Having a stable residence is a cornerstone of auto loan approval – especially for those with poor credit.
Address and Residence History for Vehicle Lending
When you apply for vehicle financing, the lender takes a look at your income, address, work history, down payment amount, and other items. Your income and home address are two of the most important factors – stability is key in auto financing. Auto lenders ask for your home address so they can see how stable you are in terms of living circumstances.
With a permanent address, you’re less of a risk to the lender. If you move frequently or don’t have a stable living history it can represent a flight risk to them, and make them less likely to approve you for a car loan. However, if you’ve been living in one place for a long time or you’re a homeowner, your odds of getting approved for an auto loan increase.
Homeowners have a really good chance of meeting residency requirements and often higher approval odds, since buying a house is a big commitment. In the eyes of an auto lender, it’s likely you aren’t going to skip town and leave with the vehicle – having a mortgage or owned home shows the lender you have financial and living stability.
Additionally, having an active mortgage on your credit reports is good for your overall credit history (if you’ve been making the payments on time). If you have a good credit history with your mortgage, then it may be a sign to an auto lender that you’re willing and able to repay your current loans.
Don't worry – you don't have to be a homeowner to get an auto loan. Renters that have been at the same residence for a while are also viewed as stable by lenders, too.
Meeting Residency Requirements
Proving your home address for a car loan isn’t that difficult. An auto lender is likely to ask for your driver’s license showing your correct address, and either a utility bill in your name with your current address or a bank statement showing your current address.
The longer you’ve lived in the same area or held the same address, the higher your chances of meeting the residency requirements of an auto lender. The specific area you live in isn’t of consequence to an auto lender – the length of time you’ve spent in the same place is what they’re looking at.
If you have poor credit, expect a bad credit auto lender (also called a subprime lender) to ask about your living stability. Many subprime lenders require that you’ve lived at the same address for at least one year. Some may consider unique circumstances, such as those that move frequently for their job. For example, contractors that move around for different jobs may still meet residency requirements because their work requires them to move around a lot.
Borrowers that haven’t held the exact same address for at least one year may be eligible for vehicle financing if they’ve lived in the same area for around three years, but this varies. Be upfront with your auto lender about your living situation so they can get a better picture of your stability and decide what you qualify for.
What if I Don’t Have a Permanent Address?
Without a permanent address, it’s tough to get an auto loan approval. Your address is also a way lenders can contact you about the status of your car loan. If you live with relatives and the mortgage/lease isn’t in your name, or you’ve moved a lot recently, you may run into issues getting an auto loan approval.
Temporary living situations aren’t likely to be accepted by a lender, either, such as a borrower that resides in a hotel or an RV that isn’t on their own property.
In the case of subprime vehicle financing, they may be willing to assist with unique circumstances, but it all depends on your personal situation.
Need a Dealer Near You?
Having a permanent address increases your chances of getting the vehicle financing you need. However, finding a lender that can assist with credit challenges isn’t always that easy. Thanks to our nationwide dealership network, though, we want to help you find a dealer that’s signed up with subprime lenders.
At Auto Credit Express, we’ve been connecting consumers to dealerships with bad credit car loan resources for over two decades. To get matched to a dealer in your local area that’s able to help with unique credit situations, fill out our free auto loan request form.