Approved thru credit union, Question

[nate79416]

I was approved for a auto loan at my credit union, for 10k with 2k down, I am only looking for a used small suv my question is, do I have to use the whole amount, because I can find a small suv for less then 10k that's for sure. If I find a car-suv for less will that decrease my down payment?? I'm new to this whole credit union auto loan thing. Also what are the steps when dealing with the dealership but having the credit union finance me?? I don't want to use the whole 10k. Thanks for any help

[Anonymous]

Not all credit unions are alike, so you are likely to get numerous different responses to your question.

The credit unions I transaction business with base their loan decisions for used autos on the specific auto you have chosen to finance.  Primarily because one of the key factors on loans for used autos is the LTV.  It isn't an open ended situation where they approve the loan without knowing the vehicle and it's condition.

In other words, if you have settled on buying a used car for $6,200 the credit union will determine the value of the vehicle then apply any LTV parameters to the loan.  Let's say the credit union values the car at $5,500 and they have an 85% LTV for used autos.  That means the max loan they would approve is 85% of $5,500, or $4,675.  However, you agreed to buy the car at $6,200 before tax and or other applicable fees. So in the end, you will need a down payment of at least $1,525, or the difference between the $6,200 you agreed to pay less the $4,675 loan approval. 

Rather than make any assumptions, it's wise for you to pose the question directly with the loan source because they have the final say.  Everything else is conjecture.

[Anonymous]

One additional thought.

If you believe the value of the used auto is actually more than the value set by the credit union, you may see if the institution will personally inspect the vehicle and re-evaluate their decision.  Sometimes they will, other times they won't. 

If they are receptive to the idea, make arrangements with the seller to get the vehicle to the office where the loan decision is being made.  Set up an appointment so everyone is pulling on the rope in the same direction.  Please note that results vary, and the length of time you've had banking relations with your institution could influence their willingness to do this.

And from a logistics standpoint, this isn't always a simple thing to do because loan decisions aren't necessarily made at your local branch.  These decisions may be done at their main office, which could be quite a distance away, or even out of state.  If this is the case, it wouldn't be worth it.

I have personally done this myself at a local branch for a large credit union and it worked out favorably for me.

[nate79416]

thanks for your reply, the Stipulations with this loan is the car has to be 2004 or newer and no more than 75k miles on it! Wondering since they approved me, should I just take a shot at the dealership, then again my score is only 596, they also said I had to put the 2k down regardless if the car is under 10k.

[nate79416]

I orignally appiled for a signature loan of 5k, instead ended up with a auto loan for 10k with a 2k down payment requirment!

[dekelley1]

What credit union is this through? 

[nate79416]

ufcu in Austin

ended up only having put 1k down and they actually paid 97% of the value of the car!

[Anonymous]

There's another factor not mentioned.  YOU were pre-approved for a car loan - up to 10K.  The CU believes you are capable of paying on a 10K loan.  The final approval will depend on the car selected. 

If you have bad, bad credit, you won't get a loan for 10k even on a Lamborgini.  On the other hand, even Bill Gates won't get a car loan for 10k on a used Yugo.

And as you've already seen, approval for 10K doesn't mean you must take exactly 10K.