Financing your car shouldn’t be left to chance at the auto dealer, or you may end up with a higher-than-expected monthly payment! For competitive rates, convenient online features and stellar service, your community bank has everything you need to finance your next vehicle. Seeking a loan from a bank ahead of time puts you in the driver’s seat when buying a car. You'll walk into the dealership with an offer in hand, changing the conversation from monthly payment to purchase price.
To plan your big purchase, use our simple guide to getting an auto loan independently.
Check your credit report
Before applying for a loan, knowing where your credit score stands is critical. It can give you a solid idea of where you stand in the eyes of a creditor. And you can identify and fix any errors before a lender sees them. What’s considered a good credit score for an auto loan? Anything between 660 and 850 should give you access to the most attractive rates.
Tip: Pause your credit activity
Until you finalize your auto loan, refrain from any new credit activity. Don't apply for a new line of credit or charge a big purchase on a credit card. Otherwise, these activities could push your credit score into a higher tier interest rate. Meanwhile, continue making on-time payments with existing loans.
Compare quotes with lenders
Choosing a car loan shouldn’t be driven entirely by the lowest interest rate. Take time to know the lender’s other offerings to help you succeed. Are they willing to work with customized options? How easily can you reach a live human when you’re having a payment issue that automated features can’t resolve? Working with a community bank versus an online lender can provide an optimal lending experience with competitive pricing.
Once you identify a lender you want to work with, getting preapproval before you head to the car dealership is an advantage over chancing it at the dealership. You’ll know your monthly payment ahead of time. You’ll have less temptation to go over budget with upgrades and extra warranties you don’t really need. Because you’ll essentially be a cash buyer at the dealership, it puts you in a stronger position to negotiate.
Tip: Before you get preapproval, make sure the lender’s parameters meet your needs. Is the type of car you want to buy covered by the loan? Do you have to stick to specific dealers? Are individual loans OK? Knowing upfront can spare you wasted time and disappointment.
Pre-approval vs pre-qualifying: Know the difference
The difference between pre-qualifying and pre-approval is significant.
- Pre-qualifying is a soft credit pull during the shopping for lenders stage that provides an estimate of interest rates.
- Pre-approval is a hard credit pull when you’re ready to buy. Once the lender evaluates your credit report, they’ll provide a rate, which will likely stay in place as long as your new vehicle purchase meets their criteria.
If you really want to shop around you can seek pre-approval from several lenders without damaging your credit score, despite it being a hard credit pull. When several like inquiries are close together, they count as one inquiry.
Finalize your budget and find your car
Now that you know your complete loan and your monthly payment, confirm how much car you want to buy — you can certainly spend less than the maximum loan. And finalize the make and model of your car. Remember, preapproved offers have a shelf life of 30 days or so.
Once you select your car and are ready to drive it off the lot, all you have to do is follow the lender’s instructions to finalize funding and the dealer will handle the rest. If it’s a private sale, you’ll likely get a cashier’s check from the lender, and sign the rest of the paperwork.
Get preapproval for your auto loan at Minnwest Bank
Before you hit the dealership, get preapproval for an auto loan at Minnwest Bank.
- Get extra bargaining power at the dealership.
- Access competitive rates for new and used automobiles.
- Get customized terms to meet your needs, ensuring your monthly payments fit your budget.
Our lenders bring personalized, friendly service, and are happy to share their expertise to help you make the best choice for your budget. Contact one of the helpful lenders at Minnwest Bank to get preapproval today!