As a bad credit car buyer, lenders look more closely at things that show them you’ll be able to successfully complete an auto loan. In order to prove this, you’ll have to provide documentation at the dealership that shows you have the ability, stability, and willingness to pay an auto loan.
Why Does the Dealer Need Proof?
Dealers have to verify these things because consumers who need subprime financing typically have credit challenges and pose a higher risk to lenders. People in these situations are usually unable to work with a traditional lender. Subprime lenders look a little closer at the details behind any issues when evaluating an applicant, however, these lenders also ask you to provide them with proof.
What Do I Have to Prove?
Lenders are looking for documentation to prove you are who you say you are and that the information provided on your loan application is correct. You’ll need to prove:
- You have the ability to pay a loan – Do you have enough income to make your payments? Lenders typically require you to make at least $1,500 to $2,000 of taxable income each month, from a single source of employment (although other sources may also be considered).
- You have stability – How steady is your income? Do you have a solid job history? Have you lived in one area, or are you constantly moving? Lenders like to see reliable employment and a stable residence history, but they do understand special circumstances in some cases. Typically, they prefer three years of job history, with no long gaps in employment, with at least six months with your current employer.
- You’re willing to pay a loan – What does your credit say about you? Lenders will look closely at the payment history section of your credit report to see how you’ve handled past debt, especially auto loans.
How Do I Provide Proof?
Once you’re at a dealership, there are four things you’ll need for proof. These documents are known as stipulations. They provide the necessary proof regarding the information on your loan application.
- Proof of income – Your most recent check stub. It must be computer-generated and show year-to-date taxable income.
- Proof of residence – A current utility bill in your name, for the address listed on your application.
- Proof of a working telephone – A common adage among lenders: no phone, no loan. You must have a working landline or contract cell phone from a national carrier in your name. No pre-paid phones are accepted.
- List of references – Typically, lenders ask for six to eight personal references. This means names, phone numbers, and addresses of friends, family, or co-workers – as long as they don’t live with you.
Once you’ve provided these along with your valid driver’s license and proof of insurance, the ball is in the lender’s court.
Go to the Right Type of Dealer
When it comes to getting financed as a consumer with bad credit, you have to be sure and visit the right dealer. Not all dealers work with subprime lenders, and not all lenders will be able to help you with financing. Only certain special finance dealers have the proper lending resources to be able to help people who have bad credit, no credit, or bankruptcies.
Luckily, here at Drivers Lane, we work with a nationwide network of them, and we want to help you find a local dealer. It’s simple to get the process started, just fill out our online auto loan request form. As always, it’s free of cost and obligation, so what are you waiting for?