To get an auto loan, you can just show up to a car dealership and ask. But that’s a good way to get ripped off. The right way to do it is to prepare by getting your documents ready so that the lender can make you a fair offer. Here are the things you need.
Proof of Income
Lenders need proof that you are actively earning an income so that you can make your car payments on time. So bring along a pay stub that’s less than a month old that shows your year-to-date income. If you’re self-employed, carry your tax returns for the past two to five years and bank statements from the past three months.
Proof of Residence
Lenders need to verify your address on the car loan. You can use a utility bill or any other business correspondence that you receive at your address. You also need to show a valid driver’s license.
Proof of Insurance
State laws need all cars to be insured, and the lender needs to know that you’re covered before they give you the money. Carry the documentation if you’ve already purchased the insurance. If you haven’t bought it, then you should ideally shop around for quotes and buy the best available coverage.
You’ll need a photo id with your signature on it, a current utility bill in your name with the same address as your id, and two months of current bank statements. Acceptable photo IDs include your passport, Medicare ID, stock certificates, title to a home, or a vehicle.
Credit and Financial History
Lenders need to know your debt-to-income ratio, i.e., the percentage of your monthly income that goes towards paying debts and your credit history and credit score. They can access this data themselves with your basic personal information and your consent.
If you’re applying for a used car loan, you’ll need a lot of information about the car you’re buying. The lender needs the vehicle’s purchase price, identification number, year, make, model, mileage, original title, and liens on it.
If you’re trading in a car, you’ll need its title and registration and any other documents to determine its worth.