Can you walk me through the process of getting a car loan step-by-step?
I need to borrow money to get a car, but I've never applied for a car loan before. How does the application process work?
Answer provided by
Answered on Mar 12, 2021
To secure a car loan, follow this process:
- Check your credit report to ensure you have no outstanding debts or judgments on your credit.
- Pay down any debt to improve your debt-to-income ratio and the overall attractiveness of your application.
- Shop around to find terms that suit your needs (interest rate, convenience, prior relationship with the lender, etc.). Don’t forget about credit unions, which can typically offer lower interest rates than banks. In addition, some dealerships run promotions and special rates, so consider these as well.
- Get pre-approval from your shortlist of lenders.
- Once you’re pre-approved, this means the lender will approve you up to a certain amount. Use this amount to help set a budget for your vehicle. But don’t forget about extra expenditures such as insurance, maintenance, and gas.
- Find the car that you want.
- Choose a lender from one of your pre-approved applications and then finalize the loan. This will require you to show up to the closing. However, the lender usually takes care of the payment to the seller, saving you time and allowing you to get behind the wheel sooner than expected!
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