When it’s time to apply for a car loan, there are specific documents required by the lender. They’re looking for proof of good credit and ensure that you can repay the loan with no problem. They calculate the interest rate payable from the latter terms.
Below is a checklist of information and documents required when you need a car loan.
A Checklist on Refinancing Your Car Loan
Car loan refinance rates will vary depending on when a person wants to refinance. According to Lantern by SoFi, “when an individual applies for refinancing from a lender, they’ll do a credit check for verification.” They will require other documents listed below.
1. Proof of Identity
The federal law requires that all lenders confirm their customer’s identification before proceeding to lend them a loan. The most common proof of identification used by lenders includes a passport, driver’s license, US visa or any other government-issued ID.
These forms of identification must show your face on them. However, some lenders can verify your identification with no documentation from you. To get this information, they will contact a third-party source such as a reporting agency for consumers.
Once you’re employed, they will request your Employee ID number. If you’re a business owner, they may also ask for an article of incorporation to prove business identity. They’ll also check the business’ cash flow along with two years’ worth of financial statements.
2. Proof of Income
The lenders want to ensure you’re able to repay the loan; therefore, they’ll do income assessment, monthly expenses, credit checks, and employment to determine your ability to repay.
Getting copies of your paystub for the past month is a good idea when applying for a car loan. A pay stub shows your year-to-date income. Some lenders will allow you to use bank statements to verify income. If you’re self-employed, the lender will use your tax return to find your gross pay.
3. Banking and Credit History
You will need to give the lender your social security number when attempting to get a car loan. They’ll also need your name, date of birth, and address. This will allow them to access your credit history.
They may also check other information, such as other credit accounts you may have and why.
4. Proof of Residence
The Federal laws require that all lenders must gather data on the residence of the borrower. If your driver’s license has your recent address on it, then the lender can use it for reference.
You can also use personalized emails received recently as proof of residence. Other proof of residence is the property tax bill, utility bill, lease agreement, mortgage statement or a renter’s insurance policy.
5. Proof of Insurance
Once you sign your bill of payment, the lender will request proof of insurance. It must comply with the state laws and meet all the other requirements of the lender.
Other details include information about the vehicle, vehicle Registration if you’re trading in and the form of the down payment.
To get a car loan, ensure you become aware of your credit report and score and have spending limits in mind to avoid overspending. Refinancing your car can get tedious, but knowing the procedure and the documents required can help you with the process.