How to Get an Auto Loan

By Jennifer Tucker
April 13, 2023 | 4 Min. Read

You’ve already done a lot of work to get behind the wheel of a new vehicle. You’ve researched cars, set your budget, and saved for a down payment. Now it’s time to apply for an auto loan, and you might feel overwhelmed.

The path to ownership doesn’t have to be hard. Here, we’re breaking down five simple steps to get an auto loan.

Before you apply for an auto loan, it’s important to check your credit. Lenders rely on your credit score to approve you for a loan and determine your interest rate.

A low score could make it difficult to get approved for a loan or find a favorable rate, but that doesn’t mean you’re out of options. If you have damaged credit, consider working with a lender willing to help low-credit borrowers. You can also apply for a loan with a co-signer.

When you’re ready to apply for a car loan, you’ll want to be sure you’re getting the best loan terms. As you research options, consider looking at:

  • National banks
  • Local community banks
  • Credit unions
  • Online lenders that provide auto loans
  • Dealership financing

Compare car loans from a few different lenders, including the bank or credit union where you currently have an account. You may get a preferred rate here, especially if you have an active checking account.  

Once you’ve determined where you’re likely to get the best loan terms, you’re ready to get pre-approved (which will give you greater buying power at the dealership!).

But before you approach your lender, it’s important to understand the difference between pre-QUALIFICATION and pre-APPROVAL.

Prequalification estimates the interest rate and the loan amount you can expect to qualify for based on providing the lender with limited information about your credit history. This will result in a “soft” credit pull, so it won’t hurt your credit score. However, your quoted rate could change after a full credit check.

Pre-approval gives you a firmer estimate than pre-qualification. When you get pre-approved, you provide the lender with more information about your credit history, and it results in a “hard” credit pull. This can temporarily impact your credit score, but the rate you’re quoted will better reflect the final rate you can expect to receive.  

Once you’re pre-approved, you’ll also know the loan amount you’ve qualified for. This will help you decide how much car you can afford to buy.

You may have already looked at your budget to figure out how much you can put toward a car down payment. Now you want to determine your monthly auto loan payments and the total cost of a loan. A simple car loan calculator can help. Marine Credit Union offers a variety of free budgeting and planning tools to help you on your lending journey, including a Car Loan Calculator and a Car Payment Calculator.

After you’ve found the car you want to buy and negotiated a price that works for you, you’re ready to seal the deal on your loan.

If you’re buying your car from a dealership, you’ll follow your lender’s instructions to finalize the funding of your loan. This may involve someone from the dealership contacting the lender to initiate funding.

If you’re buying a car from a private seller, you’ll pay with cash or a cashier’s check. In this case, you’ll go back to your lender to finalize your application, sign the paperwork, and receive the funds.

Applying for an auto loan is similar to applying for other types of loans. Once you’ve picked the right lender and are ready to apply, the next step is understanding the loan qualifications and requirements and gathering the necessary paperwork to submit your application.

Each lender and loan type has its own requirements, but when you apply for an auto loan, you’ll typically complete an application with information about your financial situation, including:

  • Your Social Security Number,
  • Your current and past addresses,
  • Your current and past employment information,
  • Your total income and income sources, and
  • Any debt you may have.

With this information, the lender will pre-approve you for the loan. Then you’ll be ready to hit the dealership and negotiate your way into a new ride!

Different goals call for different types of loans. When you’re looking for a car loan, we’ll find the right solution to meet your unique needs.

We don’t think anything should stand in the way of your dreams of ownership. If you’re ready to purchase a car, we’re ready to discover a way to make it possible.

Some lenders have rigid lending guidelines and qualifications that are tough to meet. If you’ve been told “no,” we can help you find the path to “yes.”

All loans subject to Marine’s approval process. Membership eligibility required. Federally insured by NCUA. Equal Housing Lender.