If you will be applying for an auto loan, learn what requirements will be asked of you prior to loan application. Having the documents ready and on hand will make the application process easier and less stressful. Listed below are the top five car loan requirements:
Proof of Identity
Naturally, lenders will want to know more about their potential debtor. They need to gather customer information in order to make a decision regarding financing. You may have already filled up the application form with personal information, but lenders still need to verify the information you have provided. As a result, you will be asked for an ID, signature verification proof and photographs (typically passport-size). These are usually required by lenders other than banks and credit unions you have business with.
Proof of Residence
One thing that lenders really need to verify is your address. They will want to know if you really reside in the address you have given because they need to be able to find you (and the car) should you default on your payments. The proof you need to provide will depend on the lender. Some just ask to see a driver’s license while most request their borrowers to show a utility bill in your name and registered to the address you have given or a mailed bank statement (or statements). The bill and statement must be current.
Proof of Income
Of all requirements, this is most important. Lenders will not offer financing without the guarantee that the money they will give will be repaid plus interest. One such guarantee is proof of income. Before they let you borrow, they need to know for sure that you have the capability to repay. Thus, you need to have a source of income if you wish to qualify for an auto loan.
If you are a salaried individual, you will be asked for your pay stubs. These do more than just prove you are employed, though—these also show the lender how much you make and in turn tell them if you can afford to make repayments. Lenders usually ask for the two most recent salary slips. If you are paid through salary deposit, you will need to show the receipt of the deposits. You will need to ask a paper copy of the receipts from your employer. Another thing you may need is employment certification, which some lenders also require.
If you are self-employed, you will be asked to bring income tax returns. While some lenders just ask for one year’s tax returns, other require more.
Proof of Insurance
You are not required to get auto insurance before you buy a car, but you will need it in order to drive the vehicle home. Lenders need to be reassured that losses will be covered in the event of an accident or theft before they offer financing. So once you have decided on the car you will buy, you need to get auto insurance.
Oregon law requires liability insurance (bodily injury and property damage) as well personal injury protection. The insurance identification (ID) card provided by the insurance carrier is a good enough proof, but most lenders ask for the declaration page of the insurance policy.
If you will be trading in your current car in the process of the auto loan application, you should have all the important documents related to the current car. Prepare the title and registration papers, as well as other documents related to your ownership of the vehicle as well as its value.