How To Apply For An Auto Loan
Types Of Car Loans
In general, auto financing can be divided into two categories: purchase loans and refinance loans. A purchase loan is a loan taken out in order to purchase a new or used vehicle. Some lenders may work through dealerships to provide purchase loans, and others may offer to provide loans for private purchases as well.
There are also purchase loans for lease buyouts, in which drivers choose to purchase a vehicle after leasing it for an amount of time.
A refinancing loan is a second loan taken out to pay off an existing auto loan. The reason drivers may choose to refinance a loan is if the new loan offers a lower interest rate, meaning that they will pay a lower overall cost.
People whose credit score or income has recently changed may be interested in a refinancing loan. Or, if you feel that your original loan has particularly bad terms, refinancing your loan with a better lender can save you money.
Many lenders allow borrowers to apply for an auto loan through an online application. In some cases, borrowers can receive same-day financing. Typically, to apply for an auto loan you will need to supply the following information:
- Personal details such as name, address, and age
- Social security number
- Gross annual income information
- Vehicle information such as vehicle identification number (VIN), age, and mileage
- Driver’s license
- Pay stubs
When you apply for a loan, some companies may offer you the opportunity to have a cosigner, another person who will assume responsibility should you fail to make your loan payments. A cosigner may be required for people with exceptionally poor credit.
As with personal loans and other forms of credit, many auto lenders offer a pre-qualification process that doesn’t ding your credit.
If you want to go into the negotiation with the upper hand, consider getting a pre-approval letter from a lender before you go to the dealership. With this, you can show the dealer you have full credit approval up to a certain amount, and that you’re a serious buyer. Continue Reading
