How Do You Qualify for an Auto Loan?
The used car buying process can feel intimidating, especially when it comes to financing. It can be easier to focus on things like the color, make or model rather than the most irksome aspect of buying a car — how we plan to pay for it.
Perhaps you’ve saved up enough cash to purchase the vehicle outright, greatly simplifying the payment process. Most Easterns Automotive shoppers aren’t in that position. In many cases car buyers come to us with just enough to make a down payment.
Qualifying for an auto loan in the Washington D.C. and Baltimore areas will require you to approach a lender(s) or dealership with a multitude of paperwork and documentation. Lenders will need to confirm things like your identity, employment, credit score and income before they can offer you a car loan.
What Materials Do You Need to Apply for an Auto Loan?
- Proof of identity (i.e., driver’s license or government-issued I.D.)
- Proof of income (i.e., bank statements or pay stubs)
- Credit and banking history
- Proof of residence (i.e., utility bill or mortgage statement)
- Vehicle information (i.e., purchase price and VIN number)
Where Do You Apply for an Auto Loan?
There are a number of lenders in DC, Maryland and Virginia who can offer you a loan to finance a used car purchase. When applying for auto loans, some car buyers will shop around for lenders until they find the best offer.
Common used car loan providers include:
- National banks
- Local community banks or credit unions
- Online lenders who specialize in auto loans
What Is Pre-Qualification Versus Pre-Approval?
Pre-qualification is an estimate of the loan and rate you are likely to get based on the limited personal information and credit history you provide to a lender. A pre-qualification only requires a soft credit pull and is not an actual offer to fund your used car purchase.
Pre-approval is when a lender reviews your credit report to determine the estimated loan amount you’re approved to borrow and the interest rate you’ll be charged. A pre-approval does require a hard credit pull in order to provide a more accurate offer.
It’s important to note that neither will guarantee the approval of your auto loan, but both can be useful for planning and budgeting your used car purchase. If you want to impress a dealer or seller, getting pre-approved demonstrates your ability to obtain financing and shows you’re serious about buying the car.
What Affects the Approval of Your Auto Loan?
If you’re planning on financing your used car, you might be wondering what it takes to qualify for a car loan. If you haven’t had credit cards or loans in the past, you may have a harder time getting a loan.
Don’t lose hope — it’s not entirely impossible to get approved for a loan even if your credit isn’t great. In most cases, you should be able to find a lender willing to offer you a loan, but it may have a higher interest rate.
There are some steps you can take to increase your chances of being approved if your credit isn’t great:
- Save for a larger down payment
- Show proof of a steady job and income
- Ask a trusted friend or family member with good credit to be a co-signer/co-borrower
If you have been denied by a bank or lender in the past, don’t let that discourage you from buying a car. Easterns Automotive helps used car buyers in DC, Maryland and Virginia qualify for financing, no matter their credit history.
Apply For Used-Car Financing in DC, Maryland and Virginia
When you shop at Easterns Automotive, we handle the financing for you. You don’t have to worry about your credit history or getting third-party pre-approval when you apply for an auto loan through us.
At Easterns, we strive to get you the financing you need to purchase the car you love. Browse our extensive pre-owned inventory in Maryland, DC and Virginia or visit one of our dealership locations today.