The Basics of Auto Loan

By Charles Hopkins Published 11/30/2007 | Auto and Trucks
Unless you have loads of petty cash, its unlikely that youll be able to buy a brand new car outright.  Even if you can afford to buy a car now using your own money, youre unlikely to do so because there are other things that youll probably need to spend that money on.  In the normal course of things, therefore, youre more likely to need car financing or an auto loan to buffer your meager resources.

Auto Loan Options

When its time to buy your car, you have three financing options.  On the one hand, you can procure an independent auto loan from your preferred financing institution.  On the other hand, you can get in-house financing from the auto dealership that you will buy your car from.  Finally, you can also get car financing support from your company if your company has such a plan for its employees.

Auto Loan Requirements

For all of the abovementioned options, you need to prepare appropriate documentation.  Getting an auto loan means qualifying for a loan.  This means that you have to have a stable source of income.  If you are employed with an adequate salary, youre much more likely to get approved for an auto loan.  If you are self employed or have an alternative source of income, you have to present documents that will prove you have sufficient income to cover auto loan repayments.

A credit check is also likely to be required when you apply for an auto loan.  Therefore, a good credit standing and record will stand you in good stead.  However, if you have a spotted credit record, this does not preclude a successful approval.  Perhaps collateral may be required.  In other instances, you may have to settle for a higher rate of interest.

Of course, to get an auto loan, you have to be of legal age.  Moreover, the car that you are considering buying should pass certain parameters or criteria.  When buying a second-hand car, the car youre thinking of purchasing should not go beyond a specific mileage ceiling.

Finding an Auto Loan

To find an auto loan, you should definitely consider using the internet.  This is a very convenient way of finding more information on the auto loan plans that you can avail of from various lending institutions.  The internet is also useful for searching out potential auto dealerships with in-house financing.  However, if you are getting an auto loan through your company, then you should consult with your human resources personnel for the specifics of getting an auto loan.