If you live in Dallas, you need a car. In fact, the Dallas-Fort Worth area ranked near the bottom of the list of worst places in the United States to live without a car.
Buying a car isn’t cheap, but fortunately, there are plenty of auto loan lenders out there willing to help you finance the purchase of a car. Let’s talk about what you need to qualify for an auto loan, how much car you can afford, and the best auto loan lenders in Dallas.
Where can I get an auto loan in Dallas?
While you may be able to find private financing elsewhere, the three best options for an auto loan are through the dealership, credit union, or bank.
Top 10 auto loan lenders in Dallas, Texas
- Randolph-Brooks Federal Credit Union
- City Bank
- American Airlines Federal Credit Union
- Dallas Auto Center
- DFW Auto Financing
- Auto Starlight
- Navy Federal Credit Union
- Credit Union of Texas
- Auto City Credit
- First Texas Auto Credit
Credit unions
Credit unions are almost always the cheapest place to get an auto loan. However, to be a customer of a credit union, you have to become a member. Though some credit unions are open to anyone, many others require you to be an employee in a certain industry or meet other eligibility criteria.
Credit unions tend to have the lowest interest rates since they’re member-owned nonprofits (rather than companies with investors looking to make a profit), and they’re more likely to work with you to find a flexible loan solution than a big bank.
Dealerships
Dealerships are a convenient place to buy and finance a car since you can often do all the paperwork in one shot. Some dealerships offer their own financing in-house, but many will partner with other lenders, which usually translates to a higher interest rate or additional fees that they pass on to you.
Another benefit of financing through the dealership is that you may be able to get a better deal on the car itself, and since dealers want to sell you the car and the loan, they might be more flexible if you have a lower credit score or a smaller down payment. If you do choose to get a loan through the dealership, be aware that the price of these benefits will be those higher interest rates and the possibility of additional fees.
Banks
Banks are known for lending money, but they’re also known for being very strict and highly regulated. Banks usually have lower interest rates than dealerships, though they won’t be very flexible when it comes to the eligibility requirements to qualify for those loans. If you have an existing relationship with a bank and good credit and income, a bank might be a good place to look for an auto loan.
Want to learn more about the pros and cons of different auto loan financing options? Check out this article comparing bank, dealership, and credit union financing to help you decide which one is best for you.
What do I need to qualify for an auto loan?
When you apply for an auto loan, lenders will want to verify that you’re creditworthy. In other words, they want to see that you have the means to pay back the money and that you’re likely to make your payments in full and on time.
To qualify for an auto loan, lenders will:
- Ask you for proof of income: Your word isn’t enough to get you an auto loan – you’ll actually have to prove it. You can prove your income by sharing copies of your pay stubs if you’re an employee, or tax returns and bank statements if you’re self-employed)
- Run a credit check: Lenders will check your credit score and look into how much debt you have relative to how much money you earn (aka your debt-to-income ratio).
There’s no official minimum credit score to get approved for an auto loan. To qualify for the best possible rates, lenders will expect a credit score of at least 740. You should still be able to find a good car loan if you have a credit score of 660–739, but if your credit score is less than 660, your options may be limited and you’ll often end up paying a much higher interest rate.
- Verify your identity and home address: Lenders need to know who they’re dealing with and where you live, so don’t be surprised when a lender requests a copy of your passport or driver’s license.
- Proof of insurance: Lenders will ask you for proof of insurance before you walk out of the dealership. Now, you might be thinking it’s strange for a lender to ask you for insurance on a car you don’t yet own, but the lender wants to make sure the car is insured the moment you drive it off the lot. (Your insurance policy helps protect your investment and the lender’s investment in the vehicle.)
Once you decide which car you want, give your insurance agent a call to purchase an insurance policy with comprehensive and collision coverage. Don’t worry – it won’t take very long and insurance agents are used to getting frantic calls from buyers at the dealership and quickly putting together an insurance policy for you.
FAQs
What is the easiest place to find an auto loan?
The easiest place to find an auto loan is usually from a car dealership or an online lender. However, while the easiest auto loan might be the quickest, most convenient, or easiest to qualify for, it may not be the best for your situation or the most affordable.
How can I improve my credit for a car loan?
To improve your credit, avoid spending a large portion of your credit limit, taking out new loans, or closing old credit cards. You should also consistently pay all your bills on time, and give your score time to increase as you continue to follow these best practices.
Can I get a $4,000 auto loan?
You may be able to find some lenders who offer a $4,000 auto loan with a short term (up to 36 months), but many lenders will have a minimum loan amount of $5,000.
Is there a minimum income for getting a car loan?
While there is technically no minimum income for getting a car loan, the estimated minimum income for getting a car loan is around $1,500–$2,000 per month. It would probably be difficult to get a loan without, at least, this income.
Can I buy a car without a salary?
You can buy a car without a salary if you’re self-employed, have an alternative source of income, or can prove to the lender you have the financial assets to make your monthly payments.
How much car can I buy on a $40,000 salary?
If you earn $40,000 annually, our recommendation is to spend no more than $17,900 on a car. This figure is based on the 20/4/10 rule, which advises a 20% down payment, a 4-year (or 48-month) loan term, and spending no more than 10% of your monthly income on your auto loan.
How can I buy a car if I have a low salary?
You can purchase a car with a low salary if you buy used, make a sizable down payment, find a low-interest auto loan, and stick to your budget. If you can’t qualify for a loan on your own, adding a co-signer can help you win the lender’s approval.
Is getting an auto loan from your bank better than the dealership?
A car loan from the bank will have some advantages over dealer financing, but the dealership is king when it comes to convenience and flexibility. Consider your priorities and shop around for financing at both the bank and the dealership before you make your decision.
Sources:
- Leighton, H. (2019, October 15). Dallas-Fort worth area named as worst large metro Texas city to live car-free, analysis shows. Kinder Institute for Urban Research | Rice University.
- Florida, R. (2019, September 24). The Best and Worst U.S. Places to Live Car-Free. Bloomberg.
- Cothern, L. (2022, May 12). What Is the 20/4/10 Rule for Car Buying? Capital One.
- Consumer Financial Protection Bureau. How do I get and keep a good credit score? (2020, September 1).
Jonathan is a writer with over 10 years of experience and a former insurance agent. Jonathan’s focus is to simplify personal finance and help equip you with the tools you need to make smart financial decisions. Despite the criticisms, he remains committed to driving a manual transmission and prides himself on smooth shifting, even in rush-hour traffic.
