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What to Bring When Buying a Car: 8 Documents to Have

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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On top of the normal stress of buying a vehicle, there’s the aggravation that comes from not having all of the paperwork you might need. The last thing you want is to make more trips to the dealership. To help you save time, money and some sweat, we made a list to check off before you hit the lot.

1. Proof of identity

This one seems like a no-brainer and it often is. If you’re a U.S. citizen with a current (unexpired) driver’s license, you’re usually good to go. But if you want to or need to use other documents to buy a car, here’s what you could use depending on your situation.

U.S. citizens: Most federal and state-issued identification that includes a photo of you, such as passports and state ID cards, should suffice. Military ID badges, however, are not acceptable as proof of identity because making a photocopy of them is illegal.

Non-U.S. citizens: You’ll have to bring your passport and visa when buying a car. The passport serves as your identification document. The visa shows you are legally allowed to be in the U.S. for a period of time. If you want to finance a vehicle with a U.S. lender, the lender will want evidence that you are allowed to stay in the country for at least the entire duration of the loan. So if your U.S. work visa is for 60 months, but you want a loan for 72 months, the loan probably will not be approved. In this example, you might have to get a loan for a 60-month term or shorter, which may mean you need a less expensive car.

To prove that you may legally drive on public roads, you usually need an international driver’s permit or a local driver’s license.

Do you need a driver’s license? Technically you could buy a vehicle without a driver’s license, but you couldn’t legally drive it, get auto insurance for it (required by lenders if you are financing the car) or register it in your name. Generally, you must provide your driver’s license, not necessarily as proof of identity, but as proof you can legally drive. The dealership will require you show your license before you even take a vehicle on a test-drive.

There is, of course, the obvious loophole: if you’re not going to drive the vehicle, it isn’t an issue. If you are a cosigner for a person who does have a license and you’re not going to drive the vehicle at all, then you don’t have to worry about having your own driver’s license. A couple examples for this situation include a grandparent who can no longer drive but cosigns for a grandchild or a disabled person buying a vehicle that their caretaker will drive for them.

2. Proof of income

Not all lenders will require proof of income, but you’re more likely to need it if you have a new job or have multiple sources of income. They want to make sure you’ll be able to not only cover your new car payment but also still be able to make rent. How little or how much proof you’ll need to submit depends on how you get your income.

Proof of income for primary job(s). Perhaps the most convenient thing for you to take as proof of income for your primary job(s) is your tax form, your W-2 or W-4. If that’s not available, then what will probably suffice is three months of pay stubs. The pay stubs should show the total amount you’re paid before taxes and the total amount you actually receive (after taxes, benefits and any other deductions).

Proof of income if you’re self-employed. If you don’t have an employer-provided tax form or pay stubs because you work for yourself, or you’re a freelancer or a contractor, the best things to bring are your 1099 tax form and at least three months of personal bank statements showing income being deposited into your account. Any work contracts showing you will have gainful employment for a set time, such as a year-long contract to develop a website, could be useful as well.

Proof of income if you’re going to start a job. If you’re not employed yet or you’re changing jobs and want your potential lender to consider your future income as a reason you can afford the new car, then bring your job offer letter. It should show the employer’s name and contact information, your name, future start date, annual income and any bonuses being offered. Many lenders will want to verify the offer with the future employer. Many lenders require that this starting date is no more than 90 days out from when you sign the financing contract for the car.

Multiple sources of income. You do not have to prove every single source and amount of income you earn. You only have to report it if you want the lender to take this other income into consideration. For example, if you earn $30,000 a year from your job, but you also receive $10,000 a year from Social Security, alimony, pension, child support, stock dividends etc., that’s a lot of money that could help you afford your car payment.

The more you are able to make your loan payments, the less risky it is for the lender to lend you the money. This translates more likely getting a loan and having better loan term. So if you have a significant amount of income from other sources, consider including it in your auto loan application.

To prove these sources of income, you may have to provide a couple of different documents in addition to bank statements. The second type of documentation depends on the type of income source.

  • Social Security. The award letter from the government showing the amount you receive and how often you receive it.
  • Pension. A letter showing that you are to receive a specified amount from a pension fund managing company, the start date and for how long it will continue. It may be that it continues for the rest of your life or until you reach a certain age.
  • Interest and dividends. The issuer of these should provide an income statement showing how much and when you receive it.
  • Child support or alimony. A signed court order showing the amount that is to be paid to you and the dates you’re going to receive the payments.

If you have any questions specific to your situation, you could also ask the lender directly or a dealership finance manager.

3. Proof of residence

You’re most likely to need this if you recently moved. The address you provided on the loan application should be your residential address — where you actually live. Most lenders will not accept a P.O. box or a business address as your primary address.

The most commonly accepted forms for proof of residence are utility bills such as electricity, water and gas. You usually only need one utility bill as proof. But if the utility bills aren’t in your name, then a medical bill or tax bill, bank statement, lease or mortgage contract, driver’s license, cellphone bill or several pieces of business mail (or junk mail) may work, depending on the lender.

If you absolutely need to receive mail at an address that is not your residential address, you can specify that your mailing address is different from your residential address. Specifying this may be an option during the process of buying the car, or you may need to contact the lender afterward to add to your personal preferences.

4. Current vehicle registration (for trade-in)

To trade in a vehicle, you have to prove you have the right to do so. If you have the current vehicle registration in hand and only in your name, you’re good to go in most cases. This applies if you go to a dealership to get your new car, no matter whether you still owe money on the vehicle or you own the car outright.

Do you need to bring the title? If you own the vehicle (you paid off the loan or you paid for it in cash), then you should have a title and it’s best to bring it in order to avoid delays in paperwork processing. But if you lost it, you could fill out a form that’s called “lost title” or “request for title”(provided by the dealership or your state’s DMV site) and may be able to trade in the car with that form instead of the title, as long as you have the current vehicle registration.

What’s a payoff instead of a title? If you owe money on the trade-in, you don’t have a title. In this case, you’ll need a payoff statement, which shows how much money it costs to pay off the entire vehicle loan at once, at an exact date. You do not have to worry about getting this yourself if you go to a dealership. At a dealer, your salesperson can get a payoff quote from your lender (which is listed on the vehicle registration) and take it from there.

If you are buying a car from a private seller, you might have to do more work. If you need a loan to buy the car from the private seller, the lender may call and get the payoff amount for you and apply that amount into your new loan, or you may have to call yourself to find the amount and tell your new lender what it is.

If the trade-in isn’t yours. In the case that the car you want to trade in isn’t yours, you need to have the owner sign off, saying that they give you the right to trade it in and they acknowledge they won’t have a right to the new car. Some places require that the owner go to the dealership, show their ID and do this in person. If the owner lives in a different state, the same paperwork applies and can be sent to them, but they will probably have to have it notarized.

If there is another name on the vehicle registration or title. If your name is on the paperwork for the trade-in along with someone else’s, you might have to get them to sign off on the transaction. Because their name is on the paperwork, they’re technically part owner. Depending on the state, you may not be able to sell or trade it without their permission.

To find out whether your state requires consent from both owners before you can sell or trade a vehicle, visit your state’s Department of Motor Vehicles website or ask a manager at a dealership. If it is required, follow the steps in the section above to get permission from another person.

5. Method of payment

Whether you’re giving a small down payment or paying for the whole vehicle at once, here are some notes on what to bring when buying a car in the way of money and funds.

Credit or debit cards. Do bring your card and don’t forget your PIN number (if you have one). Also, don’t be surprised if the transaction is declined if you didn’t warn the card company about a large purchase in advance. Call your credit card company or bank (if it’s a debit card) ahead of time to let them know you’re giving a vehicle down payment and you may need a one-time or a one-day increase to your normal daily credit or debit limit. It’s easier to do this ahead of time instead of when you’re in the finance office at the dealership.

Cash. Bring large bills for faster processing and expect a dealership manager to count it in front of you and check for counterfeit currency.

Check. For exceptionally large personal checks, the dealership finance manager may call your financial institution to ensure fund availability. Some dealers have a third-party check processing company that guarantees checks. If the dealership can’t verify funds, they may ask for a different form of payment.

A dealer’s check. If you already accepted a loan offer directly from a lender, the lender may give you a blank check (with a maximum limit on it) for you to use to buy a vehicle. After you strike a deal and sign the paperwork to buy the car, you’ll give the dealer’s check to the finance manager who will fill it out and send it to the lender with the other paperwork. Your loan will be finalized when the lender pays the dealer.

6. Rebate qualification documents

If you want a rebate, you usually need to bring appropriate documents showing you qualify. Here are three common car rebates and the documents to take with you to show you meet the requirements.

  • Military. Bring the appropriate document pertaining to your current military status:
    Active duty: Bring your Leave and Earnings Statement (LES).
    Retired or separated from service: Bring your DD-214 discharge papers.
    Again, military ID badges are not acceptable. If you want to receive the discount because your spouse or household member served, not you, they will need to come with you and bring their LES or DD-214 and proof of their relationship with you such as a marriage license or proof of residence.
  • Grad/Student. Your diploma showing you graduated or transcript papers showing your soon-to-be graduation are generally accepted. You may also need to have proof of income.
  • Conquest/Loyalty. Bring the vehicle registration or title of the car that shows either a competitor brand and model (for the conquest rebate) or the same brand (for the loyalty rebate) to prove that you (or someone in your household) currently owns it. If the car is not registered to a household member, you may have to prove that you live at the same address with proof of residence for each of you.

7. Knowledge of your credit and banking history

The following things aren’t required papers to bring with you but should at least be familiar knowledge when making a major purchaser. If you want to bring a copy of any of these for your own reference, feel free.

Credit history. When the lender does a hard pull on your credit, they will receive a copy of your credit history. You don’t need to provide one to the lender. You should, however, know your credit score (you could check it at LendingTree) and what’s on your credit history report. Both are important when shopping for a car loan because they impact the type of loan offer you receive. (LendingTree owns MagnifyMoney.)

Dealerships are usually able to make money by increasing the auto loan APR above what the lender charges. And to convince you that you deserve a higher APR, they might point out places where your credit history is lacking. If you have your own copy of your credit history and a preapproval from another lender, you’ll have a better idea of the rate you deserve.

Banking history. Usually, if a lender asks for bank statements, they want them as proof of income or proof of assets. Unless you know you need these, it’s not recommended to bring them. It would be good, however, to know how to get into your bank account from another computer, so you could print bank statements at the dealership if later deemed necessary.

Asset amounts. How much you have in your savings or investment accounts isn’t just a good way to show off that you manage money well, it’s also a way for the lender to confirm that if you don’t make your car payments, you have liquid assets the lender can take instead. You would only likely need these documents to buy a car if you have a lot of current debt on your credit history.

8. An auto loan preapproval

Because dealerships can make money by increasing your auto loan APR above what the lender charges, we highly recommend you get an auto loan preapproval from your bank, credit union or online lender before you step foot into a dealership.

A preapproval will tell you the APR you can get, the amount you can borrow and how long or short your loan can be. You’re not tied to any one dealership, either. If you don’t like the dealership, you can leave and take your preapproval with you. It doesn’t hurt your credit to apply for a few preapprovals or a few auto loans any more than it would to apply for one — if you do your applications within a 14-day window.

So if a salesperson offers you a 5% APR loan and you have a 2% APR preapproval in your pocket, your life just got easier. You can read more about the benefits of getting a preapproved auto loan here.

LendingTree
APR

As low as
3.09%

Terms

24 To 84

months

Fees

Varies

SEE OFFERS Secured

on LendingTree’s secure website

LendingTree is our parent company

LendingTree is our parent company. LendingTree is unique in that they allow you to compare multiple, auto loan offers within minutes. Everything is done online. LendingTree is not a lender, but their service connects you with up to five offers from auto loan lenders based on your creditworthiness.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Jenn Jones
Jenn Jones |

Jenn Jones is a writer at MagnifyMoney. You can email Jenn at jennifer@magnifymoney.com

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This Is What You Should Know About Private Party Auto Loans

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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Buying a used car can be a tricky process, from getting approved for financing to checking out the history and maintenance of the vehicle. But what happens when you want to buy a used car from a person rather than a dealership? Before you purchase the car you’ve been eyeing, it’s helpful to learn the ins-and-outs of private party auto loans, where to shop around for them and how to make sure you are getting the best deal.

Here are some guidelines on how to navigate the used car industry and get the most competitive interest rate for your auto loan.

What is a private party auto loan?

A private party auto loan is one option for would-be car owners purchasing a used vehicle from an individual, rather than a dealership. Those who don’t have the savings to pay for the car will need to seek financing from a lender who offers private party auto loans.

Where can you find private party auto loans?

There are many lenders who offer private party auto loans, including banks, credit unions and online lenders. These lenders have their own specific requirements for things like minimum credit score, income and down payment, and could also have a maximum limit on the age of the vehicle and the number of miles it has accumulated.

APRs for used vehicle loans are also generally higher than ones for new cars. Used cars depreciate more in value because there is more mileage on the vehicle, along with more wear and tear on the engine, tires and other parts. The lender is taking on more risk and, in turn, charges a higher interest rate.

The length of a private party auto loan is similar to that of loans for new and used cars that have been purchased directly from a dealer.

Steps to take before you buy

After you’ve narrowed your search to the vehicle you want to purchase, you should start shopping around on how to finance it. Decide how much money you want to put toward a down payment from your savings or if the trade-in value of your car will be sufficient. The more money you have for your down payment, the lower your monthly payments will be.

Another important factor to look out for is the interest rate for your potential loan — a lower interest rate means that more of your money goes toward the principal of the loan. Make sure you compare auto loan rates from various lenders, including banks and credit unions. Banks will sometimes give a better rate if you are already a customer, though the lowest rates are often offered by credit unions — see if there is one in your neighborhood that you qualify for if your employer does not belong to one.

You’ll also be able to find out which lender offers the lowest APRs by comparing them online. You can compare rates from up to five auto lenders with LendingTree’s online marketplace by entering some basic personal information.

LendingTree
APR

As low as
3.09%

Terms

24 To 84

months

Fees

Varies

SEE OFFERS Secured

on LendingTree’s secure website

LendingTree is our parent company

LendingTree is our parent company. LendingTree is unique in that they allow you to compare multiple, auto loan offers within minutes. Everything is done online. LendingTree is not a lender, but their service connects you with up to five offers from auto loan lenders based on your creditworthiness.

Still, one important thing to remember is that each time a lender checks your credit score, your overall score will be impacted. Coordinate your searches for auto loans only when you are ready to make the purchase so that they occur within a 14-day period, which has less of an impact to your credit score.

The way to determine the best price for a particular brand and model of a vehicle is to compare selling prices from industry standards, including the the National Automobile Dealers Association, Kelley Blue Book and Edmunds. These guides are also helpful if you’re trading in your car and want to use the proceeds for a down payment.

Until you are ready to purchase a vehicle, continue to shop around on auto marketplaces or dealer websites. They could offer a discount for cars in different colors and features that may not be a priority for you.

Save your online research and show an individual car owner what other dealers are offering. Show them what their competitor’s price is and see if they are willing to lower their price.

Alternatives to a private party auto loan

Obtaining a personal loan is an option, especially for car owners with lower credit scores or shorter credit histories. Personal loans are typically used by consumers to pay off high-interest debt, like credit cards. An individual could apply a personal loan toward the purchase of a used car, along with a down payment, instead of seeking a private party auto loan.

However, while personal loans allow an individual to borrow a set amount of money for a fixed period with a fixed interest rate, their interest rates are often higher than an auto loan that has collateral (the car itself). These loans usually range between 24 and 60 months.

Another option is a home equity loan. You can qualify if you have enough equity in your house, which is used as collateral. These loans, available from lenders including banks and credit unions, can be used for various purposes. Once you are approved, the lender will give you a lump sum of money, which can be used toward the purchase of a vehicle.

You’ll make monthly fixed payments when you receive a home equity loan, similar to how a traditional auto loan works.

The bottom line

Car buyers have several loan choices they can make before committing to a major purchase. Private party auto loans are another common option to finance your vehicle. Once you’ve chosen the vehicle of you want to buy from another individual, you should check your credit history and the value of your current trade-in, and decide whether you’re able to make a down payment.

Start shopping around for private party auto loans to get the best interest rate and a lower monthly payment.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Ellen Chang
Ellen Chang |

Ellen Chang is a writer at MagnifyMoney. You can email Ellen here

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No Money Down Car Loans: Do They Exist?

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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Buying a car can be a frustrating experience. Between shopping, filling out paperwork and figuring out the down payment, the process is stressful for many. Thankfully, there are many options available for car buyers, even for people with poor credit, those who can only make a small down payment (or none at all) or someone who does not have a trade-in vehicle. But beware that you’ll often pay a higher APR in these circumstances.

How your interest rate is affected

The best APRs typically are given to people with higher credit scores who have a down payment or trade-in.

Individuals who have a poor credit score because they do not have a long credit history or did not pay their bills on time in the past will most likely be offered a higher APR from a lender.

Someone who does not have a down payment — or only has a small amount like $100 — will also likely pay a higher APR. So what can you do?

How to negotiate for a no-money-down car loan

If your credit score is poor — which can be defined as between 550 and 649 — and you do not have a down payment, you can make your case that you are a good candidate for a car loan by talking up some other factors.

Explain how long you have been employed at your current job. Lenders like to see that you have steady employment because it means you have regular income and can hopefully make payments each month. Staying with one company for an extended period shows that you are more reliable and do not have gaps in income.

Another factor that makes you look more responsible is maintaining the same apartment or residence for at least a year. This shows that you make monthly payments and could be reliable.

Keeping your debt to a minimum and having multiple offers can also help in your negotiations.

You can also now boost your credit score by allowing your cellphone, cable and utilities payments to be included in calculations. Separately, you can show a positive payment history by obtaining a secured credit card.

Shop around for a no-money-down car loan

Do your homework for the right loan and the right car. Start by comparing auto loan rates from lenders online or talking to your credit union or bank where you have a checking or savings account.

Shopping around for an auto loan is the only way to know which lenders offer the best APRs. Just getting one or two loan offers, or relying on the one from the dealership means you could be missing out on savings.

LendingTree
APR

As low as
3.09%

Terms

24 To 84

months

Fees

Varies

SEE OFFERS Secured

on LendingTree’s secure website

LendingTree is our parent company

LendingTree is our parent company. LendingTree is unique in that they allow you to compare multiple, auto loan offers within minutes. Everything is done online. LendingTree is not a lender, but their service connects you with up to five offers from auto loan lenders based on your creditworthiness.

After you have multiple loan offers, choose the one with the best APR because a lower interest rate will save you money during the life of the loan.

You can fill out a short online form and compare rates from up to five auto lenders through the LendingTree online marketplace. It’s important to remember that while some lenders conduct a hard pull on your credit, getting multiple hard pulls will count as just one if within a 14-day span.

You may have had your eye on a certain brand and model of a vehicle for several months, but make sure you are getting a fair price by comparing selling prices, including through Kelley Blue Book, Edmunds and the NADAguides. You can use these guides if you are trading in your vehicle.

Don’t just go to the auto dealership where you bought your last car or the one you drive by often. It’s easy to look up dealers online and see the prices for which cars are being sold.

Being flexible can help you save more money — even a different color could save you hundreds of dollars.

Dealerships want to sell you a car, so show them what their competitor’s price is and see if they will match or beat it.

Other tips

You can negotiate for a better interest rate if you can save a small down payment. Lenders prefer receiving even a few hundred dollars as a show of good faith toward a new loan.

If you can not provide a down payment, even a trade-in of an old vehicle might help you get a no-money-down car loan at a fair interest rate.

Getting pre-approved for an auto loan can help you walk into a car dealership with confidence and secure you the lowest APR.

The bottom line

Even though purchasing a car can be a complicated experience, doing some research can make the process easier and faster, even if a buyer can’t put any money down on a loan.

You can avoid some major headaches if you shop around for a vehicle, check your credit score, see how much your current car’s trade-in value is and determine if you can provide a down payment.

You, as a car buyer, have several choices before committing to a major purchase.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Ellen Chang
Ellen Chang |

Ellen Chang is a writer at MagnifyMoney. You can email Ellen here

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