Credit Union Auto Loans - 5 Keys to a First Time Buyer's Approval

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Sherin Dev, Professional Investor and editor of MoneyHacker. Started on 2007, MoneyHacker posting vital lessons in wealth creation, protection and lots of personal finance topics.. More about Sherin...

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Credit Union Auto Loans - 5 Keys to a First Time Buyer's Approval

Credit Unions are essentially member oriented organizations, which provide auto loans to potentials consumers on lenient terms and lower interest rates. Individuals who are purchasing cars on finance for the first time, loan from these organizations are the best option. However, in many cases the loans of the first time buyers are not approved because they do not meet with the criteria set by these unions. If you are determined to get your request sanctioned by the Credit Union, then here are the five key points that you need to meet with to get approval.

Service Record

Whenever you are applying for car loan to a Credit Union, make sure that you have at least twelve to eighteenth months of employment record. Submit the pay stub of the current months along with your loan request to make your case stronger before the concerned authority.

Credit Score

The next important thing that you need to check before applying loan to a Credit Union is your credit score. A long credit history with no record of prior car loans is the most suitable condition for getting the loan sanctioned. If you have a small but good credit history like a limited credit card record, then it becomes much easier to get approval. A zero credit history will also be tough as the lenders are not sure about the risk involved in investing their money with you. If you have no credit history, like any phone bills or utility bills in your name, then it becomes really difficult for you get your car loan request approved. So make sure you fulfill the above mentioned criteria, with regard to credit history, before applying for loan.

Down Payment

The amount of down payment that you desire to make is also important for getting your loan sanctioned by Credit Union. A larger amount of down payment implies that you have better chances for your loan to get approved as the lender gets convinced that you are really interested in the vehicle. Moreover, it also secures the money of the lender and thus giving them enough reasons to sanction your car loan.

Do You Have a Credit Union Account?

It is often seen that Credit Unions have a partial attitude towards the members of the association. So if you have an active account in any of the Credit Union with a lot of deposit in it, then you would definitely have an upper hand over other applicants. However, it does not mean that only account holders are granted loans by the Credit Union. This is one of the important conditions that will definitely act as a stimulant in the whole processing.

PTI and DTI

These are two important factors that are considered by the Credit Unions before sanctioning the loan amount to a person. PTI (Payment to Income) and DTI (Debt tot Income) help in determining the ability of a person to pay back loan in time. PTI is the ratio between payment that is to be made by the person and the total income. DTI is the ratio between all the debts of a person like utility bills, insurance premiums and other regular expenditures of a person and his income. Ideally, the PTI of a person should be about 20% of the total income and DTI should be 40% of the total income to get the loans approved by the authorities.

These are some of the important quotients that are taken into account by the Credit Unions before sanctioning a car loan. Therefore, check it yourself to see whether you meet up with the criteria and thereafter apply for the loan. In case you meet up with all these standards of logbook money, you will be surely granted loan for your first car on flexible terms and lower interest rates. Loans from such an institution will help in establishing a good credit record that will be beneficial for your future investments.

The above article is composed by Celi who is associated with logbook money as their community manager. She handles all the content and marketing related issues for them.