Where To Find Financing For Your New Car

There are many advantages to paying cash for your new car. You will not have a monthly payment, you will be able to sell the car whenever you need to, and you can usually negotiate money off the sticker price of the car when you can afford to pay for a car at the dealership.

But most people cannot afford to pay cash. This is why car loans were created. With other expenses, paying cash is just not a realistic option, but if by some chance you can pay cash, it is recommended.

You have a few choices when you are looking for financing. You should consider all possibilities and choose the one that can offer you the terms you are looking for.

The Bank

Banks are the first place you can go to ask for a loan. If you have a checking or a savings account at a bank, start with that bank first. They already have a record of your banking habits and may be able to give you a lower interest rate if you are a good customer. When visiting the bank you should bring the following paperwork:

Recent pay stub
Credit card information
Social security card
Driver’s license
Check book
Banking identification

You will be speaking with a loan officer who will ask you questions about the type of loan you are looking for, the amount of the loan, how long you would like the loan, and questions about your salary and other expenses. The loan officer will run a credit check to see what your credit history is like.

Banks can be very strict about who they will grant loans to even if you are a loyal customer. If your total expenses exceed 60% of your total income, you will probably not receive a loan. Many small banks are not willing to take the risk on those who have other bills to pay. You may have to try several banks before one will accept your loan application.

Dealerships

Dealerships work with larger banks that may be able to grant you a loan. When you visit a dealership, ask them about financing options. When you decide to buy a car, you can ask for financing. Dealerships work with many banks that are willing to give people with little or no credit a car loan.

The interest rates at these banks are usually the same as other banks. Your interest rate will depend on how your credit report looks and how long you will need the loan.

Using a bank that works with the dealership will save you time. You can usually be approved immediately. All the paperwork will be handled by the dealership who will be in contact with the bank. You will not have to visit the bank since the bank may not even be in the same state where you live. You will receive a payment book from the bank a few weeks after you purchase your car. You will send all payments directly to the bank.

This is a good way to build credit if you do not have much of a history. Once you have paid off the loan, it will be on your credit report. This will make future loans easier to qualify for.

Credit Card Company Loans

You may also qualify for a car loan from your credit card company. If you have good credit, you should apply for a car loan. You will receive a fair interest rate with a lender that you already have a relationship with. This will also help your overall credit rating.

You can usually apply for these loans online by visiting your credit card company’s web site. You will need to have very good credit, however. For first time car buyers, the chances of being approved are less, but it is worth a try.

Online Lenders

Finding a lender online is another way to find a car loan. By filling out a form, you may be approved in minutes. You should investigate these lenders before agreeing to the terms of any loan. There are many fraudulent web sites whose sole purpose is to rob people of their money. Do not give any personal information over the Internet such as social security numbers and banking information. If the web site asks for this information, you should find another web site.

After you fill out the form, the lender will agree to call you for a follow up interview. This is the only way to apply for a loan online.

Other Finance Sources

Other places to find car loans include your workplace, credit unions, organizations that you belong to, military assistance, and government assistance programs.