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Requirements Needed to Get a Car Loan Approved

It doesn't matter if you have excellent credit, some lenders require you to provide them with certain documents and proof of income and residence before approving you for a loan.

These are called stipulations, and the lower your credit score, the more stipulations that will be required.

Let's take a look at what you're expected to provide as part of the loan approval process:

1. Proof of Income
Most lenders require you to submit a current pay stub - no more than 30 days old and showing year-to-date salary totals. In most cases, they will want you to be a full-time W2 employee with a minimum net monthly income requirement of $1,250.

Self-employed borrowers will need to provide at least 90 days of current bank deposit records and up to 5 year's of tax returns.

2. Proof of Residence
Many lenders will require proof of residence, such as a utility bill in the borrower's name mailed to their current address. It cannot be more than 30 days old.

3. Personal References
Lenders like to have a list of references they can contact in the event you don't pay your bills and they're not able to get in touch with you. The lower your credit score, the more references you will have to produce.

Lenders will want as many as 10 references - including full name, address and phone number. If your credit is bad, you can rest assured they will be calling your references so make sure you provide them with real people who will answer their phone.

4. Phone Bill
This is only required if you're a sub-prime borrower. The main purpose is for skip tracing in the event that you stop paying your bills.

5. Car Insurance
Many lenders require that you have full coverage insurance on the vehicle with a deductible of $500 or less. If your credit is good, this won't matter.

6. Driver's License
This should be obvious. You will need a valid driver's license in the state where you reside.

3 Steps Every Car Buyer Needs to Take to Save Maximum Money

The key to getting the best deal is to gather price or lease bids from as many local dealers as possible. Then shop that best price around until no one can beat it. Here are the steps:

Step 1 Get Prices From My Trusted Network

Select the vehicle you're interested in to see if there are local dealers in my network who will provide you with their best upfront price. You will get direct access to an internet sales manager who you can further negotiate with online (no need to visit dealership).
Select Vehicle to Get Local Pricing

Step 2 Get Prices From TrueCar / CarsDirect

TrueCar, and CarsDirect are my top 2 online price quote recommendations. These services show you pre-negotiated prices from dealers closest to you - and the deals are usually pretty decent. But remember, you can still negotiate further.

Step 3 Complete my Checklist

Follow this up with my checklist to make sure you squeeze out every last bit of savings.
- Gregg Fidan

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About The Author

Gregg Fidan Gregg Fidan is the founder of RealCarTips. After being ripped off on his first car purchase, he devoted several years to figuring out the best ways to avoid scams and negotiate the best car deals. He has written hundreds of articles on the subject of car buying and taught thousands of car shoppers how to get the best deals.
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