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Auto Loans - Documents And Other Information You Need To Submit When Applying For An Auto Loan



Auto Loans - Documents And Other Information You Need To Submit When Applying For An Auto Loan


Auto loans



Auto loans refer to loans you can acquire to get an automotive. 


Auto Loans - Documents And Other Information You Need To Submit When Applying For An Auto Loan

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To know if you qualify for an auto loan, lending institutions usually require that you furnish the following documents before applying:



  • Proof of income which can be verified

  • Proof of residence which can be verified

  • Good credit history

  • Valid driver’s license

  • Valid title to the automobile in cases of a trade in

  • Personal references

  • STIPS or additional items such as tax returns, phone bills, bank statements and  others



For first-time car buyers, there are lenders who allow first-time auto loan applicants.  Interest rates for auto loans usually depend on your credit history, whether it is a new or used car and the length of the auto loans. 



The length of time for auto loans is usually within 36, 48, 60 or 72 months.  For shorter auto loans,  interest rates are cheaper.  But they do require larger monthly payments than the long-term loans.



Auto Loans - Documents And Other Information You Need To Submit When Applying For An Auto Loan

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Auto loans are classified as simple interest loans.  For simple interest auto loans, interest is computed based on the original principal and not on the interest accrued.  Simple interest loans are oftentimes applicable in cases where the loan terms are higher than $25,000 and the term is more than 60 months. 



Auto loans can either be directly financed or indirectly financed. Direct financing happens when you obtain auto loans directly from the bank or any other lending institution. Indirect financing is obtaining a loan from the dealership. Oftentimes, dealerships have a mark-up on their interest rate.



In some auto loans, prepayment fees refer to charges from the lender for paying off your loan balance early.  Not all lenders and dealerships will charge them and they are not commonly found in auto loans. 


The full amount of the auto loan is  generally used for the vehicle.  Auto lenders will usually not give more than the value of the car nor will they allow auto loans to be used for other purposes.  


To determine the value of interest rates for the auto loan, there are several factors to be considered. These include but are not limited to:


Credit history, down payment made, credit risk and general banking factors such as the amount of interest the bank is charged in order to avail you funds for the auto loans.  




Auto Loans - Documents And Other Information You Need To Submit When Applying For An Auto Loan

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Generally, the application process usually takes several minutes but can take longer if more information or additional requirements are needed.


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