Purchasing a vehicle is an important decision that offers security and reliability to individuals and families across the Midwest. At Central Bank, we offer various options for financing and refinancing your automobiles with competitive rates and terms. Our auto loan experts will help you every step of the way to find a plan that fits your transportation and financial needs.
What Is An Auto Loan?
An auto loan is used to purchase a new or used private or commercial vehicle. Auto loans are secured loans in which the vehicle itself is provided as collateral to the lender. The interest rates for auto loans are typically fixed and loan terms range anywhere from two to seven years.
How Do Auto Loans Work?
When you finance the purchase of a vehicle through a lender like Central Bank, you receive a lump sum of money to buy the car then pay back the amount you borrowed through monthly payments, plus interest. Your monthly payment amount depends on the lump sum of money you borrowed, the term of the loan and the amount of interest paid over the course of the loan.
Car loans can be used to purchase new or used vehicles, and they can also be used to buy out a lease or refinance an existing loan. For longer-term auto loans, monthly payments will typically be lower, but you could end up paying more for the loan overall when you add up the interest. Shorter-term loans typically have higher monthly payments, but the amount of interest paid will be less.
How Much Car Can I Afford?
There are many factors to consider when determining how much you can afford when purchasing a vehicle, such as your monthly payment, down payment, any trade-in value, loan term and interest rate. Though everyone’s financial situation is different, a common recommendation is that your monthly car payment should be around 10% to 15% of your monthly income. If you need help simplifying your vehicle budget, we provide a car affordability calculator to help out.
Car Affordability Calculator
Our car affordability calculator helps you determine the most expensive car you can buy based on the highest monthly payment you can afford. Input the highest monthly payment you can comfortably afford, down payment, any trade-in value, loan term and interest rate to determine what car prices to consider as you shop.
How To Get Approved For A Car Loan
- Check your credit score
- Maintain a steady source of income
- Gather documents to show proof of identity and residence
- Consider completing the preapproval process
- Save money with a down payment or trade-in
- Improve your credit score before applying
There are a few different criteria to consider when applying for a car loan. To determine whether you’re qualified for an auto loan, lenders will look at your credit score, income, proof of identity and residence. Consider running a credit check or getting preapproved before applying. If your score isn’t where you want it to be, work on improving your score before applying for an auto loan.
Having a steady source of income and the ability to prove your identity and residence is important to lenders. Be sure to have any documents, such as a W-2 form or pay stub, gathered before applying. If you have additional questions about the approval process for car loans, consider reaching out to a lender at Central Bank.
Interested In Getting A Car Loan? Call Central Bank!
Whether driving to work or across the country, an auto loan provides the freedom to travel anywhere with a reliable mode of transportation. If you’re interested in applying for an auto loan at Central Bank, apply online or visit our locations page to find and speak with a local banker today.
What is an auto loan? Is it affordable?
