Pitfalls of a Blank Check Auto Loan

If you want to get a blank check auto loan before you buy a vehicle, there can be some restrictions and limitations about this type of financing that you will need to understand before agreeing to the loan. The lending institution’s guidelines for this particular loan will have an impact on the vehicle you purchase. You many not be able to buy one that is more than a certain number of years old, or under a specific dollar amount. Make sure to fully grasp all of the requirements for this type of financing, before you purchase your new vehicle.

Blank Check Auto Loan Defined

A blank check auto loan is what a lending institution offers for the purchase of a vehicle, before the exact model of the vehicle has been determined. You will apply for an auto loan before you buy a vehicle, and the lender will determine your creditworthiness. Once your application is approved, the lender will inform you how much they will loan you for your vehicle purchase. This amount will determine the maximum price of the vehicle you can buy, unless you have money to use for a down payment.

Vehicle Restrictions

There can be multiple restrictions involved in using a blank check auto loan for your vehicle financing, depending on the lending source. Some lenders require that the vehicle you buy be under a certain number of years old. For example, a car that was built twenty years ago may not be eligible for blank check financing. There may also be a mileage restriction. Some lenders will not issue a blank check for vehicles that have been driven for more than 50,000 miles.

You may not be able to buy a vehicle from a privately owned used car lot, or from an individual seller. The dealer may have to be a franchise owner of a major manufacturer. The model may also have to be selected from a certain list of cars that the franchise dealer has to offer.

Make sure you know what restrictions apply, so you do not choose a vehicle that the lender will not finance.

Loan Limitations

The amount of your blank check auto loan may have a minimum and maximum limitation. For example, you may have to buy a car that is worth at least $5,000, but less than $40,000. The vehicle’s worth will be determined by whatever valuation source the lender uses per their loan guidelines.

The term of your blank check loan may also be limited to the type of vehicle you select. This will have an effect on the amount of your monthly payment. Be sure that the payment falls within your monthly budget, before you choose your vehicle.

Ask your lender what the limitations are before you agree to use their blank check auto loan for your financing. This will save you some time as you being to look for a vehicle to buy, and help you find the car that is right for you.

 


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