#I might Info Dump a little but I promise we'll get there

[microcosmia]

As someone who worked loans at a credit union in the USA, I'm going to add some things about the financial aspect (as it applies to the USA!)

1. When going to a CU or bank to get a loan, they are going to want to know HOW MUCH you need the loan for - total, cumulatively.

You can choose to put the taxes/registration and title fees into the loan if you want, but you need to tell your loan office ahead of time. If you're going to get pre-approved, go to a higher but still comfortable amount rather than lower and then find a vehicle under your pre-approval limit. Do NOT tell a dealership what your pre-approval limit is, they will push you, and from experience, they make it feel reasonable.

1.5 When considering a "comfortable amount," also don't forget you're going to have to ALSO pay for full coverage insurance.

Add that into your monthly total. If your comfort zone is $200/month, and you find a car that will get you that, you will DEFINITELY be paying more like $350 a month when the insurance comes into play. Call your insurance company and ask for a quote about adding [X] type vehicle to your account. You're gonna need to talk to them anyway.

2. Before your FI will give you the money, you will need to give them the VIN (vehicle identification number), mileage, make/model/year, and asking price of the vehicle.

This means you need to already have a vehicle in mind. You can get *pre*approved up to a certain amount without specifics, buuuuut....

3. Your lending institution may deny your loan based on chosen collateral (the vehicle) for several reasons. If so, don't panic! Pressure sales tactics can only work if you let them!

Reasons they may deny collateral: A) waaaaaaay overpriced (happens a lot with smaller, used car dealerships), B) totaled out and under a salvage title, C) too old (10-15 years), D) too high mileage (varies by institution; sometimes only higher interests rates will apply and not a denial). The FI (financial institution) giving the loan is making an investment; theoretically, them protecting themselves *in this case* should also protect you.

3.5 Especially when working with a CU ask your loan facilitator if there's any dealerships in your area they would Not Recommend you use.

I saw a lot of patterns of overpriced cars, lemons, and bad faith contracts from specific dealers consistently. Your loan person, if they've been doing this a while, probably has all the dirty deets.

4. Ask your loan facilitator about early payoff penalties.

These are stupid and shouldn't exist, but, well. They do. This is basically a fee/fine you have to pay if you pay off your loan before the term is up, typically in a lump sum. Some of them are flat rate, some of them are a percentage based on the amount you paid off at once, the remaining time on your term, and your interest rate. This is important if you ever think about refinancing your loan to get a lower rate - when you refi, you aren't changing your current loan, you're paying it off and making a new loan. FIs will not change a contractual agreement; they'll satisfy it and then make a new one. So, the early payoff penalty could impact you while trying to refinance.

5. You will also need proof of insurance for your new vehicle before the FI will give you the loan.

Or at least they should. Sometimes my FI was lax on this but it becomes Big Problem if it ever becomes a problem at all. You will need to tell your insurer that the lien holder - the company ransoming your vehicle back to you - is the lending FI and will most likely need an address to list for the FI. This is likely not their branch address and may not even be their headquarters address. Ask your loan officer.

5.5 Then, you will need to get a Declarations Page from your insurance, showing the FI as the lienholder.

This means that before you own your car, that FI owns the car. If you pay it off and sell it, the FI will need to sign off on your title (assuming they still use paper titles, my state went paperless a couple years back) before you can do so.

6. Titles!

Yes, like OP mentioned, if the seller cannot produce the title for you, DO NOT BUY THE CAR. It could be stolen, it could be salvaged, it could still be *under lien by a different FI*. Truly only the most despicable and shady of salesplaces will do this, but I saw it happen. It went to court. It wasn't pretty. Also, your FI won't give you the money without at LEAST photographic evidence of the title. Also make sure the VIN on the title matches the VIN physically on the car - not a fun mix up. Also went to court. Also not pretty.

Some states are using an electronic title system now to great success. This is only for VERY RECENT vehicles though, like 2024 and newer (and I guess those sold and bought after the switch). If a seller says that a 2008 Honda Civic which has been on-lot since 2020 has an electronic title, be skeptical. Be very skeptical.

6.5) Sometimes your FI can help you with retitling the car in your name. YMMV depending on FI.

Mine would do it assuming we were titling for the people on the loan only (so we wouldn't title the car in the child's name if mom and dad were buying it for him and they were the ones on the loan) and everyone's legal names were correct on their current, valid IDs. Otherwise you were on your own.

7. Expect the entire process to take about 5 business days, especially if you don't know what you want.

Normally, an application for credit is good for 30 days from the credit pull, so you do have *time*. Just make sure you understand that there's a lot of paperwork that needs to fall in line and you need to be communicative with your loan officer. I saw loans happen in as little as 10 minutes and as long as 6 months because people were or weren't communicating and getting the paperwork they needed sorted out. Unless you've done this before, it is NOT going to be an in-and-out. Be prepared for a little back and forth.

8. There will be a credit pull!

They will look at your credit! If you're hiding things, especially from a joint borrower like a spouse, they WILL find out (and your life will get very difficult!) There is some flexibility for first time car purchasers who may not *have* a lot of credit, though, so check with your loan officer. You may need a co-signer! If you're denied due to credit reasons, ask your FI if you can speak with someone who can explain what all that sh*t means and walk you through your credit report. It's confusing. It took me a good month and a half to understand what I was looking at and how to address one. Credit coaching ended up one of my favorite things, though, and there ARE ways to rapidly improve your credit if you have none or repair it if it's tanked for whatever reason.

8.5 Medical debt cannot be considered while credit checking for an auto loan.

It will still be on your credit report, but medical debt *by itself* cannot be the reason for your denial. Just an FYI. Meaning someone somewhere understands that the numbers are made up and the costs don't matter but this isn’t that kind of post, so I digress.

9. Co-signers!

This is someone who will join in on responsibility for the loan with you. Generally, this is needed if you don't qualify due to income or credit reasons. Most of the time, it's family or a very close friend. If the primary person you are co-signing for defaults on their loan, it is now your (the co-signer's) problem. You will get collections notices. It will affect your credit. Be VERY CAREFUL who you choose to sign with.

10. Joint applicants/co-borrowers!

The legal distinction here is that a joint would be immediately just as responsible for repayment on the loan, not just in case of primary default like a co-signer. However, they also have legal access/ownership to the funds/collateral during the term of the loan. Easier to navigate for everyone. Most FIs will NOT give you the option of being either a co-signer OR a joint applicant, so you'll have to ask what their process is to best understand the responsibilities expected.

11. Defaulting on your loan - basically this is when you don't pay for your loan. You were in "default" for us if you were behind by 3 months on payments with no communication or good faith.

That's when we would start the process of repossession - which is basically where the FI pays a bounty hunter to track down the vehicle that *they* actually own. It isn't a nice process.

If non-payment goes on long enough, the FI WILL start pulling money from your account, your joint borrower's account, or ANY account which you hold ownership over (like being joint on a parent or child's account, and not just a POA - check you account structures). FIs ARE within their legal right to do this *based on the security agreement your signed*. Please please please read your paperwork.

If there's ever a time when you are struggling with your loan payment, do NOT stay silent. Call your FI and explain the situation. Ask if there's any way you can make a temporary payment plan. Communicate, communicate, communicate! At my CU, we wanted to help people. We had resources to help people skip payments or extend payments out. We could set up small transfers out of each paycheck to keep showing good faith. But people were too ashamed or scared to say anything - which I get! But your FI literally cannot help you unless you ask. This may be more common at credit unions, but I also may be biased.

I am almost certain there a things I'm missing so I might add more later. If you have any questions about the financial side of things, feel free to ask me!

Good luck and stay sharp!

Possibly making an insane car buying decision tomorrow. Wish me luck.