How to Get Qualified for a Car Loan

People Shaking HandsBuying a car is one of the significant investments people routinely make and if you’re like most people nowadays, you’re not likely to have the luxury of paying for that vehicle with cash. You’ll need to secure a vehicle loan. Here are some tips to help make that whole process easier.

Proof of Income

The first thing you'll need to qualify for a loan is to prove that you have a steady income. It generally means that pay stubs and bank statements are enough, but some lenders may look to call your employer for verification. Some collateral will also help you get it. More often than not, the car is itself the collateral, but it never hurts to have a backup plan. 

Insurance

Before you choose a car, identify local insurance agents if you don’t already have one and comparison shop. If you carry a policy on your current vehicle, you can add your new car to your policy over the phone.

Girl with keysProof of Identity

Unless you're applying for a car loan at a credit union or bank that you've previously had business with, you will need to provide some proof about your identity. 

Proof of Residence

You usually are required to provide some evidence of residence so that lenders can find you if you stop paying your bills. Typically, utility bills with your name on them work well in facilitating your current home address.

Trade-in Documentation

This is only applicable if you are trading in a vehicle in the process of applying for a car loan. You need to have the right paperwork for the car you are selling. Title and registration, as well as other such vital documents that will prove ownership and will help the lender determine the worth of your car. 

Couple CarThese requirements above apply to all lenders, be it online or in person. An excellent credit rating isn't listed here because you can still buy a car if you have a bad score or if you are a first-time buyer and don't have credit built up yet. If you are in the first category and have a bad rating, you can try accessing a high-risk poor credit car loan, but you'll pay more in interest and will need to give a larger down payment. If you're on your first purchase, you'll need to have a co-signer on that loan. 

Credit Rating

A good credit score will almost always guarantee you a loan approval so make sure to have one in advance. It's advisable to have your credit repaired if you have a low score; otherwise, you will end up paying more in a high-risk credit car loan. You should start by paying off any existing debts that you might have.

Down Payment

The general rule of thumb is that the less money you borrow, the less interest you need to pay back. What's more, there is no such thing as a "no down payment" loan. And even if there is, it usually leads to inflated monthly payment terms.

Last but not least is to remember to have patience and not rush into anything, especially when it comes to such an important and long-term decision like getting a car loan. At Mike Duman Auto Superstore, you can get your financing pre-approved right away. Our finance team is committed to helping you with everything you need. Feel free to contact one of our finance managers at 888-523-1142 or visit our website for more information.