If you’re in the market for a new or used car, Rocket Mortgage auto loans can help finance your purchase. Rocket Mortgage is the online lending arm of Rocket Companies, the largest mortgage lender in America. While they are best known for home loans, Rocket Mortgage also offers competitive auto financing options.
In this comprehensive guide, we’ll explain how Rocket Mortgage auto loans work, their rates and terms, eligibility requirements, and the pros and cons of using them to finance your next vehicle purchase.
What Are Rocket Mortgage Auto Loans?
Rocket Mortgage offers online personal loans tailored specifically for automobile purchases and expenses. While they market them as “auto loans” Rocket Mortgage auto loans are technically unsecured personal installment loans.
This means they are not secured against your vehicle like a traditional auto loan from a bank or dealership. However Rocket Mortgage auto loans can still be used for
- Buying a new or used car
- Paying for repairs and maintenance
- Refinancing existing auto loan debt
- Covering insurance deductibles after an accident
Rocket Mortgage auto loans provide the financing upfront in a lump-sum payment directly to you. This allows you flexibility in how to pay the seller or mechanic.
Rocket Mortgage Auto Loan Amounts
Rocket Mortgage offers auto personal loans from $2,000 to $50,000. So they can accommodate smaller used car purchases as well as more expensive new cars.
However, Rocket Mortgage auto loans may not be able to fully finance luxury or specialty vehicles that cost over $50,000 You would need to cover any amount above $50,000 from savings or other financing sources
Auto Loan Terms From Rocket Mortgage
Rocket Mortgage personal loans come with fixed rates and terms of 3 or 5 years. This means your monthly principal and interest payment will remain the same over the life of the auto loan.
A 3 year loan term will have higher monthly payments but less interest paid over time compared to a 5 year term. You can use Rocket Mortgage’s online loan calculator to estimate payments for different loan amounts and terms.
Keep in mind that while Rocket Mortgage auto loans have fixed payments, they can still be paid off early with no prepayment penalty. This allows you to pay more toward the principal and pay off your auto loan early to reduce interest costs.
Rocket Mortgage Auto Loan Rates
As of January 2023, here are the current interest rate ranges offered by Rocket Mortgage:
3 Year Term: 10.44% – 29.49%
5 Year Term: 13.25% – 29.99%
The interest rate you qualify for will depend on factors like your income, credit score, debt-to-income ratio, and the loan amount requested.
Borrowers with good credit (scores above 680) may qualify for rates on the lower end of these ranges from Rocket Mortgage. Your rate is locked in once approved, so it will not change over the loan term.
Rocket Mortgage Auto Loan Eligibility
Here are the basic eligibility requirements for a Rocket Mortgage auto personal loan:
- Minimum credit score of 620
- Debt-to-income ratio under 50%
- Monthly income of at least $800
- Social Security number
- Valid U.S. bank account and routing number
- At least 18 years old
As an online lender, Rocket Mortgage auto loans are available nationwide to residents of all states except Nevada. They do not have physical branches, so the application process is completed online or over the phone.
Co-signers with better credit are allowed which can help borrowers with limited credit histories qualify and get lower interest rates.
Origination Fees and Closing Costs
Rocket Mortgage charges an origination fee of 5% to 8% on their personal auto loans. This one-time fee is deducted from the approved loan amount before funds are disbursed.
For example, if you are approved for a $20,000 Rocket Mortgage auto loan with a 7% origination fee, you would receive $18,600 after the $1,400 fee is deducted. Make sure to factor this fee in when determining how much to borrow.
There are no other closing costs or prepayment penalties charged on Rocket Mortgage auto loans. However, late fees apply if a payment is more than 15 days past due.
The Pros of Rocket Mortgage Auto Loans
Here are some of the key benefits borrowers can get with a Rocket Mortgage auto personal loan:
Fast funding – Rocket Mortgage finances loans quickly, with funding possible in as little as 1 business day after approval. This allows you to close on a vehicle purchase right away.
Fixed payments – Your monthly loan payment stays the same over the full loan term, making budgeting easy.
No prepayment penalties – You can pay off a Rocket Mortgage auto loan early with no extra fees.
Apply online – The entire application process can be completed online with e-signature. No need to go into a branch.
No collateral required – The loan is unsecured, so you don’t put your new car or other assets at risk as collateral.
Credit building – Making on-time payments can help improve your credit score over time.
Co-signer option – Allows applicants with limited credit to qualify and get better rates.
Use anywhere – Funds are sent to your bank account to use toward any auto expense.
The Cons of Rocket Mortgage Auto Loans
There are also a few potential drawbacks to consider with Rocket Mortgage auto financing:
High origination fee – The 5% to 8% upfront fee reduces the loan amount you receive.
Higher rates – Interest rates may be higher than rates from some credit unions and banks.
No rate discounts – Rocket Mortgage doesn’t offer lower rates for new or used auto purchases specifically.
Max loan amount – Borrowers may need other financing options for cars costing over $50,000.
No direct lender – The loan is through a partner bank, Cross River Bank, not directly through Rocket Mortgage.
No dealership financing – Rocket Mortgage personal loans cannot be used at car dealerships to finance a vehicle purchase.
Unsecured loan – Your new vehicle or other assets are not used as collateral for the loan.
How To Apply For a Rocket Mortgage Auto Loan
If you decide a Rocket Mortgage personal auto loan is right for your needs, here is an overview of the application process:
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Check loan eligibility – Use their rate checker tool to see estimated rates without impacting your credit score.
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Gather required documents – This includes things like driver’s license, proof of income and car insurance.
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Complete the application – Apply online in minutes by providing personal, employment and financial information.
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Accept your loan offer – An instant decision is provided after submitting your application and e-signing the loan agreement.
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Get funding – Once approved, the loan funds are sent via ACH to your bank account as soon as the next business day.
If you need further assistance, Rocket Mortgage has a team of auto loan specialists available by phone or online chat. They can help explain the lending process and best loan options for your financial situation.
Alternatives To Rocket Mortgage Auto Loans
Rocket Mortgage isn’t the only option for financing a car purchase. Here are a few alternatives to consider:
Banks and credit unions – May offer lower rates and discounts on new vehicle purchases, but can have slower loan approval and funding.
Dealership financing – More convenient to bundle into the car buying process, but their lender options are limited.
Peer-to-peer lending – Borrow from individual investors for potentially lower rates, but the process involves more time and paperwork.
Manufacturer financing – Special incentive 0% APR financing deals are sometimes offered for certain makes/models.
HELOCs and personal lines of credit – Tap home equity or revolving credit line; more flexibility but rates may be higher.
Buy outright in cash – Avoid financing charges by purchasing a cheaper used car you can afford to pay in cash upfront.
Rocket Mortgage auto loans provide a quick and convenient middle ground between dealership financing and taking out a traditional auto loan. Their online lending process makes getting funds fast and straightforward. But make sure to compare all your borrowing options to find the best auto financing rates and terms for your situation.
Frequently Asked Questions About Rocket Mortgage Auto Loans
Can I get a Rocket Mortgage auto loan with bad credit?
Rocket Mortgage requires a minimum credit score of 620 for approval on their auto personal loans. Borrowers with lower scores are unlikely to qualify.
How long does it take to get loan funds?
Funding can be as fast as 1-2 business days after you complete the application and get approved.
Where are Rocket Mortgage auto loans available?
Auto loans are issued in all U.S. states except Nevada. The entire process from application to funding is handled online
How Does A Car Loan Affect Your Ability To Get A Mortgage?
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