Check your credit report before applying for a car loan. If you haven't requested your free annual report yet, now is a good time. You can also get your FICO score for about $20. A lender will pull your credit report early on in the loan application process. If you know that you have a solid credit report and high credit score when you first go to get a car loan, you are already one step ahead of the game. To get the best auto loan rates, your credit score should be above 700. A credit score in the high 600s will still work, but the loan will cost you more.
When applying for a car loan, the lender will want to see financial paperwork proving your income. Verifying your income shows that you can repay the loan. A lender will consider both your monthly income and expenses to determine whether you can afford a car loan payment. Bring copies of your tax returns from the last two years along with your two most recent pay stubs showing how much income you’ve earned so far this year. If you are self-employed, you will need to show a year-to-date profit and loss statement. The lender also may ask to see recent bank statements for your checking and savings accounts, in addition to current loan and credit card statements. A lender may request the contact information for your current and past employers. Often, lenders ask for written or verbal verification of employment from any employers during the last two years.
When buying a new car, the lender will want information such as the make, model and year of the car, purchase price and vehicle identification number. If you are buying a used car, you must give the lender the same information in addition to the number of miles on the car and a title history report from Carfax or AutoCheck. A lender also will ask to see the sales contract, any warranties or service contracts and the buyer’s guide if you are purchasing a used car. If you are trading in your current vehicle, bring that car’s title if you paid off the car loan as well as the car’s service and repair history. Prepare to show your auto insurance identification card to prove that your current vehicle is insured.
In some cases, you may have to make a down payment to get a car loan. The plus is that a down payment will reduce how much money you need to borrow. It will also lower your monthly car payment and the interest rate you pay. You can get the best auto loan rates by paying at least 20 percent of the car’s purchase price upfront. Bankrate.com points out that if you put 20 percent down, you should see positive auto equity after two years into a four-year loan. If a 20 percent down payment is too rich for your blood, put down what you can so that it’s easier to qualify for a loan.
陳道 Will Chen