Bank Auto Loans

Among the myriad of consumer loan products that banks offer is a car loan. Depending on your bank, it can be called auto loan, vehicle loan or car loan. Almost any will be willing to extend to you a car loan for as long as you are credit worthy and have some proof of a regular income. Some banks however, have stringent regulations for anyone applying to get a car loan. These regulations are aimed at reducing bank risk as well as protecting the consumer.

The approval process for an auto loan is quick and easy if you have an established relationship with the bank. If you are a new customer, it might take longer than two business days. Do not feel restricted to approach other banks for a car loan other than your current bank. 'Shop' around for the best auto loan product. 

Pre-qualification conditions for an auto loan 

• Good credit score

Your credit score is very critical if you are to access any bank loan products. It is the main pre-qualification condition. Your credit score can only be verified if a credit report is run! Note that unnecessary querying for this report affects your point score of your credit rating status.  Fortunately, there are other ways you can know if you have any outstanding loan obligation without affecting your credit rating. Most banks have this option is available for free for you to use. Make use of it!

•   Outstanding loan obligation

If you have any outstanding loan obligation, it will be considered during the approval process. The bank looks at your historical repayment data to determine if you can handle a larger loan obligation. Early repayments as well as timely regular repayments on the existing loan is a plus. If you have a history of default, it's very likely your application will be declined! Nevertheless, it's better to try!

On the other hand, if your outstanding loan obligation is quite big, the bank will decide how much of the requested amount it's willing to release to you or decline your loan application.

• Evidence employment

If you have a job, you will have to give a copy of your employment contract to the bank as evidence and proof that you can ably repay the car loan. Some banks might in addition ask for a bank statement of your salary processing account. Although most banks give unsecured car loans, it might be limited to a preset figure. However, you are required to provide an endorsed guarantor agreement for the entire term of loan from your employer. If the sum of the car loan requested, exceeds the bank's preset maximum amount, it may request some form of collateral in addition to the guarantor's agreement.

•  Minimum account activity period

This is not a universal requirement. If you are a new customer seeking a car loan or a loan of any kind. The bank might require you to open up an account with them and transact with it for a limited period before you can be approved for your car loan. This is done for customers who do not have any historical credit information.

• Evidence of income and assets

If you are not employed, the bank might ask for evidence of your source of income and tittles of your assets. If you run a business be ready to provide audited books of accounts. These may not necessarily be used as collateral but a basis for determining your income to debt ratio (DTI) or credit worthiness! In turn the DTI information is used to determine the amount of car loan you qualify for.