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Updated on Wednesday, March 31, 2021
You researched reliability and value, road tested a few vehicles and checked your credit — you’re ready to drive a new car home. But before you make that last trip to the dealership, you should know what to bring when buying a car. This list of documents you need to buy a car can save you time, money and aggravation.
- What do you need to buy a car?
- Buying a car out of state
- FAQs about what to bring to the car dealership
What do you need to buy a car?
There’s a stack of paperwork that’s part of the process of buying a car. You’ll need to provide several pieces of personal information, particularly if you plan to finance your vehicle through the dealership. Take some time to gather the proper documents to avoid extra trips.
License and proof of insurance
Your current (unexpired) driver’s license proves your identity and clearance to drive one of the dealer’s cars off the lot. Non-citizens may need their passport and visa for identification plus a local driver’s license or international driver’s permit.
You probably already had to show your license to test-drive a car, but the dealer and your financing company will now want to make sure you have auto insurance, too. Your insurance card from a trade-in or other car you own will probably do — insurance companies usually provide a grace period where the new car is covered until you add it to the policy. Do this as quickly as possible once the purchase is complete. You’ll probably have to show proof of insurance for that vehicle when you register it with your state or local government.
Compare rates: If you don’t already have auto insurance, shop around for the best rates before you go to the dealer. Most providers can supply you with temporary proof of insurance if you have the car’s vehicle identification number (VIN).
Form of payment
Whether you’re paying cash for the vehicle or financing it, it’s wise to research your options before you sit down to make the final deal at the dealership. Dealers are allowed to increase your auto loan’s annual percentage rate (APR) for their own profit. The only way to know what rate you deserve is to do your own research about the different payment methods available to you:
Preapproved auto loan
A preapproved auto loan tells you the APR you will get and the length of the loan term. With an offer in hand, you can judge whether the dealer’s options are better (or worse) choices. Plus, if you don’t want to buy from one dealer, you can take your preapproval with you to the next one.
Preapproval vs. prequalification: The preapproval or prequalification process may use what’s called a soft credit check or a hard credit check. A soft check shows what rates you may qualify for without hurting your credit score, but it may not be as accurate as a hard inquiry, which does impact your credit. Ask potential lenders what method they use and remember: you’ll most likely have to go through a hard pull at some point in the car-buying process. Credit bureaus allow a 14-day shopping window where all pulls count as a single inquiry. The drop to your credit score is typically minor and temporary.
A preapproval may come in the form of a blank check that you finalize with the dealer. You’ll take the check to the finance office, where the dealer will fill in the final amount and submit it to the lender. Or, you can go to a bank or credit union branch once you have the final amount.
To apply for financing at the dealer, you’ll need the same information it takes to apply for a preapproval online including your:
- Social Security number
- Proof of income or employment status and history, such as pay stubs, particularly if you’re starting a new job or have a low credit score.
- Residence status – do you own or rent? You will need to provide the monthly cost of your rent or house payment.
The dealer may ask for references based on your work history or a personal reference from the closest relative that does not live with you. Financing companies will use your Social Security number to check your credit score and credit history.
If you’re self-employed: You may be asked to provide bank statements, canceled checks or tax returns as proof of income. If you’re claiming other income sources such as child support, alimony or retirement income, you’ll need documents to back that up as well.
A personal check may be an acceptable form of down payment for a car or to buy a low-cost used car outright. For example, a private seller may be willing to take a personal check.
The dealership may ask you to verify that you have enough money in the account to cover the check. You could call the bank or use the bank’s mobile app to show your account balance. A dealership may prefer a cashier’s check, certified check or money order over a personal check. These types of checks verify there is enough money in the account to guarantee payment.
Dealers are usually reluctant to accept credit cards for the full amount of a car because of the merchant card transaction fees, but you may be able to charge a down payment of a few thousand dollars. There might be an advantage to doing so in the form of reward points and other incentives — for example, American Express cardholders who use its car-buying service are eligible for auto repair and insurance deductible benefits worth up to $2,000.
Credit cards charge high APRs, so unless you are able to pay off your purchase immediately, or have a low promotional rate, be wary of swiping plastic for such a large amount.
Check with your bank on the maximum amount you can purchase with your debit card. It’s usually more than the daily cash withdrawal limit, but may not be enough for a down payment on a new car. You could call your bank to ask for a short-term increase in your normal daily purchase limit. If you want to use your debit card, set things up with your bank ahead of time rather than while you’re sitting in the finance office at the dealership.
Dealers typically make more money when you finance through them, so they prefer those deals. If you’re thinking of paying with actual currency, keep in mind the dealer must report cash transactions over $10,000 to the IRS. Cash will be more welcomed for a small down payment. Dealers consider cashier’s checks and money orders for the full amount to be cash transactions because there’s no financing involved.
To trade in your vehicle, you’ll need to bring these essential documents to avoid any delays.
Must be valid and current.
Title and payoff information
Whether you have the title depends on your state – some states retain the title until a car is paid off; others send you the title with a note that there’s a lienholder.
If the car is paid off, you should have the title or it will be sent to you if you made the final payment within the last few days. Some states send a lien release form that you take to your state’s Department of Motor Vehicles (DMV) or the dealer to get a new title with the finance company’s name removed. At least 19 states track titles and liens electronically so your information is always up to date.
Lost title: If you have lost the title, apply for a duplicate with your state’s DMV. Depending on your state, a dealership acquisition form or a transfer bill of sale may work instead.
Don’t forget to sign over the title: When you own the car with another person, check to see if the title and registration is written with “or” between the names or “and.” If it’s “or,” only one person is required to sign the title. If it’s “and,” both signatures are required, so make sure both of you go to the dealership to avoid delays in the paperwork. When one person isn’t available, you may be able to have them sign a power of attorney giving you permission to sell the car.
The loan payoff is the amount you still owe on your trade-in, unless you’ve paid it off. Bring your loan account information including the payoff amount. You or the dealer may need to call the lender to get the most accurate figure.
If you want to take advantage of dealer rebates and incentives, you may need to verify your military or student status, for example. These types of discounts may be in addition to or in lieu of deals that depend on your credit profile. Be sure to check the manufacturer’s website for the latest offers and eligibility requirements. To get these discounts you usually must use the manufacturer’s finance company.
You’ll need to verify your status with a military ID and/or your leave and earnings statement, which also can be used to verify income. Some manufacturers are adopting government-approved online services like ID.me to prove your identity. Sign up online and receive a discount certificate to take to the dealer. The discounts are usually available to immediate family members as well.
Retired military or separated from service
Verify your veteran status using a current military or retiree ID card or a DD Form 214, the discharge papers you received when leaving the military.
Bring a student ID or other documentation to show you’re a current college or graduate student or have graduated from a two- or four-year college within the past two years.
You may be able to get a discount for staying with the same brand of car, or switching from a direct competitor. In either case, you’ll need to bring proof of ownership and, in some cases, proof of active financing or leasing status.
Buying a car out of state
Many dealers will start the registration process for you even if you live in another state. If they don’t, or if you’re buying from a private seller, you may have to do more of the work to get your new car home and properly registered.
1. Obtain temporary tags
Your new car needs license tags before you take it out on the road. A dealer usually provides a temporary tag, giving you time to register it in your home state. If not, or you’re buying a car from a private seller, you’ll have to go to a local DMV to get one or ship your car home. In a few states, the license tags stay with the car, so you could drive the car home. Be sure to check local regulations before you buy.
2. Register the car
You’ll need to register your new car with your state’s DMV within a specified time period.
To do that, you’ll need some documents, which vary by state and locality. Typically, you’ll need to fill out a vehicle registration application, and an application for a certificate of ownership for bringing in a vehicle from out of state. You may also need:
- Title or bill of sale or invoice
- Proof of insurance
- VIN inspection
- Safety inspection if required
- Current odometer reading
- Emissions certification if required
- Proof of tax paid via dealer
- Lien holder information
3. Pay any necessary fees
If you’re buying a car out of state, you should not have to pay that state’s use or property tax. Instead, you’ll pay that in your home state. You’ll also pay registration and license fees to the state as well as any local municipality fees and taxes.
FAQs about what to bring to the car dealership
Do dealerships register cars for you?
One of the advantages of buying from the dealer (versus a private seller) is that most are authorized to issue temporary registration and tags until your permanent ones arrive in the mail. Check with your local DMV to see what dealers can and cannot do in your state.
What documents do you need to buy a car?
At a minimum, you’ll need your driver’s license and proof of auto insurance. If you plan to finance through the dealership, you’ll need to bring the documents proving residence, income and more that we describe above. Bringing your own auto loan offer will make the process faster — your credit union, bank or online lender has already reviewed your paperwork. either in person or online.
Can you take a car home the same day you buy it?
Yes, if you’ve come to the dealership prepared. Otherwise, not having the right documents or signatures could slow down the process.