State Farm Bank auto loan review: Preapproval process and multiple repayment options

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In a Nutshell

State Farm Bank offers a variety of auto loans, including new-car, used-car and refinance options, at competitive rates. But according to a State Farm rep, to start the application process, you’ll have to speak with an agent — unless you already have a State Farm Bank account or insurance policy.

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Pros Cons
“Payoff Protector” feature may provide financial protection similar to GAP insurance in the event of a total loss Prepayment penalty if you pay off your loan within the first 12 months
According to a State Farm rep, customers with State Farm can apply online for preapproval or an auto loan If you don’t have a State Farm Bank account or policy you have to apply in person with an agent or by phone, according to a State Farm rep
Wide range of vehicle loan options Not available in Massachusetts or Rhode Island

What you need to know about State Farm Bank auto loans

State Farm is primarily known for its insurance offerings, but the company also offers a variety of auto loan options through State Farm Bank that may be worth considering. Here are a few.

Payoff Protector

If your car is financed through State Farm Bank, the loan is in good standing and your insurer declares a total loss, State Farm Bank will look at the final settlement amount you get, along with whatever you may owe on the car, and cover any remaining principal balance. State Farm Bank calls this feature “Payoff Protector.” Note that Payoff Protector is not an insurance product, and it won’t cover any past-due payments or related late fees.

Cars that State Farm Bank finances are covered by Payoff Protector, assuming they’re insured. Other benefits of Payoff Protector may include minimizing the need to roll over any unpaid loan balance into the cost of a replacement vehicle.

Applying with an agent

According to a State Farm representative, State Farm Bank requires all new applicants to apply by phone or in person if they’re not existing State Farm insurance or bank customers. That means calling into the State Farm Bank customer service line or connecting with a local agent in your area. If you want to apply online, you’ll have to have an existing State Farm Bank account or State Farm insurance policy.

Like many lenders, State Farm Bank also allows you to apply for preapproval to check if you can get an estimate of the loan amount and annual percentage rate, or APR, that you may qualify for. While you may be able to prequalify with some lenders without affecting your credit, State Farm Bank doesn’t indicate on its site whether applying for preapproval will result in a hard or soft inquiry on your credit.

A preapproval offer is good for 30 days from your approval date. Keep in mind that this offer isn’t a loan approval — you’ll still have to submit a final loan application.

Competitive interest rates

State Farm Bank offers competitive fixed interest rates on its auto loans. The bank determines your eligibility by reviewing a number of factors such as your credit and transaction history and your debt-to-income ratio.

To qualify for the most-favorable rates, though, you likely need to have solid credit.

A closer look at State Farm Bank auto loans

Here are some additional details to consider when comparing State Farm Bank with other auto lenders.

  • New-car loan terms range from 12 to 84 months. But if you decide to purchase a used car, you can only finance it for up to 72 months.
  • Car loan amounts can range from $5,000 to $250,000, though all auto loan amounts depend on the car and your eligibility.
  • State Farm Bank doesn’t finance vehicles with more than 150,000 miles or vehicles that are driven more than 50,000 miles annually.
  • State Farm Bank charges a $100 prepayment penalty for any auto loan paid in full within the first 12 months.
  • Payoff Protector is offered with every car loan from State Farm Bank.
  • You must be 18 years or older, have proof of identity, reside in the U.S. and be listed as a registered owner on the title and registration of the vehicle to apply.
  • State Farm auto loans are not available to residents of Massachusetts or Rhode Island.

Is a State Farm Bank auto loan a fit for you?

A State Farm Bank car loan is an option for someone looking to finance, or refinance, a variety of vehicle types, including cars, boats, recreational vehicles, trailers and motorcycles. The Payoff Protector feature could provide some peace of mind and possibly savings on GAP insurance, depending on the level and cost of that coverage.

Existing State Farm customers don’t get any special perks if they get auto loans with State Farm Bank. But if you open a State Farm Bank credit card, you may be eligible for bonus points on your car insurance premiums, which could save you some money depending on your situation.

How to apply for a loan from State Farm Bank

If you already have a State Farm Bank account or State Farm insurance policy, you can log into your account online and apply. If not, you’ll either need to apply via phone or contact a local State Farm Bank agent, according to a State Farm representative. Here’s how to apply over the phone.

1. Call State Farm Bank’s Loan Center and connect with a representative.

2. Provide your desired loan amount and loan term, along with personal information, including your address, Social Security number and date of birth. You’ll also need to provide employment and income information.

3. If you’re applying with a co-signer or a co-applicant, you’ll need to provide their info.

4. Once you submit specific collateral information and an agent completes the underwriting process, you’ll receive a final decision on approval. The agent can help walk you through your next steps for purchasing your new vehicle if you’re approved.

Typically, if your car loan application is submitted during normal hours of operation, you should receive a decision within an hour. If you complete a full loan application, your application is valid for 60 days from your submission date.

Not sure about a State Farm Bank auto loan? Consider these alternatives.

State Farm Bank makes it easy to navigate the process of applying for preapproval and offers a wide range of lending options. But if you’re not set on a State Farm Bank car loan, here are some other options to consider.

  • Capital One Auto Finance: This lender could be an option for people who want to apply for prequalification online.
  • LightStream auto loan: LightStream may be worth considering if you can take advantage of its “Rate Beat” program.