What do I need to qualify for auto financing?
Proof of Income - pay stubs
Verifiable Proof of Residence - mail addressed with you as recipient.
Established good credit history
Valid Drivers License
Valid Title (if trade in is being used)
Personal References (Family and/or friends)
How is the interest rate determined on my auto loan?
The interest rate you qualify for will be based on your credit history, whether you're buying new or used, and the length of the loan.
What is the usual length of an auto loan?
Auto loans usually have terms of 36, 48, 60, or 72 months. Shorter loans may have lower rates and are cheaper, but have larger monthly payments than longer-term loans.
Which is better, direct or indirect financing?
Direct financing is when you obtain financing straight from a bank or other lending agency. Indirect financing is financing from a dealership. The dealership typically makes a mark-up on the interest rate.
Why do I need insurance to get an auto loan?
Most auto loans are secured by the vehicle itself. If the vehicle is lost or damaged, the lender?s security (the ability to sell the vehicle to recover the loan amount) is also lost. Therefore the lender will want to protect its security interest in the vehicle by requiring the borrower to place a policy of insurance that provides not only liability coverage, but also collision and comprehensive. The minimum amount of coverage required will generally be determined by the lender?s loan policy and can vary from lender to lender.
What good is a co-signer on the auto loan?
A co-signer with good credit will definitely improve your chances of getting a Loan if you do not have good, established credit.
Can I use my trade-in as a down payment?
Yes, you can. If there is a lien on the trade-in vehicle from a previous loan, that loan will have to be paid off before clear title can be passed on to the dealer you are trading your vehicle into. If you owe more for your old loan than your trade-in vehicle is worth to the used car dealer (referred to as ?negative Equity? or being ?upside down?), you may be required to pay these additional cost in your down payment or by increasing your new loan amount to cover this added expense. Not all lenders will finance negative equity in the new car loan however.