If you have bad credit and need a car, you’re more than likely going to be working with a subprime lender. These lenders work with special finance dealerships, and offer financing to those dealing with credit issues. In order to get approved, you need to bring in a few extra documents that traditional lenders don’t usually ask for.
Documentation Needed to Buy a Car with Bad Credit
The only way you’re going to be able to get approved for an auto loan with a subprime lender is if you provide the necessary documents to the lender. These are known as stipulations, or “stips,” for short. Subprime lenders ask for stipulations to backup the information you provide on your loan application.
Specifics vary by lender, but these six documents are usually needed:
- Valid driver’s license – This is needed to confirm your identity. Valid means that your license can't be expired, revoked, or suspended.
- Proof of income – A recent computer-generated paycheck stub showing your year-to-date earnings is needed to prove your income and employment. If you’re self-employed, recent tax returns and bank statements usually suffice.
- Proof of residence – To prove you live where you say you do, you need a recent utility bill in your name listing the address on the application.
- List of personal references – You typically need to provide a list of five to eight personal references complete with names, addresses, and phone numbers.
- Proof of a working phone – A recent phone bill in your name is needed to prove that you have a phone so that lenders can contact you. Both landlines and contract cell phones are acceptable.
- Proof of insurance – Make sure you have insurance before taking delivery, and have your insurance agent’s contact information handy.
The six stips mentioned above are usually required by all subprime lenders. However, depending on your situation, you may need to provide additional documents in order to get approved for a car loan.
For example, if you’re in an open Chapter 13 bankruptcy, you need to bring in a copy of the order to incur additional debt from the court to prove you can legally finance a vehicle. Or, if you recently had a bankruptcy discharged, bring in your discharge papers just in case it doesn’t show up on your credit reports.
Another common example is if you’re planning on trading in a car. To do this, you need to have the title with you. If the title has a secured party, bring in the payoff letter or the payoff amount, and have the lender’s contact information and your account number ready. Make sure you also bring in the registration if you plan on transferring the license plates to the new vehicle.
The Bottom Line
Be as prepared as possible before heading to a dealer. Buying a car with bad credit can be a challenge, and the process can take longer if you don’t have the proper documentation ready ahead of time.
Once you gather all your information and feel confident moving forward, Auto Credit Express is here for you. We help consumers with no credit, bad credit, and other credit issues find financing thanks to our nationwide network of special finance dealerships.
All you have to do is complete our free and fast auto loan request form, and we’ll get right to work connecting you to a local dealer!