How do I apply for an auto loan?
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UPDATED: Sep 9, 2011
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In order to apply for an auto loan to finance a new vehicle, borrowers must have their basic personal information, often including their driver’s license, a recent bill with their name and address on it and current bank statements. A borrower may also be able to use his or her passport, Medicare card or titles to other vehicles or a home. To apply, a customer will also need to provide proof that he or she has a steady income so that the lender knows the person will be able to make monthly payments. Proof of auto insurance and proof of residence are also necessary information to provide.
In addition to the basic requirements above, an individual’s credit score is an important part of applying for an auto loan. This tells the lender about the person’s financial situation and any paid or unpaid debts he or she may have. For an auto loan (as opposed to some other types of financing) borrowers do not necessarily need a high credit score to be approved because the loan is backed by their car as collateral.
However, what a credit score does determine is the interest rate on your loan – the higher the score, the lower the rate. A co-signer with good credit can also help get a better loan with a better interest rate.
Finally, while a loan can help pay for the vehicle purchase, it will not cover the entire cost of the car; customers will be required to put up a down payment up front.