Blank Check Auto Loans

Many used car buyers want to finance a vehicle before they buy (in fact, even before they step onto the lot) and blank check auto loans are one way to accomplish this. For borrowers who qualify for a blank check auto loan, there are some definite pluses to going this route; however, there are also a few things to look out for in using a blank check auto loan to finance a used car purchase.

The first is that bad credit can sink a buyer who applies for a blank check auto loan. Many lenders offering this kind of service require decent credit, and if a consumer's credit is less than stellar, they can be denied, and then it's back to square one. Many lenders like to know as much as possible about the vehicle they will be financing, and so it is generally not in the best interests of a buyer with poor credit to hold out for a blank check auto loan.

Another danger in blank check auto loans is that in some cases, the buyer may not encounter enough of a face-to-face briefing situation with the lender. Some lenders offer convenient blank check auto loans through online sites or similar tools, without an in-depth, rigorous process to educate the buyer about their responsibilities. Although blank check auto loans generally carry fixed rate financing, where the interest rates cannot jump according to the market, a buyer still needs to be as knowledgeable about the interest rates in terms of their loan as possible. A buyer shouldn't think of the total amount of a car loan as anything less than a financial responsibility that has to be paid back promptly in the agreed-upon monthly installments.

One other issue with a blank check auto loan is how it can influence a deal going down at the dealer's lot. Although the blank check auto loan does provide for a less complex haggling process in terms of financing, it can also have the effect of pinning the buyer into a fixed price situation, something that can result in an up sale which the buyer can't afford. The dealer may also try to "match" the amount of the blank check loan with a vehicle that is actually valued at a lower amount. To avoid this kind of situation, it's a good idea for the buyer to be as close-mouthed as possible during the shopping process, avoiding going into detail about the actual financing that has been arranged until it's time to close the deal. This can be tricky, as the dealer representative may be very curious about financing procedures. A buyer should let sales staff know that financing options are in place.

One option for dealing with these liabilities is to mix a blank check auto loan with a down payment. This has two upsides: the first is that a down payment minimizes the amount that needs to be financed, so that over the term of the loan the buyer pays less. The second is that a buyer can use the combination of a possible down payment and a blank check auto loan amount to be a little more flexible in terms of a vehicle's total cost during the shopping process.