Auto loan

There are a number of lending institutions that offer auto loans. These include: banks, credit unions and auto finance specialists.

The bank auto loan is probably the easiest and most convenient considering you already have the necessary background on the bank. You are aware of its financial strengths and capabilities. You do not need to do more research or inquire from clients about the banking institution. In credit unions and auto finance specialists, you need to do additional research so to determine its capacity to extend auto loans.

Another important point to consider before applying for an auto loan is knowing whether the loan is direct financing or an indirect financing. Direct financing happens when you obtain auto loan directly from the bank or any other lending institution. Indirect financing is obtained from the dealership. Oftentimes, dealership has a mark-up on the interest rate so this may come out higher and more expensive.

Different lending institutions have different requirements for their auto loan. But usually they require the following so you should get them ready before approaching a reputable auto loan provider:
Verifiable Proof of income
Verifiable Proof of residence
Clean credit history
Valid driver’s license
Valid title in case of trade in
Personal references such as family and friends
STIPS or additional items such as tax returns, phone bills, bank statements and others

Interest rates for auto loan usually depend on your credit history, whether you are buying a new or used car and the length of the auto loan. The length of time for an auto loan is usually within 36, 48, 60 or 72 months. For a shorter auto loan, the interest rates are cheaper. Banks and other lending institutions offer a lower length of time but auto loans with lower length of time usually have higher monthly payments compared to those with longer lengths.

To determine the interest rates for the auto loan, there are several factors to be considered: credit history, down payment made, credit risk and general banking factors such as amount of interest the bank is charged for making an auto loan. Generally, the application process usually takes several minutes. But it could take as long as a few hours if you give incomplete information and if they need additional requirements from you.