Here, we’ll explain the process of buying car loans from start to finish.
Whether you’re dealing with a bank, a credit union, or an online lender, make sure to ask the following questions when shopping for auto insurance:
- What is the interest rate?
- How often is the interest rate compounded?
- If I miss a payment, will the interest rate increase?
- How much is the down payment?
- What are the loan’s repayment terms?
Gather the Information You’ll Need
When you’re approaching a lender to negotiate a car loan, make sure you have the following information handy:
- Your credit score or FICO score from a credit reporting agency
- W-2 or recent pay stub
- Government ID and proof of residence (often a driver’s license, utility bill, etc.)
The lender will want to verify your employment, home address, and credit score. Using this information, you can get preapproved for a car loan, which we’ll detail below.
If you’re wondering how much auto loans cost in general, here’s a sample from the second quarter of 2021.1
|Type of car
||Chevrolet Silverado 1500
|Average loan amount
|Average monthly payment
|Average term length (in months)
|Average credit score
Once you have a general idea of how much you should be paying for your car loan, it’s time to get preapproved.
Before you even buy a car, you can get preapproved for a loan from a traditional bank, credit union, or online lender. You can get preapproved online or over the phone with most lenders.
||Type of lender
|Bank of America
||844-892-6002 for new customers, 800-215-6195 for existing customers
|Navy Federal Credit Union
|State Employees’ Credit Union
|Pentagon Federal Credit Union
|SchoolsFirst Federal Credit Union
The lender will run a soft credit check to see your credit report. A soft credit check, as opposed to a hard inquiry, is when a lender requests a copy of your credit report or checks your credit score. In contrast, a hard inquiry occurs after you’ve applied for a loan and could affect your credit score.2