Do you need to finance your next vehicle purchase, but you've never had an auto loan before? If so, you likely have these questions for any potential lender you work with.
Is There A Credit Score Requirement?
If you have concerns about your credit when applying for a loan, it is best to ask the lender what they are specifically looking for when deciding to approve auto loans. That is because there is no minimum credit score that is used across the board when getting an auto loan since the auto loan market is much different than the real estate loan market. Some lenders may have higher requirements than others based on how much money you are borrowing and the size of your down payment.
Is There A Down Payment Requirement?
Much like with the credit score requirement, there is no down payment requirement when getting an auto loan. In fact, many auto lenders offer loans with no money down to make them more appealing to buyers. However, be aware that it is always worth having a down payment if you can afford one. A larger down payment lowers the loan amount, which reduces how much you pay in interest over the course of the loan.
Is There A Long Waiting Period For An Auto Loan?
If you are familiar with the long process of getting a mortgage, know that an auto loan is completely different. Many lenders are able to approve someone for an auto loan the same day they apply, while others may take a few days if additional documentation is requested. Either way, it's much faster than a mortgage so you can be driving your new vehicle soon.
What Kind Of Documentation Is Required For An Auto Loan?
Be prepared to have a few key documents when applying for an auto loan. This includes proof of your income, such as tax returns, pay stubs, or even a letter from your employer that states how much you typically make. You'll also need to bring identification, proof of residency, and information about the vehicle you are buying.
It is also incredibly common for lenders to request that you have insured the car with the proper amount of insurance before you are approved for a loan since they want to make sure the vehicle is covered from the moment that you drive it off the lot. Your insurance provider can provide you with the proof of insurance that you need that will satisfy your lender.
For more information about auto loans, contact a local lender.