Consumers with problem credit can streamline the car loan process even before visiting the dealership by putting together the right type of reference list beforehand.

Understanding the car loan process

Somewhere down the line, most borrowers who need a bad credit auto loan will find out that they'll need to bring a list of personal references to their dealer's special finance manager as part of a list of additional items they're required to furnish. Here's why.

Bad credit auto loan documentation requirements

In addition to the normal list of documents required for a car loan, such as proof of insurance and a valid driver license, lenders who work borrowers that have tarnished credit usually ask for a number of additional items that, in the auto business, are known as "stipulations" or simply "stips", for short.

The additional items usually include a recent phone bill (to verify the applicant's phone number), a copy of a current apartment lease agreement or home mortgage contract (to establish the applicant's residence), a recent utility bill (to verify the applicant lives at the address) and last but not least, the topic we'll be covering today: a list of personal references.

Personal references


So, what is a personal reference? Fortunately, it's much simpler than it sounds. As far as subprime lenders are concerned, a personal reference is simply someone who knows you "personally." The person can be a relative (brother, sister, aunt, uncle, cousin or even grandfather or grandmother). Someone on the list can also be a friend, co-worker (current or former), minister or even an applicant's boss.

In most instances, a list of six references is enough. In addition to a name, that person's current home address and either a work, home or cell phone number where they can be contacted is also required. Although most lenders will ask for only four, there are a few do require more so it's always a good idea to have at least six people who have given their permission to use them as a reference.

Why you need their permission

Why is their permission needed? That's because there is the possibility that during the loan verification process (when the lender corroborates that the information submitted on the application - including employer, home address and income - is correct) there is also the possibility they'll contact one or all of those references to confirm the fact that they know the borrower.

It also helps if applicants bring their reference list along with them when they first visit the dealer. That way, the loan process can proceed as efficiently as possible. That's because the more information the special finance manager has prior to the application being transmitted to the lender, the easier and more quickly a positive loan decision can be made.

The Bottom Line

In our experience, bringing in a list of at least six complete references from people an applicant knows who have given their permission, during the first dealer visit, will move the loan process along more smoothly and quickly.

We also have another tip: if you've experienced past credit issues, Auto Credit Express can help you find a car dealer for your best opportunity at an auto loan approval.

So, if you're ready to reestablish your installment credit, you can begin now by filling out our online car loan application.