Goodyear card can be a good investment if applicants pay off their balances on time and take advantage of the promotional rebates that offer cash back options. Major Retailers Accepting Each Card GE CarCareONE CFNA Citibank Goodyear NAPA Bridgestone Goodyear Aamco Firestone Mr. Tire Meineke Monro Maaco STS Midas Best One Pep Boys
    • 5 © 2013 Corporate Insight, Inc. Auto Repair Financing: A Guide for Consumers www.corporateinsight.com Follow us on Twitter @CInsight General Electric Capital CarCareONE Card Overview: The GE Capital CarCareONE credit card is one of many retail credit cards provided by the GE Capital Retail Bank. Besides issuing the CarCareONE card, GE Retail Bank offers co-branded cards, which provide special offers and promotions with select retail stores. Interested customers can simply apply online and receive a credit line within minutes of submission. GE also offers optional card security, which will protect your account up to a maximum of $10,000. The Good: The CarCareONE card is more versatile than the other major auto repair financing cards and is accepted at over 16,000 locations across the United States. For someone who needs a repair away from home, they are almost certainly close to a shop that will accept CarCareONE. Customers can use their card at major auto repair retailers including: Pep Boys, Midas, Meineke, Maaco, NAPA, Aamco, Merchants and more. CarCareONE can also be applied to fuel purchases at any Exxon or Mobil gas station, of which there are over 10,000. The Bad: Although CarCareONE offers interest-free financing under specific conditions, the variable purchase APR of 29.99 is almost two and a half times the national average for fixed-rate credit cards. The Verdict: The GE CarCareONE card is ideal for emergency situations where a person might need instant credit with broad application. Another benefit is virtual support through webinars, online chat and alerts. Customers who maintain a high balance on the CarCareONE card should be aware of the high APR and the potential for accruing hefty interest charges. Roughly 70% of cardholders have a credit score of fewer than 700, which may explain the unusually high APR. The graph above depicts Goodyear and CarCareONE cardholders’ credit scores versus FICO's national data. Retail banks take on risk by giving credit to people with subpar scores, consequently inflating interest rates. 0 5 10 15 20 25 30 35 40 45 <500 501-550 551-600 601-650 651-700 701-750 >750 Credit Score Distribution (by %) Goodyear CarCareONE FICO
    • 6 © 2013 Corporate Insight, Inc. Auto Repair Financing: A Guide for Consumers www.corporateinsight.com Follow us on Twitter @CInsight 0 5000 10000 15000 20000 CarCareOne CFNA Good Year Retail Locations by Card Credit First National Association Card Overview: The Credit First National Association provides credit cards exclusively for automotive repair financing. Unlike GE, which provides a card of its own brand (CarCareONE) in addition to co-branded cards, all of the CFNA’s cards are co-branded. CFNA is a wholly owned subsidiary of Bridgestone, which is why the standard CFNA card depicts the Bridgestone – Firestone brand. Applicants can apply online or in-store and will receive a decision instantly. The Good: With an APR of 22.8%, the CFNA card offers the best low-interest financing options. Customers can avoid interest altogether by paying off the account balance within 6 months of purchase. CFNA has national reach, and a few of the major participating retailers include: Firestone, Bridgestone, Monro, STS, and Best One. The Bad: CFNA does not issue a general card that can be used at all of its co-branded locations. The CarCareONE card can be applied at any of the stores that partner with GE Retail Bank, which means it can be applied at all of the 16,000 possible locations. Additionally, credit card forums are littered with complaints regarding CFNA’s inability to communicate account information and updates efficiently and within the appropriate time frame. The Verdict: The CFNA lacks the infrastructure and resources of a company like GE, which probably contributes to their insufficient and sometimes confusing information. For example, some of their co- branded cards can be used at all Bridgestone – Firestone locations, but their website also implies that some cannot. Although not as comprehensive as the CarCareONE card, the CFNA cards offer low interest financing and instant credit, making it an effective resource in inopportune times. Customers should be aware of CFNA’s reputation for middling communication, which can be aggravating when payments and statements are involved. 0 5000 10000 15000 20000 CarCareONE CFNA Goodyear Retail Locations by Card
    • 7 © 2013 Corporate Insight, Inc. Auto Repair Financing: A Guide for Consumers www.corporateinsight.com Follow us on Twitter @CInsight AUTO REPAIR FINANCING TIPS FOR CONSUMERS The major credit cards in auto repair financing excel in different areas and it is incumbent on customers to evaluate every aspect of a credit card agreement before applying. Here are four tips to guide you when deciding on how to finance that next auto repair: #1 All auto repair credit cards offer high interest rates, but they also offer no-interest financing under the stipulation that the account balance is paid on time or within 6 months. If you apply for one of the three cards, be sure you can pay off your balance on time. #2 Some cards provide access to more retail locations than others. Make sure to find out the major retail repair shops that are near your home or office. For example, it would be wise to apply for a Goodyear credit card only if you are close to a Goodyear retail shop. #3 Special offers and savings associated with the cards are minimal, and are not a sufficient reason to apply for a card. Apply for a card because you need to finance a repair quickly and without a big hassle, not because you intend on earning rewards. #4 Establish what you will use the card for to help guide decision-making. If you want a card that can be used for fuel purchases in addition to repairs, then CarCareONE is a good option. If your primary concern is interest rates, then CFNA is the best option.
    • 8 © 2013 Corporate Insight, Inc. Auto Repair Financing: A Guide for Consumers www.corporateinsight.com Follow us on Twitter @CInsight CORPORATE INSIGHT THOUGHT LEADERSHIP Facebook Marketing Campaigns - Social Media Initiatives in the Insurance Industry This slide deck highlights some of the engaging Facebook marketing campaigns initiated by P&C Insurance Monitor firms this year and offers a few Facebook marketing tips for insurers. User Insights Vol. 2 - Comparing the Desktop and Tablet Banking Experience This usability study provides insights to how mobile applications match up against traditional website interfaces, both in terms of usability and functionality for five leading banks. Optimizing the Online & Mobile Experience for Retirement Plan Participants This slide deck features industry best practices and includes five recommendations for DC plan providers looking to improve their Web and mobile offerings. 2013 Mobile Finance Trends and Innovations This study includes commentary on mobile developments, key takeaways for financial services firms and thoughts on what’s next for mobile finance. Asset Management and Social Media: A Guide to Social Marketing This guide looks at how asset management firms use popular social media platforms such as LinkedIn, Twitter, Facebook, YouTube and Google+ to connect directly with investors and financial advisors. Also available as a slide deck. The Millennial Opportunity Whitepaper Examines the marketing tactics, strategies and online resources leading financial institutions are using to connect with Millennials. Also available as a slide deck.
    • 9 © 2013 Corporate Insight, Inc. Auto Repair Financing: A Guide for Consumers www.corporateinsight.com Follow us on Twitter @CInsight ABOUT CORPORATE INSIGHT Corporate Insight provides competitive intelligence and user experience research to the nation's leading financial institutions. For over 20 years, Corporate Insight has tracked new developments in the financial services industry through our Monitor research services and custom consulting services. We are known for our detailed, objective research, unmatched expertise, and emphasis on the actual user experience. There are no assumptions in Corporate Insight’s work – we use live accounts at the firms we track to benchmark their effectiveness across all major channels and give our clients unparalleled competitive intelligence. Corporate Insight is continuously tracking and identifying best practices in online banking and investing, insurance, annuities, mobile finance, active trading platforms, social media and other emerging areas. In the process, we have helped our clients -- which cover the entire spectrum of financial services -- to stay on top of industry trends and improve their competitive position. Our intelligence services are utilized by over 70% of the financial services firms on the Fortune 500. Our research and analysts are frequently cited in financial media outlets such as The Wall Street Journal, Barron’s, Bloomberg, CNBC, Forbes and SmartMoney and news publications like the Associated Press, New York Times, Newsweek, TIME and USA Today. Media Inquiries Corporate Insight welcomes the opportunity to speak with the media. If you are interested in citing our research or would like to schedule an interview with one of our analysts, please contact Intermarket Communications at 212-888-6115 or corporateinsight@intermarket.com. Connect With Us ANDREW MALAMET RESEARCH ASSOCIATE 212-832-2002 X-145 AMALAMET@CORPORATEINSIGHT.COM BEN POUSTY MARKETING MANAGER 212-832-2002 X-134 BPOUSTY@CORPORATEINSIGHT.COM