General Auto Loan Information

Blank Check Auto Loans: Advantages, Disadvantages and Tips On How To Obtain Them


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Blank check auto loans grant car shoppers more time in finding the right vehicle and the right loan agreement. In these kinds of deals, the individual goes to the lender first before looking at any vehicles. They get pre-approved for a specific amount of money, then go to dealerships and look for the optimal vehicle according to their pre-approval amount.

After finding the right vehicle, the customer can often make a good deal knowing that they are able to get the loan amount necessary to make a specific purchase.

One reason many customers a love blank check auto loan is because with a pre-approval amount in hand, they can talk to dealer representatives about price without worrying about financing.

Though not all blank check auto loan lenders are credible institutions within the greater lending market, some impressive lenders are adding themselves to the list of those who offer blank check auto loans, as well as other bank or credit union car loan offer types. For instance, lending giant Capital One offers their own blank check auto loan program for customers.

A blank check auto loan pre-approval situation can be a great way to find out what your price range really is, rather than relying on a dealer representative to talk to you about your monthly payments. Buying a vehicle based on monthly payments is often a bad idea, according to auto finance experts.

All too often, dealers take advantage of a customer's financing needs with expensive dealer markups in the interest rate, claims of bad credit (that may be false), or specific bait and switch tactics on price itemization for a package that includes financing, warranty and other extras.

Lenders offering blank check auto loans are in the class of lenders who are likely to demand higher interest rates from those with less than stellar credit or customers who may not have qualifying income. Blank check auto loans are a better deal for customers who can go through a conventional loan process without being subjected to sky-high interest rates because of credit problems or other financial difficulties.

What some customers don't like about car shopping with blank check auto loans is that, after doing all the paperwork to be pre-approved, the potential car buyer has to go back to the lender after finding their vehicle and go through more paperwork. If you're the type who doesn't like paperwork, this kind of arrangement may not be right for you. Be aware that any good auto financing deal must include some research to help the consumer avoid being negatively impacted by any dealership sleight-of-hand.

Now you are ready to go out in the field and do some shopping. Before you embark on your quest, be sure to prepare yourself with these additional tips.

Know you credit score and history

It’s not unusual for someone to be sitting in a lender’s office and have the lender ask them to explain something on their credit report. You need to know everything that is there. There are rare occasions where accounts that should be listed as closed, aren’t. You will also run into the occasional instance where a creditor is listing you as delinquent, when you really aren’t. Eliminate any and all surprises.

Check around and Know the Approximate Values for the Cars You Want to Look At

If you know how much you’ll need for the car of your dreams, it’ll make negotiating for your auto financing much easier. Remember that if you have financing in hand when you step onto the car lot, it’ll make it that much easier for you to get the price you want to pay. This is because the dealer doesn’t have to take time checking with banks to find you the best deal on a loan.


Shop around for the Best Loan Package for You

Some things you need to take into consideration are what the interest rate will be, what the length or term of the loan will be and what your monthly payments will be. Also find out if there is a programmed “balloon payment” at the end of the loan. This is a type of payment that is more than your normal monthly payment. This may or may not work for you, so it’s wise to find out if you’ll have to deal with it when the time comes.

Shop around for the Best Rate

If you’ve got great or even good credit, you may have received fliers in the mail offering you pre-approved loans. Make sure you don’t over-extend yourself. If you can easily afford $400 a month, but are looking at loans with payments of $500 and more, you may be approved, but you may get hit with a higher rate because the lender may feel you might have problems later on. If you can, offer a larger down payment. This reduces the risk to the bank and your payoff is a lower rate. Make sure you make note of this intention in the “comments” or “remarks” section of the application. Unless you are applying online, inform the person you are applying with, also.

Knowing how much money you can spend and what your payments are before you set foot on a dealership lot can be a very rewarding feeling. It gives you freedom to actually enjoy the car buying process, instead of worrying about whether you can afford the car or not and what sort of loan terms you’re going to get for the car you want.

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