The most common auto loan myths are based on seemingly logical assumptions consumers make due to a lack of information on the auto financing process. Auto credit myths are easy to dispel once you have all the correct knowledge and understanding under your belt. 
Only Great Credit Gets Approved
The first auto loan myth that a surprising number of consumers believe is that only applicants with great or perfect credit histories can get approval on car loan financing. Lenders are aware that people have complex financial histories that can create a lower credit rating and provide auto loans for people with low credit ratings.
No Down Payment
An auto loan does not eliminate the need to put forth the appropriate used car down payment for the car you are buying. In fact, investing more in the initial down payment will lower how much you are financing. A loan that is for a lesser amount will accrue less interest as you work toward repayment, as you will be able to pay the loan off sooner. Also, if you have credit rating concerns, a lower principal is more likely to get loan approval with most subprime lenders.
Only for New Cars
Another common auto loan myth is that you can only finance the purchase of a new car. As long as the real value of the car can be confirmed, you can find auto loan options for the purchase. Dealerships that specialize in used or pre-owned car sales will often offer in-house financing, which means you can apply for your in-house auto loan at the same place you are purchasing the car. An auto loan for a private used car sale, or a sale-by-owner, can be more difficult to get due value verification. Most auto loan providers need to confirm the value of the car being sold, as it is considered the collateral for the loan.
Must Own a Home
Many consumers think that you need to own a home before you will qualify for an auto loan. On the contrary, auto loans are easier to get and using one to secure the asset of a paid off car will make financing the purchase of home easier down the road. Approval for most auto loans is contingent on your credit history and income, not on other large assets you own.
The bad credit myths about loans can keep well qualified borrowers from pursuing the perfect financing for them. Ask questions throughout the car shopping and financing process to make sure you’re not being influenced by one of these auto loan myths.
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