Find the Best Car Loans in Indianapolis, IN

How to get an auto loan in Indianapolis

There was a time when the criteria for financing a car was pretty standard and the interest rate, length of the loan and borrower’s credit requirements all fell within a relatively narrow range. Today, the financing is as much a part of the buying process as the car itself, and it behooves borrowers in Indianapolis to prepare for dual sales pitches: one from the car salesman, and one from the loan officer.

To get the best car loan, you should arrange financing before shopping. Getting pre-approved for a loan lets you:

• Compare rates from several lenders
• Know your budget before shopping
• Potentially negotiate a lower rate from the dealer
• Shop at multiple dealers
• Act as a cash buyer by receiving your loan amount before shopping

Here is what you need when you walk into the lender’s office:

• Proof of identity and residence: Lenders want to be protected against identity theft issues and know you have a stable residence. Usually, a government-issued photo ID and a utility bill should suffice.
• Proof of income: Lenders need to know you have a steady income to repay the car loan. Pay stubs or bank statements usually do the trick.

Qualifying for a car loan in Indianapolis

Your credit rating is the most critical factor in qualifying for a car loan and receiving a low annual percentage rate (APR). It’s useful to know your credit score before comparing loans so you understand the rates you’re likely to receive.

There are multiple ways to check your credit score, and you can request a free copy of your credit report every year. You can check your credit score by consulting a non-profit credit counselor in Indianapolis, and many credit card or loan companies let you see your credit score as a courtesy.

Some lenders in Indianapolis finance borrowers with poor credit, but you pay less with a better credit score. Indianapolis residents with excellent credit receive APRs between 3 and 5 percent on loans, while borrowers with bad credit qualify for loans with rates between 12 and 18 percent or higher.

Comparing car loans in Indianapolis

The most important thing to look at when comparing loans is the total cost, which is determined by the APR, term length, down payment and additional fees. When looking at loans, consider:

• Term length: Most car loans have terms between 36 and 60 months, though some lenders offer terms of 84 months or more. The longer the loan term, the lower your monthly payments, but the total cost of the loan increases. Extending your loan for a term of longer than 60 months adds thousands of dollars to the price you end up paying for your car.
• Down payment: Many car dealerships promote no down payment offers, but anything you can do to lower your monthly payments and reduce the amount of the loan pays dividends down the road. A more substantial down payment may also reduce your APR and make you more likely to qualify for a loan.
• Additional fees and costs: Both your lender and car dealership may have documentation fees or other charges. Your loan amount should be enough to cover additional upfront costs to purchasing a car, including title and registration fees, state sales tax and insurance costs.

Getting a car loan with bad credit in Indianapolis

Getting an auto loan with bad credit in Indianapolis is frustrating but not impossible. Many lenders, especially online lenders, specialize in helping people with bad credit. Saving for a larger down payment helps, and you may be able to improve your credit score if you can wait to purchase a car.

If you’re unable to wait, you can ask a friend or relative with strong credit to co-sign your loan. Although a co-signed loan lets you qualify for better rates based on the co-signer’s credit history, they are responsible for the loan if you default.

Most lenders let you refinance your loan after six months to a year if your credit situation changes and you qualify for a better rate.