No matter your credit score, every car buyer must meet certain requirements to be eligible for an auto loan. An auto loan is defined as a loan that a lender issues a borrower to buy a new or used car.
Although the requirements can vary from lender to lender and from location to location, most tend to stay the same. Be prepared to bring in proof of each requirement before you buy.
No matter where you go, almost every lender for auto loans will require a down payment. This amount is usually 10% of the vehicle purchase price or $1,000, whichever is less. Keep in mind that depending on your lender, you may be required to pay more.
Lenders are concerned about your ability to repay, especially if you are looking to finance your next car with a less than ideal credit score. Usually, most lenders like to see a pre-tax income of $1,500-$2,000 per month. This amount can also vary by lender and your location. If you do not meet the income requirements, you may have to find an alternative dealer who works with your credit situation.
Your lender will want to verify exactly who you are, and this can easily be done with a photo ID. If you are trying to obtain financing from a bank or credit union that you use regularly, they will most likely not require this.
Lenders will need a way to contact you, and this is usually done via phone. You will need to show that you have a landline or a cell phone number that you can be reached at. For this, you cannot use a prepaid phone.
Your lender will want to know your primary residence and they will require proof of it. Usually, you can call your utility company and request a copy of a bill or even something known as “A Letter of Residency” which will allow you to show proof of address.
Buying a new car can be an exciting time! But for those that have less than ideal credit, it can be stressful and difficult. Thankfully, CrediReady has a large nationwide network of trusted lenders and dealers who work with buyers in all credit situations. Take a minute to fill out our free no-obligation form and start car hunting today!