Process of getting a car loan from a bank?

[originalnutta]

I've only financed, and paid in full for all my prior vehicles. So i'm not sure how to go about this.

I bank mainly with TD, so i think they would be my best bet for getting a loan.

I'm considering buying a car from a dealer car auction, but the entire cost of the car needs to be paid up front. I would need approx. $5-6k toward the purchase of the car.


What type of loan do i have to ask for?
Aside from a credit check and salary, what else will the lender be looking for (ie, car make, year, insurance) ?
And i'm assuming that banks will charge an interest rate of prime +2.

[booblehead]

IMO, you may be better off if you are using Line of Credit loan, instead of the typical car loan (which charges much higher rate). If you have a secured line, then I believe is Prime + 1 (or less) ... if you have an unsecured line, then I believe is Prime + 2.5. I would negotiate with the bank for either ones as they are NOT written in 'stone', pending on how much business you have with them.

I've only financed, and paid in full for all my prior vehicles. So i'm not sure how to go about this.

I bank mainly with TD, so i think they would be my best bet for getting a loan.

I'm considering buying a car from a dealer car auction, but the entire cost of the car needs to be paid up front. I would need approx. $5-6k toward the purchase of the car.


What type of loan do i have to ask for?
Aside from a credit check and salary, what else will the lender be looking for (ie, car make, year, insurance) ?
And i'm assuming that banks will charge an interest rate of prime +2.

[magnodrome]

Totally agree with the "booblehead" - Line of credit is the way to go, my friend did the same and got $15000 line of credit towards her recent purchase from the auction.

[a89aries]

Go into the bank first to see how much you can get, from there you have your budget for a new car! This way you don't make the common mistake of finding the perfect car only to find out your $5k short!

[originalnutta]

Go into the bank first to see how much you can get, from there you have your budget for a new car! This way you don't make the common mistake of finding the perfect car only to find out your $5k short!

Makes sense. Especially at an auction, i can't really predict exactly how much i will need to spend.

Thanks guys. I appreciate the advice.

[a89aries]

Just because they will give you $5000 doesn't mean you should go spend $4999 on a car either, you might want some spare cash to get some winter tires in a few months, or put a CD player in. All depends on your plans.

[originalnutta]

Just because they will give you $5000 doesn't mean you should go spend $4999 on a car either, you might want some spare cash to get some winter tires in a few months, or put a CD player in. All depends on your plans.

Yeah and with used cars, i can see something going wrong. Maybe worn out tires or electrical issues.



Another question, the LOC is a substantial savings over the finance rate at most dealerships for a new car? Most 36 month plans are at 3.9% or so.

My plan right now is to get a small econo car for now, but eventually buying a brand new Mazda at the end of 2010.

With a LOC, i want to be able to pay it back as soon as possible to avoid paying a few grand more than the initial price of the car. I think with a dealership's finance rate, i'm locked in for those months with the respective payments.

[a89aries]

Thats the beauty of a LOC, you can pay it off or borrow as much or as little as you want (aside from the min. payment obviously). Also if you handle the LOC properly it should be easier to finance the new Mazda. You could even just up the limit on your LOC and go into the dealership to purchase the new vehicle for cash. I feel this gives you a better negotiating stance as well.

[originalnutta]

Thats the beauty of a LOC, you can pay it off or borrow as much or as little as you want (aside from the min. payment obviously). Also if you handle the LOC properly it should be easier to finance the new Mazda. You could even just up the limit on your LOC and go into the dealership to purchase the new vehicle for cash. I feel this gives you a better negotiating stance as well.

That's exactly what i'm looking for.

Thank you again, a89aries.

[Gofishus]

What's the point of an auto loan if the LOC is much lower interest?