It’s understandable if you decided not to pay for your car in cash. It might be the ideal payment method, but you can’t afford the entire amount. Even if you include your savings in it, you still couldn’t afford the price. As such, getting a car loan is a reasonable option. If you want your application to get approved, these are the documents you need to prepare.
Proof of income
The lender needs to know that you have a stable income source. It means that you’re capable of paying the monthly fees. Make sure you show your latest pay slip. It should also reveal your year-to-date income. If self-employed, your proof of income is the tax return. You can also request for bank statements to show how much money you have in the bank. For tax history, you need to show proof for at least two years. For the bank statement, you need proof from the last three months.
Proof of residence
Another thing you need to show is proof of residence. It indicates your exact address. The lender will deliver the bills to the address shown in your proof of residence. In some instances, you will also need to show your driver’s license.
Proof of insurance
In most states, insurance is necessary by law. Lenders want to ensure that you have adequate coverage before giving the car loan. If you are purchased insurance before, you need to bring the necessary documents. If not, you need to secure it first. You can compare insurance providers and check which of them would be perfect for you.
Apart from your driver’s license, you also need to show other proof of identity. It includes a photo ID with your signature on it. You should also bring your current utility bill showing your name and the address shown in your proof of residence. Other acceptable identification cards are government-issued. It includes passport and home titles.
The most important document you need to show is your credit rating. It shows your current score and your entire credit history. The lender will analyze if you’re a low-risk borrower based on your credit rating. This document also reveals the percentage of your monthly gross income going towards debt payment. Lenders have different standards in deciding whether you will receive the loan. If your scores are low, you have to find a way to improve them. You can request an updated credit rating once you already fixed your finances.
If there are other documents required by the lender, you have to prepare them. Make sure you bring whatever the requirements are to reduce the chances of loan application rejection.
It would help if you get pre-approved first before you start shopping for cars. You will find it easier to get what you want if you already have an approved loan. If you wish to buy used cars Layton Utah for example, you’re in a better position to negotiate with an approved loan. Take your time to gather the requirements before beginning your loan application.