Buying a vehicle is a pretty big deal, and it’s definitely not something you should take lightly. While it might seem fun to go buy a new car or truck on a whim, it could end up costing you in the long run.
When you determine if you can afford a new car, you should go in armed with the knowledge of what to expect when you apply for an auto loan with Pelican.
Pelican’s lending team answers some of our most frequently asked questions on the lending and approval process.
If I’m interested in buying a car, at what time should I reach out to my financial institution about financing?
My recommendation would be to reach out to your financial institution before you look at vehicles to get pre-approved.
Our pre-approval is good for 45 days, and this will allow you to look for something that is within your approval range and save you time at the dealer. It also lets the dealer know that you are serious about buying a vehicle and already have a lender that is going to take care of you.
If I find a car I like on the lot and want to buy it that day, how long will it take for me to get a loan from y’all?
If you already have a pre-approval, the process will be much quicker than if you weren’t pre-approved. The turnaround time for loans is usually around 24 to 48 business hours, although there are a few situations that may take a little longer. For example, if you are purchasing from a dealership out-of-state versus purchasing from an individual out-of-state, it may take a bit longer to research, which will extend your wait time for approval.
This also depends on how fast you gather and fax in the requested documents. Whether you have a pre-approval or not, you will have to go through the same process of sending in documents, so be sure to send them as soon as you can to help speed up the process!
What type of information and documentation will you need from me for the auto loan?
To apply for an auto loan, you’ll need your time of residence (date and amount of rent/house payment), driver’s license information, employment information and 3 references.
If approved, you will need to provide a copy of your driver’s license, proof of income, proof of insurance and a copy of the title at times depending on the type of loan you’re getting. Depending on analyst approval requirements, other documentation may be required.
How do I know what kind of car I can afford?
Don’t forget—it’s also important that you talk to your insurance company to find out what the cost will be depending on the type of vehicle you’re looking to get.
What’s the approval process like? How many people weigh in on the decision?
What usually happens is a Loan Officer or Member Service Representative submits your application to our analysts. One analyst will generally look at the application and make the decision based off of a variety of factors.
On occasion, multiple loan analysts may review a loan. At Pelican, we know our members are more than just a credit score. We have what’s called “second review” where we look at the member’s story and analyze loan applications a second time around in case there’s something we can do to help.
How long does the process take? How can I speed it up?
The conditional approval can be as quick as 20-30 minutes. However, if income documents are required, the process could take longer depending on how long it takes to get those documents in.
My recommendation would be to bring your most recent check stub with you or call and fax it in to the Loan Officer or Member Service Representative in the branch. If you are self-employed, you’ll need to provide the last 2 years’ tax statements.
Do you recommend that I get insurance? Is that something you can help me with? Do I have to have that prepared before the loan closes?
While we don’t handle this for you, we can definitely lead you in the right direction to get insurance set up.
Full coverage insurance is required on any auto loan that we finance. This also protects you in case of an accident.
What’s Loan-to-Value (LTV)? How do I know if I’m meeting your requirements for it when looking for a car?
Loan-to-Value, or LTV, is the percentage of the value of a vehicle versus the amount of the loan.
The requirements differ depending on your credit score.
For example, let’s say a car is valued at $20,000, but the actual loan is $24,000. This means that the Loan-to-Value would be 125%. When the LTV is under 100%, you generally have some available equity in the vehicle.
What if my dealership is not in the same city as a branch of my financial institution?
That’s not a problem at all!
Members can purchase a vehicle in or outside the city limits, including out-of-state from a dealership or an individual sale. Dealerships can fax and/or email documents if they are not in the same city.
What if I’m buying the car from an individual and not a dealership or a lot, is the process different? What do I need to know if so?
It may take a little longer for an individual sale because you will have to obtain documentation from both the buyer and the seller.
If the seller is out-of-state, they will need to come to closing or we may have to mail/overnight documents for the seller to sign, notarize and mail back to us.
What are my payment options? Do I have to pay on a certain day each month? How can I pay my loan?
There are a several payment options available to members. You can set your loan up on auto transfer, pay with cash or by payroll deduction.
Your payment will be set up on a certain date, but if you need to change your payment date you can do that after making the first payment.
You can pay by mail, branch or CO-OP Shared Branch. For a small service charge you can also pay by phone or online.
Is there a penalty for paying off the auto loan early?
There is no pre-payment penalty for paying off auto loan early at Pelican.
Do you offer any special offers for people who finance with you?
We sure do!
Pelican offers a few discounts for doing specific things such as setting up an auto transfer to your loan, having a down payment of at least 10% and taking advantage of payment protection.
Have a question we didn’t answer yet? Let us know in the comments below, and we’ll answer it for you!
Once a Pelican State CU member, always a member—through life’s milestones, we’ll always be there to help you with your financial needs. Your Financial Family for Life. Give us a call at 800-351-4877.