How to Apply for a Bank Auto Loan

Many people start the car buying process at the dealership, allowing the dealer to manage the financing process. However, you can save money and time by applying for a bank auto loan through your local bank.

Things You Need to Apply for a Bank Auto Loan

There are a variety of things that you will need to provide to the bank when you apply for a bank auto loan. These include:

  • the loan application. The application will request information about where you live and work, whether or not you are applying jointly with another person, what kind of bank accounts and assets you have, and what kind of debt you have.

  • verification of your income. Most banks will require verification of income. If you are employed, you can most likely use paystubs to prove your income. If you are self employed, you may have to provide the prior year's tax records as well.

  • if you already know what vehicle you want to buy, you will need to provide the vehicle identification number and other details about the vehicle. If you don't know what car you plan to buy, you may get a preliminary approval, but the loan will not be funded without this information.
Step 1 - Choosing a Bank

Banks are competitive with their loan products, so shop around for the best interest rate being offered. Don't be afraid of checking with a credit union. You may be eligible to be a member and they can sometimes have better rates.

Step 2 - Complete the Application Process

Expect the application process to take 24 hours or less. Often you can obtain instant approval from your bank, especially if you are applying for the auto loan through the bank where you have your checking and savings accounts.

Be sure you are completely honest on your application. Not only can you commit fraud by lying on a loan application, but most likely the bank will require verification of the information anyway.

Step 3 - The Approval Process

Once your lender has approved your bank auto loan, there will be paperwork to sign. The loan approval may be subject to you providing proof of insurance. Most lenders require you to carry full coverage on a vehicle as long as there is a loan balance.

Step 4 - Buying Your Car

Once you have been approved for a loan, you will know how much you are able to spend when you go to the dealership to shop. A bank auto loan can also be used to purchase a vehicle from a private party; the bank will typically hold the title to the vehicle as collateral until the loan is paid in full.

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