Tips to Minimize Delays in Your Car Loan Application

Getting fast approval on your car loan application will allow you to move forward with a purchase immediately. Unfortunately, there are a number of items that can delay your loan. This means you may miss the opportunity to purchase the vehicle you originally wanted. Try these tips to speed up your application and ensure you will not miss the chance.

Get a Pre-Approved Loan

One method to try to make sure your loan is ready when you need it is to pursue pre-approval. There are a number of online lenders that will provide pre-approval on loans. However, you do not need to use these alternative lenders to gain the benefits of a pre-approved loan. Banks and other lenders will also pre-approve you before you have selected your exact vehicle. Pre-approval also helps you decide what your car budget truly is before seeking financing.

Check Your Credit

If there are any issues with your credit check, your loan application can be not only delayed but entirely denied. As such, you should be prepared going into the application process for any potential delays. Start with a personal credit check. Any red flags on your score should be addressed, such as late payments on prior loans. Preparing a written explanation of the circumstances to enclose with your car loan application can speed up the processing of your loan.

Provide a Large Down Payment

Lenders like to see cash on hand for the funding of a loan; this is particularly true with direct from dealer financing. If you walk into a dealership with over 20% down payment to purchase a car and finance the vehicle directly, you will see a greater responsiveness from the lender and a faster application process. As an additional benefit, you lower the limits on your auto loan, which will decrease the cost of financing over time. 

Use Your Existing Bank

If you are using a bank or lender other than the dealership in order to gain financing, use one familiar to you. If you use your existing bank, it is easier for the bank to verify your income or average account balance. Further, the bank will be able to directly deposit the auto loan into your account without delays. Using an outside lender can make it harder for the application to be approved quickly; this can also delay the time it takes for the money to transfer hands from the lender to you to the car dealer.

Prepare Income Statements

You will need to show proof of income when you apply for a car loan. This cannot be a simple "stated income," which means you just tell the lender how much you earn. Instead, you actually need proof. The most common sources of proof are paychecks, checking account balances or tax schedules. Providing a tax schedule is the best method because it shows how much you earned in a given year and not just in a given week or month. This is particularly important for self-employed persons or those with inconsistent income over time. Do not let the lender doubt you; show up with proof in hand.

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