Got car loan questions? We've got answers

At Crippen Volvo in Lansing, MI, we know applying for a car loan can be intimidating. You might wonder, what's all the paperwork? If you just apply, will that hurt your credit score? Can you get a car loan even with bad credit? Our customers have lots of questions, and that's why we have financing specialists who can explain all your options in plain English. Here are some answers we hope will be helpful.

What does it mean to pre-qualify?

Prequalification simply means the people considering you for a loan have done a basic review of your creditworthiness to see if you're likely to get approved after reviewing your credit history. Creditors might use basic information like your annual income, monthly rent or mortgage payment, or checking and savings account. Pre-qualification isn't a guaranteed approval, but it's a good way to help confirm you're qualified for credit.

Why won't it affect my credit score?

Different lenders may handle the pre-qualification process differently. Most lenders will do what's called a soft inquiry from one or more credit reporting agencies to make a basic determination. Because a soft credit inquiry simply allows access to your data, it doesn't affect your credit score in any way, and it's not visible to other lenders around East Lansing or Dewitt, MI, or anywhere else for that matter.

If I apply for a loan, doesn't that hurt my credit?

Credit inquiries can stay on your credit file for two years, but the impact is minimal and goes down even further during the two years. If you're rate shopping for an auto loan, credit scoring models will classify multiple hard inquiries as one inquiry, as long as they're completed in a timely way, usually about 14 days. So there's very little impact on your credit.

What paperwork will I need to get a loan?

Typically, lenders will ask for proof of identity, proof of income, basic checking and savings data, proof of residence, and proof of insurance. If there's a trade involved, you'll need to provide the vehicle registration and title. Lenders usually disclose the paperwork needed at the time you apply. But in rare circumtances, a lender might request other information based on your request and your credit situation.

What is a co-applicant and why might I need one?

A co-applicant is someone who will guarantee repayment of the loan. Typically, it's a spouse or a parent, but a co-applicant can be anyone who has a personal interest in getting the loan approved. For example, a father or mother, a brother or a sister or even a spouse can be a co-applicant. Co-applicants are also involved when the primary applicant can't be approved on his or her own.

Can I get a car loan even if I have bad credit?

Yes, but there are usually conditions that lenders require to make sure the loan gets re-paid. For example, a lender might ask for a co-signer or a larger-than-usual down payment. If you know your credit is an issue, it's a good idea to offer a larger down payment. Lenders look more positively on people with bad credit who are willing to invest more cash up front. In addition, the annual percentage rate may be higher than usual with a bad credit loan.

Can I get a car loan after bankruptcy?

Yes, as long as the bankruptcy has been settled or the debtor has been released from the debt. Lenders are willing to give applicants a second chance, but car buyers in any community like Mason or Charlotte, MI do have to meet the lender's conditions for approval.

Can I put zero down?

In some instances, zero down payment can be allowed. Special financing offers can include zero down options, but payments might be higher than usual and building equity in the vehicle will take longer.

Can a college student get a car loan without a job?

It's definitely possible. Depending on the circumstances, a college student might be able to get a loan without a job, but in almost all situations, a co-signer is required, in addition to a good credit score.

More questions? Talk to us at Crippen Volvo

Our finance specialists have creative ways to help you get a car loan, even if your credit isn't solid gold. We can also explain other options like leasing. Allow us to help you get the new Volvo you're dreaming of with helpful financial choices available at Crippen Volvo in Lansing, MI.