There are only a few steps to getting an auto loan, then using the proceeds to finance your new (or new to you) car. Believe it or not, most can be accomplished in a single day.
Checking Your Credit
The first step to take before getting any loan is often overlooked. You should request your credit report from the three major reporting agencies. The reasoning is clear. Your chances of getting a loan are better if your credit report and score are good. Mistakes on your credit report can lower your score. Having your report in your hand is the only way to find errors on the report. Once you have the report, fix any errors that are possible. You can get your reports free at www.annualcreditreport.com. You may want to pay the fee to get your credit score as well. You can do that here.
Submitting Your Application
The loan application itself is pretty straight forward. Plan to spend around thirty minutes filling it out if you go in person. You can speed up this process by applying online through a trusted service like My Car Lender, which takes less than five minutes. Have you Social Security number on hand along with a recent pay stub so you can fill out the information as accurately as possible. You may be asked what kind of car you are looking at and how much it costs, so you need to have researched and narrowed down your choices before going to a lender.
Offering Your Down Payment
Another question that is going to come up is your down payment. Most lenders want to see at least 20 percent of the purchase price to show that you will be vested in repaying the loan. If you’re purchasing a used vehicle, you can often get away with 10 percent. In either case, the down payment helps minimize negative equity.
Purchasing Your Vehicle
Once you have been approved, using the loan proceeds is pretty much automated. You will go to the dealership that has the car you have decided on and make your final deal. You may have to shop from a specific dealer or network of dealers, depending on your lender. Many do not work with independent, non-franchised dealers. Once you’ve selected your vehicle, contact the lender that approved you. The lender and dealer will take things from there. All you will have to do is sign some final paperwork.
Again, in order to streamline the entire process, you can work with an online service such as My Car Lender.
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