Chevy Financing in Pasadena, TX

How Auto Financing Works

You shouldn't find it complicated to understand how auto financing works if you've ever taken out a loan. After all, an auto loan is like a conventional loan but with slight differences. It's a credit option that allows you to purchase a car, with different terms, rates, and qualifying requirements from a regular loan.

You can apply for a car loan from a bank or credit union or get financing through a dealership. The lender will assess your application to determine if you meet the minimum eligibility requirements. Once approved, you'll receive a lump sum amount for the car purchase and repay it in monthly installments. The loan amount, interest rate, and loan term determine how much you'll pay to purchase your vehicle.

Before applying for a loan, check how much cash you have for your vehicle purchase. Knowing how much you can afford will help determine how much you need to borrow. A lower loan amount can reduce your down payment, interest rates, and monthly payments. It can also increase your chances of getting pre-approved.

The loan term also impacts your monthly payments. Most lenders offer loan terms ranging from 36 to 72 months, but some offer up to 84 months. A shorter period has higher monthly payments, but you'll eventually save some money. Extending your loan term lowers your monthly payments, but you'll pay more in the long run, given the interest charges paid over the loan duration.

The effective interest or annual percentage rate (APR) significantly impacts your monthly payments. A lower rate translates to reduced monthly payments, resulting in more monthly savings. However, all your efforts to negotiate for a lower APR may count for nothing if you extend your loan terms. The total interest charges over the loan duration will mean paying more. You can consult a credible lender or financial advisor to find a suitable credit option for your car purchase.

Auto Loan Pre-Approval Requirements

Getting pre-approved essentially means you're eligible for a loan. The lender has evaluated your credit report and determined that you qualify for a loan. Before pre-approval, you must meet various eligibility requirements.

Different lenders and dealerships have varying pre-approval requirements for an auto loan. Here's a list of what you need for pre-approval:

Credit Score

Your credit history significantly impacts your creditworthiness. The report helps the lender to determine your ability to repay your loan without defaulting. The minimum credit score varies with each lender. However, some lenders do not take your credit rating as the only factor for pre-approval. They may consider other compensating factors if you have a low rating or no credit history.

Proof of Identity

Your identification documents are a legal requirement when applying for any loan. Your details will help the lender conduct background and credit checks before pre-approving your application.

Proof of Income or Employment

You must provide your income details to the lender, whether employed or in self-employment. The lender will use this information to assess your ability to repay your loan. You may provide tax documents and bank statements as proof of income.

Debt-to-Income Ratio

Your debt-to-income (DTI) ratio is your monthly debts against your gross monthly income. Lenders use this information to determine if you can afford an auto loan. A DTI ratio below 40% can increase your pre-approval chances.

Benefits of Getting Pre-Approved for an Auto Loan

Getting pre-approved for an auto loan doesn't guarantee you'll receive the loan. However, it increases your chances of securing auto financing for your next car purchase.

Here are some of the benefits of getting pre-approved:

Better Financial Planning

Getting pre-approved for an auto loan encourages you to set a realistic budget. After all, pre-approval lets you know the expected costs of your vehicle purchase. You'll learn how much you'll need to save and spend to buy your dream car without denting your finances.

Extra Protection 

A pre-approval gives you the information to choose a suitable car loan. It protects you from spending more than what you can afford. Moreover, you can use the info to determine whether you need to purchase add-ons to protect your investment.

Improved Negotiation Power

A pre-approval enhances your negotiating position since you know the various financing options you can get. It shows auto dealers your commitment to buying your next car. They'll know you're serious and may be willing to negotiate and offer competitive rates toward your purchase.

Auto Financing Services

Auto financing services usually come with add-ons to protect your investment. After securing your car loan, our dealership may offer other convenient services such as:

Trade-in options

You can trade in your vehicle and apply for auto financing to cover the difference. If your car has a loan, our dealership can offset your current debt and discuss new terms with you.

Co-buying/ownership options

You can apply for an auto loan if you have a low credit rating or have issues securing a traditional auto loan through a co-buyer. The co-buyer acts as a guarantor and can help pay your monthly payments.

Extended warranty programs

You'll receive a standard warranty not exceeding three years when you purchase a new vehicle. Once your current coverage contract expires, you can protect your car with an extended warranty, maintaining your vehicle's integrity and value.

Get Pre-Approved for Chevy Financing Today

Auto financing has made buying a new Silverado truck more affordable than ever. At Monument Chevrolet, getting pre-approved for your new or pre-owned Chevy is just a call away. Our finance team works with various financial institutions to build your credit for pre-approval without using your SSN or birth date and provides several financing options for an incomparable buying experience. We can help you get your dream car. Contact us or drop by our dealership in Pasadena, Texas, to explore our extensive inventory and learn more about our process.