Blank Check Auto Loans

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Like pre-approved auto loans, blank check car loans are alternatives to traditional dealership financing. This type of auto loan can put you in the driver's seat when it comes to working with a dealership.

Blank Check Loans Defined

Basically, a blank check car loan is a pre-approved car loan—with a twist.

Similar to a standard pre-approved auto loan from a bank or credit union, a blank check car loan gives you auto loan pre-approval. However, a blank check auto loan is used when you don't already know what car you're planning to buy.

Instead of financing a specific amount of money for a specific vehicle, you determine how much you're willing to finance up to a certain amount, and are essentially given a “blank check" for that amount.

This means you walk onto the dealership lot knowing exactly:

  • How much money you can spend.
  • What your interest rates will be.
  • What your monthly payments will be.

Once you negotiate a final price with the dealer, you can write the check for any amount up to the loan limit.

Pros & Cons of Blank Check Loans

Pros

There are several perks to obtaining a blank check auto loan:

  • You already know the maximum amount you can pay for a vehicle, which cuts down on the haggling process.
  • You won't have to seek financing through the dealership or a third-party lender affiliated with the dealership.
  • Your bank or credit union is already aware of your credit score and has taken it into consideration when determining your maximum auto loan.
    • Often, buyers who finance with dealerships get sideswiped when they realize their credit scores aren't high enough for manageable interest rates.
  • Like traditional pre-approved auto loans, you could get a lower interest rate with an auto check loan than you would if you financed with the dealership.
  • You can apply online for blank check auto loans with reputable financial institutions.

Cons

Of course, a blank check car loan does come with some pitfalls:

  • Your bank or credit union might offer blank check auto loans for “traditional" vehicles ONLY, excluding vehicles such as motorcycles, commercial vehicles, or recreational vehicles.
  • There might be a vehicle age limit and/or mileage limit when determining whether you qualify for an auto loan check.
  • Because you're financing with your bank or credit union, you could miss out on certain dealership or manufacturer incentives.
  • Your credit score still matters. Although you and your bank deal with your credit score's impact on the loan up front, it will still affect your auto loan amount.
    • Consider ordering a copy of your credit score beforehand so you know what to expect.
  • Because of their growing popularity, some blank check auto loans come from disreputable financial institutions. It's crucial to do your research on each bank or credit union you consider.

Applying for a Blank Check Auto Loan

Many banks and credit unions allow customers to apply for blank check auto loans online, over the phone, or in person. Simply contact your personal bank or credit union, or research reputable financial institutions that offers auto check loans. Once you select a bank, the website or a representative will walk you through the application process.

How you choose to apply is up to you, but note these points before you begin:

  • If you're not working with your normal bank or credit union, research the financial institution before you begin the loan application process. As mentioned above, not all financial institutions are reputable.
  • Check your credit score before contacting a bank. Not only do you want to know what you're working with without any surprises, but this will also give you a chance to file any disputes against incorrect information on your report that may impact your score.
  • Research the going prices for the kind of vehicle you want.
  • Use an auto loan calculator tool to determine how much you can afford. This will help determine your loan amount.
  • Talk with a bank representative about estimated monthly payments. While the loan might seem feasible, you don't want the monthly payments to be over your budget.
  • Shop around! You don't have to go with the first loan offered. Check with a few different banks to find the best loan for you.