Consumer Car Buying Advice Blog

Because Bad Credit Car Loans are viewed as higher risk loans by the banks, the customer is generally required to prove the information that is stated on a credit application.

Verification

The 2 most important things that the bank is looking for are income and residence verification.

Income

For most people, the most recent pay stub showing year-to-date income is sufficient. The bank may also ask for the prior year W-2 form that you receive from your employer to prove time on the job.

For people that are self-employed, it becomes more difficult. The bank may also require professionally filed copies of your 1040 income tax forms from the three previous years as well as copies of your bank statements to prove income.

Other forms of income also require verification. As an example, if you are including child support or alimony payments as part of your income, the bank will probably ask for a copy of the divorce decree to prove the length of time of the payments as well as bank statements proving that the payments are being made to you on a regular basis.

Residence

In order to prove residence, the bank may ask for copies of your most recent phone and/or utility bill. In addition, if you are a homeowner, the bank may ask for a copy of your most recent mortgage statement that verifies your name as well as the address that you listed on your application. If you are a renter, the bank may also ask for a copy of the lease as well as the name and phone number of your landlord to verify that your payments are up to date and have been made in a timely manner.

Other Information

Depending upon your individual situation, the bank may request other information. As an example, if you were recently in a Chapter 13 or Chapter 7 Bankruptcy, you bank will request the discharge papers. If you are currently in a Chapter 13 Bankruptcy (that is, one that is not discharged), you will need a court approved order to incur additional debt originating from your trustee.

Most banks will also ask for a list up to 5 personal references. This can include family and friends as well as co-workers.

Having this information available when you go to the car dealership will make the process of applying for a Bad Credit Car Loan much smoother. It will also make the bank verification process much easier.

You can read more about Special Finance Car Loans here.

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