Auto Insurance

Applying for an Auto Loan

How to prepare yourself and start shopping for an auto loan.

Dealers and financial institutions like banks and credit unions consider a variety of factors when determining what kind of auto loan they will offer an individual. These factors include your credit score, monthly income, and current debt. Although some of these things may be hard to change, knowing them and planning your purchase in advance will allow you the time necessary to make any improvements possible.

Once you feel confident about your credit score, monthly income, and current debt ratio, it's time to shop for the right financial institution and schedule your first meeting.

Below, we will talk about each factor and what you need to do to before getting an auto loan.

Credit Score and Credit History

Your credit information is the first item to be considered by your lender. Using the information you provide, they’ll find your credit score and history.

Your credit score is an overall rating of your reliability in terms of meeting your financial obligations. The higher your credit score, the more likely you’ll be approved, and the better financing options you’ll be offered.

Your credit history goes into more detail on your level of financial responsibility. Negative marks, such as missed payments or defaulted loans, will appear on your credit history, and they could affect your chances of being approved.

No matter where your credit score is now, you can always work on raising it. If you start working on repairing your credit score now, it will help you plan for large future purchases and receive lower rates and more loan payment options.

Monthly Income

The next factor is your monthly income. Obviously, the amount you bring home monthly will determine the kind of car you can afford. The more you earn per month, the more likely you will be able to make larger car payments.

If you have a lower income, you won’t be able to borrow as much. You may be able to get a longer loan term, but longer loans do cost more over time and that is something to consider when you are planning your long term budget.

Current Debts

Your current debts, such as outstanding credit card balances or mortgages, are compared against your income. The higher your ratio of debt to income, the less you’ll be able to pay per month. Most lenders won’t offer financing to people with a debt-to-income ratio above a certain threshold.

Shopping for the Right Financial Institution

The next step in your auto loan journey is to select the best financial institution for you. Almost all banks and credit unions will offer a variety of auto loans to customers or members. Take the time to schedule meetings with different organizations you trust and ask them about how they could help you. Remember, you will be paying this place a regular monthly payment, so make sure you get a lower rate and a loan length you are comfortable with. It's also important to make sure they have convenient ways to pay your loan and excellent customer service in case you have additional questions later.

You also always have the option of financing through a dealership. Be aware that if you opt for dealership financing, the dealership may increase the rate to boost their own profit. If the quoted rate seems a little high, negotiate for a lower one. In many cases, you’ll still end up with a slightly higher rate than you’d get directly from a lender, but negotiating for a lower amount could help offset that.

Documentation to Secure an Auto Loan

Whether you opt for dealership or direct auto financing, you’ll need to provide certain information to prove your ability to repay the loan.

Information may include:

  • Your social security number and date of birth
  • Proof of identity, such as a passport or drivers’ license
  • Proof of income, like pay stubs or tax returns
  • Proof of residence, such as utility bills
  • Proof of insurance

When you schedule your initial appointment with a dealer or a financial institution, ask them what they recommend bringing. Make sure to keep this information secure as you travel, since most of these documents contain sensitive or private information.

Applying for an Auto Loan - Final Considerations.

Preparing to apply for an auto loan seems overwhelming, but we promise it's easier than you think. Just remember that the more you know, the more you will be able to determine if an auto loan works for you. This is why we recommend you research all the financing options available to you and you take a deep dive into your own finances before you begin planning to buy a car. Your hard work will pay off and you will be glad you invested all that extra time, especially when you drive off the lot in your new car.

Learn more from these auto financing resources:


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  • How can I access my Listerhill accounts without a nearby branch?

    If you live in Alabama or in south central Tennessee but don't have a Listerhill branch location nearby, there are still plenty of ways to access your accounts. You can use our online banking, mobile banking app, and cards app to access your accounts from your devices. You can also take advantage of our CO-OP Shared Branches for easy access to your money wherever you are. If you need to get in touch, we're always one call away.

  • Can I open a Listerhill account online?

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  • Am I eligible for membership at Listerhill?

    If you live, work, attend school, or own property anywhere in Alabama or Maury County, TN, you're in luck! You're eligible to become a Listerhill member.

  • The Great Giveback Official Rules

    1. Eligibility: No purchase or obligation necessary to participate and win. All participants must be 19 years of age or older at time of contest participation. Employees of Listerhill Credit Union are not eligible to register for the contest.

    2. How To Enter the Contest: All Listerhill members who have consumer loans in good standing, (subject to limitations below) are automatically entered. Anyone who takes out a new loan with Listerhill Credit Union, or refinances a loan from another lender with Listerhill Credit Union (subject to limitations below) will automatically be entered to win. Limit of one entry per loan.

    NO PURCHASE NECESSARY: To enter the contest without a loan, send a self-addressed, stamped envelope to: Listerhill Credit Union, P.O. Box 566, Sheffield, AL 35660, Attn: Great Giveback Contest Entry. Limit one entry per person. Written entries must be received no later than July 3, 2021.

    Listerhill Credit Union will not be responsible for incomplete, lost, late, misdirected or illegible entries or for failure to receive entries. All entries become property of Listerhill Credit Union and none will be returned. Any questions regarding the number of entries submitted shall be determined by Listerhill Credit Union in its sole discretion, and Listerhill Credit Union reserves the right to disqualify any entries by persons determined to be tampering with, violating, or abusing any aspect of the contest.

    3. Contest Entry Requirements: In the event the Credit Union, in its sole discretion, determines that any Entry contains content that does not comply with these Official Rules or does not otherwise comply with regulatory guidelines, Credit Union reserves the right to disqualify the entry.

    4. Determining the Winner: A Credit Union employee will select at random four (4) $500 winners (one per day July 12-15) and one Grand Prize Winner from all entries received on July 16, 2021. You do not have to be present to win.

    5. Prizes: $500 Cash Prize: the Credit Union will award four (4) members with $500 cash each. Grand Prize: The Credit Union will pay up to $25,000 toward your loan with Listerhill Credit Union, or combination of loans. No loan payments will be made to loans with any other lender. No cash equivalent provided, and the total prize amount may be less depending on the outstanding amount of loan balance(s) with Listerhill Credit Union. In no event will the prize awarded exceed the total amount of the winner’s outstanding balance of qualifying loans with Listerhill Credit Union. Federal, state and local taxes are the sole responsibility of the winner. IRS regulations require the Credit Union file a 1099 on behalf of the winner.

    A Credit Union employee will call the prize winners and the prize winners will be called up to five times during regular business hours at number provided on entry form and will leave no messages. Failure to reach winner during these calls may result in disqualification of winner, forfeiture of his or her interest in all prizes, and selection of a substitute winner drawn from the drum. Winner will be required to schedule a time, at least 48 hours in advance, to visit Listerhill Credit Union, located at 4790 2nd Street, Muscle Shoals AL, 35661 in person, during regular business hours within seven (7) days of being notified to claim prizes by providing proof of eligibility for prize won and completing and signing an affidavit of eligibility and a liability and publicity release. Failure of any Winner to timely contact the Credit Union, visit the above Credit Union office in person and sign and return any required affidavit and release, or to claim a prize or comply with any term or condition of these Official Rules, will result in drawing Winner's disqualification and the forfeiture of his or her interest in the prize. Winners may waive their right to receive prizes. Prizes are non-assignable and nontransferable. No substitutions allowed by winner.

    6. To be eligible to win, all loans must be in good standing (not more than 30 days past due at the time of drawing. Eligible loans are limited to auto loans (no indirect dealer loans), personal loans (no loans secured by real property, such as mortgages, 2nd mortgages, and Home Equity Lines of Credit) and recreation loans made to consumer borrowers (not business or commercial loans).

    6. Participation. By participating, entrants agree to be bound by these Official Rules and the decisions of the Contest. Except where prohibited, acceptance of any prize constitutes winner's consent to the publication of his or her name, biographical information and likeness in any media for any commercial or promotional purpose, without limitation the Internet, or further compensation. Prizes not won and claimed by eligible winners in accordance with these Official Rules will not be awarded and will remain the property of the Credit Union.

  • How do I redeem my Merchandise Rewards?

    The easiest way to redeem your Merchandise Rewards is to log into Listerhill’s Online Banking and click the “Get Info” link to the right of your credit card information. This will take you to our credit card servicing site within the same window. Select “Rewards” on the upper right side within the screen (below FICO Score) and on the next screen, click on the CURewards logo. This will automatically sign you in to be able to redeem your Merchandise Rewards points!