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The Process of Getting a Loan

When applying for an auto loan for a new or used vehicle, you can save yourself time and get better rates if you are familiar with how the loan process works and what lenders are looking for. Here are some tips to prepare you for the loan approval process.

The Primary Parts of an Auto Loan:

Before you start shopping for a loan, get familiar with the primary parts of an auto loan and how they relate to each other:

Down Payment

The down payment is the amount of money that you pay upfront when you purchase a new or used vehicle. Before you start applying for loans, determine how much you can afford to pay right away, and how much you can afford to pay each month.

The more money you are willing and able to put down, the less you will have to borrow. If you are looking to reduce your monthly payments, consider making a higher down payment

Annual Percentage Rate (APR)

The annual percentage rate (APR) is the total cost of credit over the course of one year, shown as a percentage. The APR is a standard used to measure the actual cost of a loan, taking into consideration the interest rate, the loan amount, and the term, and all loan fees.

Interest Rate

The interest rate is the rate at which interest is paid by a borrower for the use of money that they borrow from a lender. Interest rates are shown as a percentage over a period of time.

Loan Term

The loan term is the duration or period of time that the loan needs to be repaid by or renegotiated for a longer term. Most auto loans come with either 24, 36, 48, 60, and 72 month loan terms.

Understand Your Credit History

Your credit score is one of the most important factors in determining your loan's interest rate because it represents your ability to pay back a loan. Before you let lenders look up your credit report, you should obtain a copy yourself to avoid surprises.

Recently, the federal government mandated that each citizen is entitled to a free credit report once a year from each of the three major credit agencies (TransUnion, Experian, and Equifax). Make sure you order your credit report from annualcreditreport.com, the only site authorized under federal law.

Credit scores range from 300 (the lowest score possible) to 850 (a perfect score). To receive the best rates on auto loans, you should keep your credit score above 700.

Organize Your Documents

Before you start applying for a loan, save yourself time by gathering all of the required documentation that lenders will need from you. You will need to show lenders proof of employment or income and proof of residence, plus you may also need to provide additional financial references.

Documents that most lenders will ask for:

• Proof of income
• Proof of residence
• Bank statements
• Past tax returns
• Credit report
• Vehicle information

The required documents may vary between different lenders, so verify with your loan officer exactly which paperwork you'll need in advance.

Avoid Working with the Dealership

Most dealerships offer auto financing which can be convenient, but they won't necessarily provide you with the best deal possible. Remember: they are trying to sell you a car, so they'll most likely seek out terms that benefit their sales process, not the consumer.

Before finalizing the purchase of your vehicle at the dealership, do some comparison shopping of your own to see what kind of rates you can get. Banks, credit unions, or online lenders will most likely give you the best rates.

How Our Loan Process Works:

To start saving, simply enter the following info into our secure form:

• Loan Type - Auto refinance, new car loan, or used car loan
• Your Zip Code - Enter the zip code for your home or workplace
• Your Car - The year, make, and mileage of your vehicle
• Purchase Price - Estimated value of your car
• Loan Amount - The amount of money that you need to borrow
• Your Credit Status - Your own estimate, no credit check required

That's it! No credit checks, SSN, date of birth, or personal information needed to get loan offers

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