What Documents Will I Need to Get a Car Loan?

Posted by: Derrick | Tags: , | No comment

Are you searching for an auto loan? We can help you prepare for your meetings with the lenders. If you want to obtain a loan quickly, you must be able to prove your ability to repay the loan and that you have a good track record for doing so. Not all lenders require the same documentation, so you will need to research your lender of choice to determine their specific requirements.

In general, the documents below should guide you through the approval process:

1. Proof of Income.

Provide the lender with the copies of your pay stub from the previous month, as well as, everything that you have earned to the current date. Some lenders require as much as two to 10 years of income proof. Check with your lender to determine his or her requirements. Cancelled checks from your employer may be required if the stubs are hand written. Typically, lenders will require four consecutive statements.

Self employed applicants may use tax returns to show gross income. You should be prepared to share your tax returns from the past two years. Individuals receiving income from rental properties, alimony, child support, legal settlements, social security or other sources may need to show proof of this income also. If you show all income, you may be approved for a larger loan than you would without providing evidence of supplemental income.

2. Credit and Banking History.

The lender will need your full name, social security number and date of birth to obtain the borrower’s credit report. From the report, the lender will determine if there are any outstanding loans or financial obligations that have not been met by the borrower. During this phase of the process, the lender may ask the borrower to provide credit card statements, bank statements, mortgage agreements, lease agreements and proof of any alimony or child support payments.

Documents such as credit card statements, lease agreements and other agreements are required to allow the lender to examine your current debt to income ratio. For instance, a borrower may have an income to qualify for the loan if they have no other debt or bills to pay outside of their mortgage or rental. If the borrower has a number of credit card payments to make in addition to other bills, the lender may determine that the borrower may not be able to meet all of their financial obligations.

In this instance, the lender may approve the loan at a higher interest rate, because they view the borrower as a risk. Alternatively, they may decline the loan outright. Lenders currently have numerous defaulted loans and repossessions. Therefore, lenders do not want to assume additional debt that they may or may not recoup. Lenders need to know that you can handle your debt load.

3. Proof of Residence.

Every lender would like to know a physical address where the car will be the majority of the time. If you default on a loan, the lender needs to know that they can contact you and find the vehicle. The proof of residence may consist of a driver’s license or a bill that is registered at your home address. The address on the loan application must be the same as the address on the proof that you provide.

4. Vehicle Information.

The lender will probably ask for a copy of the buyer’s agreement or the sales agreement from the dealer. This agreement should detail the purchase price, vehicle identification number (VIN), the make, the model, the condition of the vehicle and the mileage. All of this information should be included in a legal document so that the bank is assured that the dealer is willing to uphold their end of the bargain. If you purchase the vehicle from an individual owner, a bill of sale will be required and both parties will sign the loan.

When you apply for a loan, you will only be required to provide all of this information verbally. Verbal confirmation will be enough to determine if you are eligible for the loan. A legal document is required to actually issue the loan to the borrower.

The title will also be required. Most individuals will attempt to determine if there are any outstanding liens against the vehicle before the vehicle is purchased. Upon the issuance of the loan, the lender will add his or her name as the lien holder. The lender will retain the title in their possession until the loan is paid in full. At that time, the title will be given to the borrower or owner.

5. Proof of Insurance.

In most states, it is required by law that you have basic coverage on your vehicle. Lenders will need proof of insurance before the vehicle is driven off the lot. A copy of the document will need to be provided for the lender to ensure that you have valid insurance and a valid license to drive the vehicle.


Borrowers that have all of the required documentation prepared for their lender in advance will probably navigate the approval process faster. Advanced preparation shows the lender that you are proactive and serious. After you gather all of the documentation, you can assess, based on the lender’s typical approval rates, your chances of qualifying for an auto loan. Keep in mind that there are many types of lenders available and some are stricter than others. A more lenient lender will probably provide a loan to an individual with challenged credit.

Gather your documents and research your lenders. Soon, you will be on your way to car ownership.