Getting a car loan from a bank instead of a dealer can save you money. Your loan approval sets a limit on the amount you can spend, protecting you from buying a car that's too expensive. It also simplifies the negotiation process with your dealer, because once you have a loan, all you need to negotiate is the price.
Once you submit the loan application and any requested supporting documents to the bank, they will generally make a decision quickly. US Bank, for example, reports loan decisions take two hours or less. A bank car loan doesn't prevent you from taking your dealer's financing, however, if it's truly a better deal.
TL;DR (Too Long; Didn't Read)
Depending on the lender, it can take anywhere from a few minutes to a few hours to receive a car loan from a bank.
Loan Approval Process
Many banks let you apply for a car loan online. The form is similar to any other loan application: You fill out information about yourself, your credit and your income and assets. Some lenders can give you an approval in a minute or two; others might take a few hours.
Once you get approval, some lenders send a blank check, while others send you paperwork to fill out. One way to speed up the process is to walk into the bank. Many banks are geared to give on-the-spot approvals.
Being physically present also allows you to sign any necessary documents immediately, rather than having to have to wait for them to be sent to you. Some expedited programs are open only to existing customers of the bank. Other banks might discount the loan interest rate if you're already their customer.
General Financing Requirements
Lenders set different rules for the type of car purchase they will finance. Generally, most banks let you use their loans to buy new and used cars from franchised dealers. Some also let you use their loans to buy from independent dealers such as used-car lots, or in private-party transactions. Many banks require you to make a down payment when you purchase a car.
Using a Bank Loan
Once you've been approved for your loan, the bank typically sends you a document that looks like a blank check. Unless your lender sends it to you overnight via express mail, the document will take a few days to arrive. Once you have it, you can go car shopping, knowing that you have the money from your bank to pay the dealer for the car.
Bank Financing at Dealers
The process is different if you're taking a loan through a car dealership. Once you've filled out your credit application there, your salesperson takes it to the dealership's finance office. The finance manager usually enters your information into a computer system that shops your loan among multiple lenders.
Although the car manufacturer's in-house financing will be one of the options, your loan also might be shopped to banks and credit unions. If your credit is good and you choose bank financing through your dealer, the loan will be approved on the spot.
Steve Lander has been a writer since 1996, with experience in the fields of financial services, real estate and technology. His work has appeared in trade publications such as the "Minnesota Real Estate Journal" and "Minnesota Multi-Housing Association Advocate." Lander holds a Bachelor of Arts in political science from Columbia University.