There are many different approaches to getting a car loan. Some of them are more complicated than others and far more complicated than they need to be. That is why some auto dealers offer "quick-qualify financing" in-house. Here is more about how that works and how it helps you get a new car right now.
Paycheck Stubs and Employment History
Usually all you need for this type of financing are paycheck stubs from the last three months and a steady employment history. Bad credit can occur for any number of reasons, including a divorce, which puts hardworking people at a disadvantage when they need to buy a car. Employment history and steady paychecks often say more about a person than a credit score, which is why many dealerships are attempting to help buyers finance a vehicle this way.
People Who Will Vouch for You and Help Track You Down
Some dealerships will also request a list of at least ten people, friends or relatives, who know you and are willing to vouch for your ability to repay a car loan. These references act like job references, providing the dealerships with a clear picture of you, the borrower. They can also help the dealership track you down in the event that you miss a payment, so be sure to make timely payments!
Calculating Your Debt-to-Income Ratio
Another piece of the quick-qualify financing process is calculating your debt-to-income ratio. The dealership wants to know how much car you can buy with the income you get. There is actually a formula most of the dealers use to figure out whether you can carry a car loan and not be burdened with your debt. (Usually, the amount you can handle is about five to ten percent of your monthly income.) If you can manage it, a maximum number for the car loan the dealer can give you is generated, and then you can shop anything on the lot that is at or below that number.
Sign and Drive
Once you get your loan number generated and select a car, it is just a matter of signing all the paperwork and driving off the lot. There are no car-delivery fees, no bank fees, and no waiting times. The entire process takes about an hour, maybe a little longer depending on how long it takes you to find a car you want. If you are doing a trade-in with your old vehicle, that takes a little extra time and paperwork, but it does boost the amount the dealership may lend you.