Looking for answers on what an auto lender is going to ask you to bring to the dealership? Lenders can vary greatly, but we’ve got some basic items that many lenders are likely to ask for, and what additional items you may need if you’re a bad credit borrower.
Preparing Your Documents for an Auto Lender
When you apply for an auto loan, the lender is going to ask for some items to get a better idea of you as a borrower. They’re typically looking at your monthly income, work history, living stability, and credit history.
You’re likely going to need to bring these items to an auto lender:
- Computer-generated check stubs from the last 30 days, if you work for an employer
- Two to three years of tax returns, if you’re self-employed or a 1099 worker
- Proof of identity, typically proven with a valid driver’s license
- Proof of residence, usually satisfied with a recent utility bill in your name
In terms of your credit history, you don’t need to bring in a copy of your credit reports for the lender. They request them, and this action is reported as a hard inquiry on your credit reports. Once your lender has your credit reports and score, they take that into consideration along with your other supporting documents to see if you qualify for a car loan.
Lenders vary on what credit score you need, how much monthly income you need, and can even vary on work history requirements. However, if you have a good credit score, enough disposable income each month, and possibly a down payment, then you’re usually on the right track for vehicle financing.
What Happens if My Credit Score Doesn’t Make the Cut?
One of the most common reasons for car loan denial is a poor credit score.
Typically, once your credit score falls below 660, you’re considered a bad credit borrower and may struggle to meet the credit score requirements of traditional auto lenders. If this is the case for you, then a subprime car loan could be the next step.
Subprime lenders often work with borrowers that have gone through bankruptcy, have limited credit histories, and other various credit challenges. To apply for a subprime car loan, you’re going to need similar items to the ones we listed above for a good credit loan. However, subprime lenders look at more than this, because they want to get a better feel for your situation.
Items Needed for a Subprime Auto Loan
These lenders are looking to make sure that you have the ability, stability, and willingness to take on an auto loan. To meet their qualifications, subprime lenders generally ask for:
- Computer-generated check stubs from the last 30 days if you’re a W-2 employee
- Two to three years of tax returns if you’re a 1099 employee
- Consistent work history for the last three years
- A down payment of at least $1,000 or 10% of the vehicle’s selling price
- A recent utility bill in your name
- A recent contract cell phone or landline bill to prove you have a working phone
- A valid driver’s license with your correct address
- A list of five to eight personal references with their complete contact information
If you can meet a subprime lender’s requirements, then you’re told the maximum monthly car payment you qualify for based on your individual situation, and work with the dealership to choose a vehicle that fits.
Where Do I Find Subprime Auto Lenders?
Subprime lenders are signed up with special finance dealerships. They’re indirect lenders, so when you apply for a subprime car loan, you speak with the dealership’s special finance manager who acts on the lender’s behalf.
Finding a special finance dealer can be difficult, since they may not advertise who their lending partners are. Instead of looking for one yourself, why not start right here with us at Auto Credit Express?
We’ve created a coast-to-coast network of special finance dealerships, and we can look for one in your local area after you complete our auto loan request form. It’s quick, free, and carries no obligation, so get started on your path to a car loan right now!
Dave says: If you need a cosigner, you're not ready – Northeast Mississippi Daily Journal
How to improve your credit score in 2021: Easy and effective tips
If you’ve ever wondered “What is my credit score?” it’s probably time to find out. Having a good credit score can make life a lot more affordable. If you’re about to buy a house or car, for example, the higher your credit score is, the lower your interest rate (and therefore, monthly cost) will probably be.
Your number may also be the deciding factor for whether or not you can get a loan and ultimately determine if you are even able to buy something you want or need.
So, yes, the goal is to have the highest possible credit score you can, but increasing the number doesn’t just happen overnight. There are important steps to take if you want to increase your score, and the sooner you start working on it, the better.
“If you’re trying to increase (your credit score) substantially to accomplish a goal, you’re really going to have to have as much lead time as possible,” said Thomas Nitzsche, director of media and brand at Money Management International, a nonprofit financial counseling and education provider that advises people on how to legally and ethically improve their credit score on their own.
If you have fair credit and you’re trying to improve the number for a house purchase, for instance, you’ll want to start working on it at least a year in advance, he explained to TMRW.
But even though that sounds like a long time away, you can (and should!) start doing things right now to bump that number up. Below, see seven things you should do — and not do — to help improve your credit score:
1. Review your credit report
The first thing you’ll want to do is pull up a copy of your current report so you know where you stand. You can get free reports from all three agencies — TransUnion, Experian, and Equifax — at annualcreditreport.com. Nitzsche said it’s important to take a moment and understand the financial snapshot of where you are today and where you want to be.
You’ll also want to take some time and look for any errors on your report, which could negatively impact your score. “If your name is misspelled, that’s not going to hurt your score,” he explained. “But if you see a late payment or missed payment (that’s in error), or maybe you have an account that should be reporting but isn’t, then that’s a problem and that will impact your score.”
If there is an error, you should dispute it and try to provide as much proof as you can.
One other thing: You can also ask a creditor to remove an issue if it’s been corrected (i.e., if you paid off a collection debt). Nitzsche said it doesn’t hurt to ask and the worst thing they could say is no.
2. Have good financial habits
“The biggest part of your credit score is payment history, so the most critical thing is never missing a due date,” Nitzsche said. Set up a monthly autopay or add all due dates to your calendar so you never miss a bill.
You can also achieve a higher score when you mix different types of accounts on your credit report. It may seem counterintuitive to get extra points for having debt in the form of student loans, mortgages and auto loans, but as long as you’re paying them off responsibly, it shows that you’re reliable.
3. Aim to use 30% or less of your credit at any given time
Know your credit card limit, and try not to use any more than 30% of that number each month, otherwise your score could lose points for too much credit utilization.
Another thing you can do is ask your bank to increase your limit. “That will give you more flexibility to spend more,” Nitzsche said. You could also pay it off twice a month to keep the balance low. But he does warn that you never know when the balance is going to be reported to the bureau. It can happen at any point during the month, so it might be the day after you make the payment or the day before. “You don’t necessarily want to use the card and pay it the next day because that doesn’t give the bureau the chance to know that you’re using it,” he said.
4. Avoid requests for new credit
If you’re looking to increase your score around the time you want to buy a house or car, you won’t want to open up a new line of credit, like a retail card, credit card or loan. That’s because “hard” credit inquiries like those can lower your score, and sometimes it comes down to a few points over whether you’re approved or what your rate will be, Nitzsche said.
“Soft” credit inquiries, like when an employer checks your credit or when you pull your own report, won’t affect your score.
5. Keep all accounts open, even ones you don’t use anymore
Even if you don’t use that credit card from college, it’s a good idea to just keep it open because closing it could hurt your score. Nitzsche explained that you’ll be dinged some points for each account that is closed. If you want or need to mentally break up with a card, just cut it up instead.
6. Build your credit if needed
If you haven’t established credit yet, you might not even exist … in the credit report space, that is! “If someone has never fallen in delinquency on any subscriptions or utilities or never had collections on anything and they have not utilized credit cards or loans in the past seven to 10 years, they may not have a credit profile at all,” Nitzsche said. “That presents a challenge when you want to buy a home.”
If this sounds familiar, you may have to get a secured credit card where you put down a deposit, he advised. “You still have to make payments and use it responsibly. Not all banks offer them but you can usually check with your local bank or credit union.”
7. Reach out for help
There are many apps and credit-monitoring services that can help you stay on top of your credit score. You could also reach out to a professional credit counselor who can help you navigate your specific situation. (Here’s a good resource about finding a reputable service.)
One last thing: Nitzsche warned that everyone should beware of credit repair scams that claim to be able to increase credit scores for an advance fee to get accurate negative information removed (even temporarily) from credit reports.
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