Automotive Financing Frequently Asked Questions

 

I heard that I should never use the dealership's bank. Is this true?

Absolutely not. Although it is wise to explore other potential loan options for your next car loan, the dealership's bank should not be excluded from this search. You would be surprised at how often a dealership's financing institution blows the competition out of the water, especially when the dealership is running a financing special, which requires you to work with the dealership's bank.

Remember that the dealership's bank is a legitimate financial institution just like a credit union and a traditional bank, so they will offer you competitive deals to earn your business.

Do I need great credit to get a decent deal?

No. Although you obviously want your credit score to be good, you won't be stuck with an awful deal just because you don't have an 800 FICO credit score.

Most dealerships have incrementally sliding scales for interest rates, which is determined by your credit score, but even the highest interest rates are usually more than reasonable for reputable lenders.

Can I get more than one car loan at once without a co-signer?

Yes. Believe it or not, owning more than one car is not a privilege reserved for businesses, people with co-signers, and those with enough cash in their pockets to purchase a car outright. You can receive loans for multiple cars on your own as long as you furnish adequate proof that you can make the payments.

You can apply for loans for multiple vehicles. Whether or not you get approved will depend on a number of factors, including your credit score, income and monthly expenses. In essence, you can get loans for multiple cars on your own as long as you furnish adequate proof that you can pay or make the payments.

Do I have to make a down payment?

It depends. There is no law requiring that a recipient of a car loan must make a substantial down payment before he or she drives off of the lot, and vehicle financing institutions understand that not everyone has thousands of dollars on hand.

Down payment are often required by lenders for security purposes, but they aren't always set in stone. In fact, depending on the lending institution, any specials they are running, and you current situation, you can often lower or even forego a down payment - as long as you are willing to make higher monthly payments to cover the cost (since a down payment goes towards the value of the car).

How does having a car loan affect my credit?

Wonderfully. There are many things that can positively impact your credit, and a car loan is at the top of that list. In fact, a vehicle loan is only second to a mortgage regarding common factors that can impact one's credit.

Does it take a long time to process a car loan?

Absolutely not. Thanks to modern internet technology, approval for a vehicle loan can happen in seconds. As such, you can often expect to drive off with your brand new vehicle the same day you apply for the loan.

Won't letting a car lender look up my information ruin my credit?

No. For some time, there has been a myth circulating that having a lender glean your credit report will somehow ruin your score. This is simply not true. Not only is this necessary, but it takes a lot of hard inquiries (when a potential lender looks at your credit report with your permission) in a short time to hurt your credit score.

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