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Find a better deal for insurance online

Two major vehicle expenses -- finance charges and insurance -- can increasingly be shopped for on the Internet, and that could turn into big savings for consumers.

An Arlington friend with five cars recently did some insurance comparison shopping online. After getting quotes from his home insurer (which offered a discount for multiple policies) and other brand-name insurers, he found a significant difference in rates.

Turns out the multiline discount, which is typically 5 percent, was less than he could get by switching to another auto insurer. He saved $1,892 a year, or 41 percent, going from $4,628 to $2,736 -- and that's with a recent accident and a couple of tickets among the family.

In the same way, Bruce Dieterlen in Plano nearly halved the interest rate on his car loan recently using a new online lending auction site called MoneyAisle.com.

"It was pretty simple, overall," he said. "I'm saving about $600 a year in interest."

Dieterlen plugged in his current 7 percent interest rate, outstanding loan amount, credit ranking and monthly payment into the website form. Out came an offer for a 3.9 percent interest rate on the balance for a shorter term through Connexus, a credit union based in Wausau, Wis. The credit union is affiliated with the Connexus Association, a charitable organization, and anyone in the United States may become a member by making a one-time $5 donation.

MoneyAisle launched its auto loan auction feature in June and has more than 120 banks and credit unions that bid on the loans, and it says it's adding 15 lenders a month.

"The average savings of our customers is $948 per year," said Mukesh Chatter, chief executive of the company. "And it doesn't cost them a dime."

Consumers with less-than-stellar credit ratings particularly can save through competitive lending websites, Chatter said.

"Everybody advertises rates that are just for super-prime credit scores," he said. "But many won't have the credit score that allows them access to those low rates."

By shopping online, credit-challenged consumers can get better terms, said Phillip Reed, senior consumer adviser for Edmunds.com, an auto information source for consumers.

"Often those in a poor or midtier credit level just don't want to know and put themselves in a 'get it done' mentality that can be taken advantage of," Reed said. "Consumers benefit when they check multiple sources of financing. That's the way the truth is revealed."

Getting an online quote is easy. MoneyAisle asks just seven questions, including ZIP code; year, make and mileage of the vehicle; amount to refinance; current monthly payment; and credit status. In less than a minute, the website spits out five offers, usually with interest rates that beat the standard market. The consumer is directed to the lender to apply online, by e-mail or by phone.

Refinancing now makes up 30 percent of auto loans at LendingTreeAutos.com, led in part by the shaky economy, said Gary Pierce, national sales director.

"It's a growing part of our business," Pierce said. "It's great for the consumer because a lot can't afford a new car right now. This allows them to skip a payment with what they save and reduce their rates."

If you aren't comfortable getting a loan online, Reed still advises using the Internet to check rates and then go car shopping.

"That allows you to focus on the cost of the car, not the monthly payment," he said.

Consumers are also shopping more for auto insurance online.

U.S. consumers submitted requests for 38.8 million online quotes in 2009 and purchased a record 2.8 million policies online during the year -- more than 20 percent higher than 2008 on both accounts, according to a survey of 2,000 shoppers by comScore.

"With the U.S. economy mired in a deep recession throughout much of 2009, consumers looked for opportunities to cut costs, and shopping around for auto insurance offered one way of doing that," said Susan Engleson, comScore director.

Virtually all insurers have a website with an easy-to-use rate quote form and can provide a quote or even the policy itself, which can be purchased with a credit card on the spot.

OnlineAutoInsurance.com and AutoInsurance.com are aggregate sites that pull rates from a public rating engine similar to what insurance brokers use, said John Pirro, marketing director for the website service based in Rancho Cucamonga, Calif.

Consumers with good driving and credit records will see up to 60 quotes from all the major insurers doing business in their state, he said.

"Risky drivers sometimes won't get a quote," he said.

J.D. Howard, a former insurance adjuster and founder of the Insurance Consumer Advocate Network (www.ican2000.com), doesn't recommend purchasing insurance online because of the intricacies of an insurance policy.

But if you do, make sure the policy covers other household members and anyone else you give permission to drive your vehicle, he said.

Texas has stronger laws against this practice by requiring insurers to offer at least a minimal coverage to parties in a vehicle accident who are not named on the policy, but you may not have full coverage, Howard said.

Teresa McUsic's column appears Fridays.

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