What You Need to Finance a Car (Plus Tips to Get Approved Faster)
When you apply for auto financing, the lender may ask for proof of income, proof of insurance, a government-issued ID and more. Some documents (like proof of income) may be waived if you have very good credit. Proof of insurance is usually nonnegotiable.
Learn what you need to finance a car and other car loan requirements. Knowing what to expect before applying can get you behind the wheel and on the road in record time.
- By law, you’ll need a government-issued ID to get an auto loan, but some lenders verify this electronically.
- If you have excellent credit and your ID information matches your credit report, you may not need proof of income or residency.
- You typically can’t finalize an auto loan without proof of full coverage insurance.
A quick look at what you need to finance a car
Getting an auto loan is more than filling out an application. Typically, you’ll also need to provide supporting documents to prove that the information on your application is true.
| Category | Documents needed | Pro tip |
|---|---|---|
| Proof of identity | Government-issued photo ID | Many lenders verify this electronically |
| Proof of income | Pay stubs, W-2s or bank statements | Might not be required if you have 740+ credit |
| Proof of residence | Utility bill, lease or mortgage statement | May be waived if your address matches what’s listed on your ID and credit report |
| Proof of insurance | Declarations page (not just an ID card) | Lenders typically require comprehensive and collision with a max $1,000 deductible |
| Vehicle information | Current title/registration for trade-ins; a VIN for a new or used car purchase | Some lenders will let you get a car loan even if you don’t know the exact car you’re buying |
| Co-applicant verification | Typically the same documents as the applicant | Lenders will verify information for both applicants if buying with another person |
Required car loan documents
Every lender has its own underwriting processes, and those processes can vary from borrower to borrower.
You can usually get an idea of what specific documents a lender requires by checking its website. Or, if you’re getting a car loan with the dealer, they’ll walk you through the required information — still, you should have the following documents on hand:
Proof of identity
In an effort to prevent terrorism and money laundering, federal law requires you to show a government-issued ID whenever you open a bank account or apply for a loan. Many lenders can verify your identity electronically, so you won’t have to provide physical documents.
If your name, date of birth, Social Security number or other personal details don’t match what the lender pulls electronically, you may then be required to provide a copy of or upload your driver’s license or other government-issued ID.
Proof of income
Lenders want to see that you make enough money to afford your car loan payments. But if you have very good credit, the lender may take your word for it. Still, you may want to have a paystub or two handy, just in case.
Alimony, child support, legal settlements, Social Security and other income sources can also count as income. But be prepared to provide proof, like a Social Security benefit verification letter.
More than half (55%) of millennials and Gen Zers have a side hustle, according to a LendingTree survey. You may be able to include side hustle income when applying for a car loan, but only if you have consistent earnings.
You may also need to provide documents like:
- Tax returns
- Profit and loss statements
- Contracts
- Invoices
Proof of residence
Lenders must verify your physical address before finalizing your auto loan, but physical proof isn’t always required. Usually, you won’t need to provide extra documents as long as the address on your driver’s license is current and matches what’s on your credit report.
If you’ve recently moved or your address doesn’t match, you may need to provide further documentation. You might be able to use a piece of personalized mail you have received within the last month, such as:
- Utility bills
- Mortgage statements
- Lease agreements
- Credit card or bank statements
- Property tax bills
- Financial statements
- Homeowners or renters insurance policies
You’ll need to have a physical address — you can’t use a post office box as proof of residence. (The only exception is for Army Post Office boxes (APO) or Fleet Post Office (FPO).) You may also use the address of a next of kin.
Proof of insurance
You’ll likely need to show proof of insurance before the lender will finalize the loan. It can repossess the car if you fall behind on payments, so it wants to ensure that the car will remain in good condition.
Most lenders require full coverage car insurance with $500 or $1,000 deductibles for comprehensive and collision.
If you already have an auto policy, the coverage you have now should automatically cover your new car for a certain amount of time. Some lenders might accept proof of insurance on your trade-in instead of your new vehicle as a result.
Even so, it’s a great idea to shop for new auto insurance before you buy a car. It’s important to factor your updated insurance premium into your budget — plus, you might find a lower rate with a different company.
Vehicle information
If you’re financing through a dealership, the dealer will provide all the vehicle information to the lender. If you’re buying from a private party or working directly with the lender, the information required will vary.
Most of the time, you’ll need:
- Purchase price
- Vehicle identification number (VIN)
- Year, make and model
However, you can get an auto loan even if you don’t know what car you’re buying with a few lenders. You usually won’t need the VIN if you’re getting a Check-Ready Auto Loan with PNC Bank, for instance.
Document requirements for trade-ins
If you’re trading in a vehicle, you’ll want to bring your title and registration to speed the transaction along. The title proves that you’re the owner of the vehicle, and lists any lien holders.
Some states may also require extra documents like California’s smog certificate. Ask your dealer exactly what you’ll need to bring with you before leaving.
What lenders look for when you apply for a car loan
Knowing what documents you need to finance a car is just one step of the process — you should also understand what other factors lenders review.
Credit score and credit history
There’s no one credit score needed to buy a car — each lender has its own criteria.
Good credit (670+) is a goal to shoot for, but you can still qualify for a bad credit car loan with a lower score. The lender will likely use your FICO Auto Score, which ranges from 250 to 900.
The lender will review your credit report to check for collections in your credit history. It’ll also look for bankruptcies, foreclosures, lawsuits, wage garnishment and liens. A past history of unpaid debt — especially related to an auto loan — will make a lender less confident in your ability to hold up your end of the bargain.
Down payment amount
Not all lenders require a down payment, but consider making one anyways. The 20/4/10 rule for car buying says you should put down at least 20%.
You can almost think of your car down payment as an incentive to the lender. A larger down payment means less risk for the lender since you’ll have to borrow less. In addition, the more you put down, the less you have to borrow. Smaller car loans can be cheaper and easier to get.
Trade-in value (if applicable)
The lender will also review your current vehicle’s trade-in value and apply it to the cost of your new car. Be sure to figure out how much your vehicle is worth before accepting the dealer’s offer.
Loan-to-value ratio
Loan to value ratio, or LTV, also dictates whether your application is approved or denied. On a car loan, LTV measures how much you’re borrowing against the value of the vehicle. The lower the LTV, the better your approval chances may be and the lower the interest rate you might get.
You can reduce your car loan’s LTV by making a bigger down payment. A lower LTV can also protect you against an upside-down car loan. When you’re upside down, you owe more on the car than the car is worth.
Employment and/or income stability
Job hopping and/or a hard-to-prove income could be a red flag for a lender. Lenders are generally more confident in your ability to pay your loan if you have a stable income history.
Lenders also use your income to calculate your debt-to-income ratio, or DTI. This is how much total debt you have compared to how much you make. Generally, 35% or lower is considered a good DTI — though many lenders accept higher ratios.
When banks compete, you win
You can save an average of $2,346 on your auto loan by using LendingTree to compare offers and picking the one with the lowest rate.
Tell us what you need
Take two minutes to tell us who you are and how much money you need for your vehicle — we’ll take care of the rest. It’s free, simple and secure.
Shop your offers
We’ll send you offers from up to five trusted lenders. Compare your offers side by side to see which one will save you the most money.
Get your money
It’s smooth sailing once you finalize your loan with your lender — you could see money in your account in as soon as 24 hours.
What happens after you apply for a car loan
- Application review. The lender checks your credit, income and other details to decide if you qualify. This is when you’ll supply any required documentation.
- Loan decision. If you’re approved, you’ll get an offer that includes the details of your loan, including rates, terms and how much you can borrow.
- Sign and fund. You’ll sign in person or electronically to finalize your loan agreement. Depending on the lender, the money will be sent directly to you or to the dealer.
- Car title and registration. The dealer will do the title and registration paperwork for you — otherwise, you’ll have to go to the DMV. Your lender will be listed on the title until you pay off your loan.
- Make payments. Your first payment is usually due in about a month. Set up auto pay to avoid missing payments or to get a potential rate discount.
Frequently asked questions
Every auto loan lender sets its own minimum credit score requirements, though typically the higher your score, the better your rate will be. That said, you can still get a car loan with bad or no credit, but expect high (possibly predatory) rates.
You may be able to finance a car without proof of income if you have very good credit and a stable job history. However, you will still need to declare how much you make per year, before taxes.
If you have bad credit or are self-employed, your lender may require proof of income through tax forms, paystubs or bank statements.
The easiest way to get approved for a car loan is to:
- Have very good credit
- Have a long, positive credit history
- Gather documents and information in advance
- Make a down payment (at least 20% on new vehicles and 10% on used)
- Buy the car with someone else who has good credit
- Get a preapproved car loan before going to the dealer
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