Buying a new automobile offers the excitement of getting luxury features and a more reliable vehicle. Car buyers review the automobiles carefully and examine any flaws that affect how well the vehicle performs. When buyers have found the perfect car, the consumers turn to lenders for financing.
Submitting An Application
Auto buyers start the process by submitting an application to a lender. The application requires confidential information including the applicant’s employer, monthly income, and contact information. All applicants are required to submit to a credit assessment. All forms must be submitted before the lender can provide a loan offer to the applicant.
Evaluating the Customer’s Income to Debt Ratio
Evaluating the customer’s income to debt ratio shows the lender what the prospective borrower can afford each month. The lender adds up all the consumer’s monthly obligations and subtracts it from the borrower’s monthly income. If the borrower can afford the new loan payment, the borrower establishes affordability and creates a plan for the borrower.
Presenting a Loan Offer
After the lender arrives at the highest loan amount available, a loan offer is created and sent to the applicant. The borrower is under no obligation to accept the loan offer. However, if the borrower accepts the loan offer, the lender explains the structure of the loan contract and the monthly payment amounts. The borrower must sign a contract before the loan amount is sent to the applicant’s bank account.
Additional Requirements for Auto Financing
Any borrower who accepts auto financing must fulfill all obligations of the loan contract. This includes paying the payments each month on time. All borrowers are required to purchase and maintain comprehensive and collision auto insurance throughout the duration of the contract. Any failure to fulfill all obligations could lead to the repossession of the automobile.
Buying a new car gives consumers a thrill and might help them get an upgrade. When examining options, consumers review possible financing for the purchase. Consulting an auto lender helps borrowers find a better loan to meet their needs and stay within an affordable range. Consumers who want to learn more about auto loans contact Consumer Portfolio Services now.