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Buying a used car? Auto Loans?

I am looking to buy a used car, but I'm on a relatively tight budget. I don't want high monthly payments, and I'm willing to do a longer lease term. My question is, where do I find out information about car loans? Should I be pre-approved before I even go to the dealership? And if they run a credit check is it a hard hit on your credit? I'm just having a really hard time getting some really good factual answers. What's a good interest rate? Are these online loan places legitimate? How do dealerships calculate how much they're willing to finance? and how much you qualify for?

Public Comments

1. Go with a local credit union it'll be cheaper. I was getting turned down by about 3 or 4 dealerships who deals with banks. so then somebody told me about getting a car loan through a credit union and i was approved right away for $7800
2. Ok. There is a whole lot to cover here, but I will do my best. I am in the car bizz, and I finance vehicles. The best place to start looking for a car loan is your own bank, they have a history with you and will normally offer there own customers competitive rates. However, dealerships have agreements with some banks that will allow for alternative financing, such as longer terms. You can get pre-approved before you go to a dealership, most dealers have an online application that you can fill out and avoid going to the dealer before you know if you can get a loan. Credit bureau inquiries only have a bad affect on your score if they are excessive and all have negative outcomes such as loan denial. Having your credit pulled 3 or 4 times looking for an auto loan is not going to hurt you. The amount to be financed is determined solely by the bank you get a loan with, it will be determined by the year and milage of the vehicle as well as your personal credit score, the older the vehicle is the shorter amount of time you can finance it. The amount you will qualify for is determined by the bank also, they use your credit score and your income to determine a debt to income ratio. Typically you will be approved for 25% of you "free" income to put towards a car loan. 2500 a month in income should allow you up to a 500 pmt, but credit plays a role too. My bets advice to you is to go to a dealer website, that you trust and fill out an online application. You will be contacted shortly there after and if the finace manager is worth a squat he will be able to guide you through a smooth purchase and finance agreement. Good Luck. Feel free to contact me if you have anymore questions.
3. You have lots of good questions. Even if you don't intend to use them, try a number of online loan sources such as eLoan, CapitalOne, and DriverLoans. The application is free and you'll get a number of quotes to compare with the deal that your dealer offers you. Here's an article with some more details: http://www.firstcarguide.com/finance/where-to-get-car-loans.html .
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