State Farm was founded in 1922 in Bloomington, Illinois. They provide insurance to more than 80,000 Americans and Canadians. In the late 1990's, State Farm expanded their services to offer a variety of financial support options, including mutual funds, and loans. With a State Farm Auto Loan, customers receive competitive rates, affordable payment options, and around-the-clock access to State Farm's customer service department.
- Payoff Protector
- Recreational vehicles
- Interest rate reductions
State Farm includes the State Farm Bank Payoff Protector with each car loan. Payoff Protector provides financial protection in case the borrower incurs a total loss of their car and the insurance settlement isn't enough to cover the remaining balance of the loan. Payoff Protector is not an insurance policy, but may help ease the financial burden in the event of a theft or major accident.
Interest Rate Reductions
State Farm offers interest rate reductions for borrowers that currently bank with State Farm through bank checking, money market, or a savings account. Borrowers who agree to make monthly payments through electronic automatic withdrawals can also get interest rate deductions on their loans.
State Farm is one of the few lenders we reviewed for car loans that doesn't limit their financing options to automobiles. State Farm will also finance boats, motorcycles, ATVs, snowmobiles, and more. This is a benefit for borrowers who have an interest in more recreational vehicles.
- No online application
- Longer process
- Mileage restrictions
Of the car loan companies we reviewed, State Farm is the only one that does not offer an online application option. To apply for a loan, customers must contact a local State Farm agent directly. This means that applying for and obtaining a car loan may take longer with State Farm than it would with other companies. This is because borrowers will have to get hold of an agent and schedule an application appointment before being able to complete the process. State Farm will not finance a vehicle that is driven more than 35,000 miles per year. This means that commuters or those who travel frequently may not be able to get a car loan with State Farm.
Lack of Transparency
One major issue we have with State Farm is their lack of transparency with a lot of pertinent information. Customer's should have access to this general information without having to go to apply first. We would like to see State Farm have information regarding APRs, term lengths, early-pay penalty fees, and bad credit options. Without this information it is more difficult for customers who are shopping around for the right company to fit their needs. It is also difficult for our team to rank their services with other companies in the industry.
The Bottom Line
Although State Farm doesn't offer an online application, there are plenty of benefits to taking the time to get approved for a State Farm car loan. Some of those benefits include APR discounts for borrowers who bank with State Farm Bank, APR discounts for borrowers who enroll for auto-debit payments, finance options for recreational vehicles, and access to a personal local State Farm agent. However, with the lack of transparency and some of the restrictions it is difficult for us to recommend working with State Farm at this time.