Introduction

Looking for a new vehicle is exciting! Deciding what make and model best suits your needs can be a fun experience. But be careful as you shop, you may fall in love with your dream vehicle only to find out that you can't afford to make the payments. As you prepare to purchase your new vehicle, you may have questions on how you go about the process. 1st Source Bank is prepared to help you each step of the way.

Getting preapproved

Your ability to make the monthly payments will drive just how much car you can afford. Keep in mind that your monthly payment could include principle, interest, and payment protection insurance. Don't over extend so there's little left over to enjoy other things in life! 1st Source can preapprove your auto loan to let you know what price range will fit your budget. If you're just starting the auto buying process and haven't found your dream car yet, being preapproved can put you in the driver's seat with the seller. Knowing exactly how much you can spend gives you a good negotiating tool. If you are preapproved, you are prepared to give them your bottom line purchase price!

Getting preapproved at 1st Source is simple. Just complete the easy to use preapproval form and a lender will respond to your request usually within two business hours! The nice thing about getting preapproved is the interest rate quoted by the lender is good for 30 days. If the interest rates rise, you'll be locked in at a lower rate. However, if interest rates fall during this time frame, you will receive the lower rate.

Before You Apply

Prior to starting your application, you will need to gather information which will help you complete the loan application. Having all of this information together will speed up the process.

Employment & Income Data

• Pay stub showing current year-to-date earnings (two most recent stubs)
• Your job history and any explanation of a job change within the past two years
• If self employed (defined as owning 25% of a business or more), you need business and personal federal tax returns (two years, including schedules), a current year-to-date profit or loss statement and a K-1 on all partnerships

Information on Your Liabilities

• Credit Cards - include account numbers, monthly payments and balances
• Auto loans and leases - account numbers, monthly payments and value of car
• Student and personal loans - include account numbers, monthly payments and balances.
• Explanation letter of any derogatory credit (bankruptcy, collection, foreclosure or default) in the past seven years.
• Landlord address(es) for past two years and rental amounts.

Auto Information

• Auto insurance information
• Purchase price of auto
• Description of auto (make, model, mileage, etc.)
  

What a Lender Looks For

When a lender at the bank receives your application, they look for a variety of information which can show them how reliable you will be in repaying your loan. There are many factors taken into consideration. The following list will help them review your application:

A lender is looking for:

• Length of employment
• Gaps in employment if you've had several jobs over the past few years
• A credit report showing all bills have been paid on time
• A credit score
  • All bills paid on time
  • Amount available for borrowing on open lines of credit (credit cards, Home Equity Lines of Credit)
  • Number of credit inquiries recently made
• Amount of current debt - Long term and credit card

If the lender has a question about any of these items, they will contact you directly for clarification. Be prepared to answer questions about these topics.

Finding the Right Vehicle

Once you've determined how much you can afford, you will want to start looking at vehicles. There are many places to search for a new automobile.

• Visit a new car dealer to find off-lease or low mileage used cars
  
• Look in your local newspaper. Many newspapers post classified ads in print and on their website.
  
• Find a "For Sale by Owner" vehicle
  
• Visit a used car dealer to find a vehicle in your price range

Before you enter into negotiations with the seller, make sure you know what you can afford to pay, not what the seller says you can afford. The seller wants to persuade you to buy as much car or truck as you can possibly manage to finance. That's good for them, but probably not all that good for you. Getting preapproved for your loan through 1st Source will help you determine what you can spend.

Check out the great values on 1st Source's Off-lease vehicles, which are featured on our web site.

How Much Can You Afford?

To help you determine how much money you will be able to borrow, 1st Source Bank provides several calculators to make the task quick and easy. Just choose one or more of the options listed below and click. You'll be connected with a calculator that will aid you in establishing how much you can afford to borrow.

• What will my payments be for a fixed rate loan?
  
• What will I save if I make extra payments?
  
• How much car can I afford?

Remember that the amount of money you are able to borrow and the amount you can comfortably afford may be two very different figures. Making sacrifices to purchase a vehicle is well worth the effort, however discovering that you've become "car poor" because you can afford nothing else is a situation you may soon come to regret. Only you know the kind of lifestyle you want to maintain and how much that will change when you purchase the vehicle. For a more in-depth look at how much you should spend, visit the "How Much Can I Afford" section.

Closing the Loan

If you have been preapproved for your loan, picking up your check is a simple process. You need only tell the lender what 1st Source banking center is closest to you. You will make an appointment with the banking center to sign the final loan documents and pick up the check made payable to you and the seller. You will be on your way in a matter of minutes!