Buying a used car, was wondering what a purchase order is?

Question

I am in the process of financing a used car through my credit union. They told me that it was nearly impossible for people to get pre approved, so that I was to negotiate a price with the dealer along with my trade in, and then have the dealer fax a purchase order. Only then would my credit union say yes or no. I was wondering if anyone else has done this. If so I would like details about the process. Thanks

Answer 1

I do this every day, only I'm the one selling. the purchase order is like an itemized receipt. the lender [credit union] needs to know all about the vehicle so they can determine it's loan value. the purchase order should include: year, make, model, miles, trim level, all optional equipment, and the Vin # [vehicle identification number] [You can also include a Kelly blue book retail value sheet on the vehicle.] the reason they need this is because, the vehicle is your collateral for the loan. if the loan amount is more than the vehicles value, and you stop making payments, they take the vehicle back, then they have to get their money by selling it again. if you owe $10,000 on a vehicle and it's value is $5,000 then the lender is out the other $5,000. so this is why its important for the lender to know all about the VALUE of the car. next they need to know exactly how much money you want to borrow, including all taxes, fees, & services. so if your buying a car , and the VALUE is $10,000. but the seller is willing to sell it for $9000, and you add tax, lic, title, documentation , {probably all about another $1000, depending on your state] and you have a trade worth $1000.... now your loan request is for $9000 or 90% of the cars VALUE . your lender then decides , based on your cedit rating; how much to lend you, what interest rate you must pay, how long you can take the loan out. the year of the vehicle also has alot to do with the lenders decision for the interest rate & length of loan. hope i answered all of question.

Answer 2

The Credit Union must know the price of the car and all the other stuff you allow the dealer to add on before they approve you. They can tell you the maximum they will approve you for and the interest rate, but as far as cutting the check they need total price. Remember they are paying the money directly to the dealer.