Finally, before you select your new vehicle, you should get pre-approved for a loan. With a pre-approval you'll know what cars are in your price range and which ones aren't.
If you are considering other banks for pre-approval, be sure to compare the fees you will be charged for your loan. Another bank might offer you a low interest rate, but have a high loan processing fee. When comparing banks, be sure to also consider any prepayment penalties you would be charged for paying off your loan early.
Getting pre-approved at 1st Source is simple. Just complete the easy to use pre-approval form and a lender will respond to your request usually within two business hours! The nice thing about getting pre-approved 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.
Gather your Data
Prior to getting pre-approved, 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 (if you’ve already selected your new car)
Auto insurance information
Purchase price of auto
Description of auto (make, model, mileage, etc.)
Increase Your Borrowing Power
If you are disappointed with the amount of money you're been approved to borrow, it's possible that you'll have to come to terms with buying a less expensive car. Before you do though, consider some options that can increase your borrowing power.
- Reduce your existing debt by paying off current loans
- Wait to apply for a vehicle loan until your household income increases
- Search for financing options that require a lower down payment and smaller monthly payments
- Put together a larger down payment to reduce the amount you need to borrow
- Keep your eye on the market and wait for interest rates to drop