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Auto Loan Documentation Checklist: 6 Things You Need

November 1st, 2021 | 8 min. read

Auto Loan Documentation Checklist: 6 Things You Need
Yanna

Yanna

As the Content Specialist and author of the Learning & Guidance Center, Yanna enjoys motivating others by uncovering all that's possible in the world of finance. From financial tips and tricks to ultimate guides and comparison charts, she is obsessed with finding ways to help readers excel in their journey towards financial freedom.

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Today’s the day you’re ready to drive the vehicle off the dealership lot and into your driveway! But, you need help with one crucial thing - financing.  Want to know what you'll need to receive a speedy decision when applying for an auto loan? 

To get started, you'll need to submit an auto loan application. Before you begin, ask yourself:

  • Do you know what documents to bring with the application?
  • What about the car details like the make and model, mileage, or if it’s a used vehicle?
  • What if you’re buying from a private seller?
  • Do you have the title and disclosure of any liens on the car?

This is the kind of information lenders will need to determine if you’re a good credit risk when applying for an auto loan.

I wish I had a financial expert on my side or a trusted site I could've researched to help me get some supporting documents together...

As a financial expert, you can trust me when I say that I’m willing and ready to help you understand this auto loan process.

When I financed Pepper - my beautiful stone-grey Chevrolet Malibu - years ago at the dealer, it took nearly two days to finalize and receive an auto loan approval. I almost lost her to another buyer during that long process. Well, I learned my lesson and I'm here to help you not make the same mistakes!

Ready to roll?

 

6 things you'll need to help speed up the decision process:

 

Home-Loan-Icon_Green proof of identity and residence

Simply put, a lender has to ensure you are who you say you are when borrowing money. Plus, federal law requires lenders to confirm customers' identification. A driver's license, passport, or other government-issued I.D. can be used for verification.

A driver's license can also help verify your residence, but the address should be current and match the address on other documents such as your credit report. In addition, you can bring recent mail to prove residence, such as:

  • Utility bill
  • Homeowners or renters insurance
  • Mortgage statement
  • Medical statements
  • Lease agreement
  • Credit card or bank statement

 

Personal-Loan-Icon_Green-1proof of income

If a lender is going to trust you with money, you should be able to prove how you’re going to pay it back, right? When applying for an auto loan (or any loan), your income is evaluated along with assets, employment, credit history, and monthly expenses. These things will help determine if you can pay back the loan.

Be prepared to submit copies of your pay stubs or W-2. If you’re self-employed, other documents might be needed such as tax returns and, if you’re receiving social security, be ready to submit your financial statements.

 

Insurance-Icon_Greenproof of insurance

Auto insurance is an agreement between you and the insurance company. It protects you against financial loss if an accident or theft occurred. If you don't have auto insurance, start shopping around now. If you have an active auto insurance policy, check to see if a new car purchase will be covered since there may be a grace period.

The types of insurance you can have are:

  • Liability Coverage
  • Collision Insurance
  • Medical Payments Coverage
  • Personal Injury Protection Insurance
  • GAP Insurance
  • and more!

Whether you’re financing a vehicle through a preferred lender or paying for a vehicle in cash – it’s vital that you have insurance. Plus, you won't be qualified for an auto loan if you don't have adequate coverage.

 

what if i have active car insurance?

If you have an active auto insurance policy, check to see if a new car purchase will be covered. There may be a grace period. In the insurance world, proof of insurance helps the lender if the borrower avoided paying their loan. The lender would notify the insurance company of the lien, and the lender would be titled as the loss of payee.

DEFINITIONS

Lien - an insurance policy for lenders. when you purchase a vehicle, a lien will be on the title until you completely pay off the car.

Loss of Payee - the party to whom the claim from a loss is to be paid. A Loss of Payee has a legal right to collect payment in the event of a claim.

 

Calendar-Icon_Greencredit banking history

This is the documentation that allows lenders to pull your credit. Lenders want to feel confident in your ability to repay a loan, so they’ll look at your credit history, see if you have any late payments, bankruptcies, lawsuits, or anything that proves whether or not you’re able to pay off an auto loan.

To check your credit banking history, lenders will need your:

  • Social Security Number
  • Name
  • Address
  • Date of Birth (DOB)

Different lenders use different credit scoring systems, such as Equifax and FICO. Before applying for an auto loan, check with your preferred lender to know what scoring system they use. It will help you to know and understand your score before they do!

 

Auto-Loan-Icon_Greenvehicle info

If you already have your eyes set on a vehicle, knowing the vehicle info, such as the VIN (vehicle identification number), selling price, and associated fees would help this application process.

Dealerships can help you obtain vehicle information using a purchase order. A buyer or seller can receive a purchase order on a vehicle. This documentation includes the selling price, rebates, and down payments made on the vehicle.

looking to refinance?

If you’re looking to refinance your existing vehicle, the lender may offer you a 10-day payoff (when you pay off your current loan within the next 10 days). It tells how much money - including the interest - you'll need to pay to have a car loan paid off. The amount differs from the auto loan you are seeking from the new lender.

Psst... To start this process, some lenders may require a written payoff letter from your finance company.

buying from a private seller?

If you buy from a private seller, you may need to obtain or complete a bill of sale. When financing, contact your credit union or bank to ensure you have what’s needed when buying from a private seller.

DEFINITION

Bill of Sale - a legal document that includes the terms of sale of a vehicle between a buyer and a seller. The bill of sale should only be signed after the buyer has completely paid off the vehicle (paid-in-full) and the seller has given the buyer the certificate of title.

 

Switch-Kit-Icon_Greentrade-in documentation

If you’re trading in your vehicle, make sure to obtain your certificate of title, motor vehicle registration, and disclose any damage that occurred to the vehicle while you were the owner. If you don't already have these handy, a dealership could supply your certificate of title and registration.

DEFINITIONS

Certificate of Title - proof that you are the owner of the vehicle. The document also lists any lien holders.

Motor Vehicle Registration - registration of a motor vehicle with a government authority. The registration helps show that you have paid any taxes or fees due. It also shows if any crime occurred associated with the vehicle.

QUICK TIP: Want to know the value of the car you are trading in? Visit Kelly Blue Book. It’s a trusted resource that provides many services including vehicle pricing and assessing car values. The site can also help you determine how much you need to borrow before financing a vehicle.

 

once you have all your documents together - here's what's next 

Now that you know what supporting documents you'll need to apply for an auto loan, the next thing you should know is how to submit them. I can't speak for all other lenders but I can explain the process for Charlotte Metro Credit Union. You can do this one of two ways: online or in-person. If you’re submitting online, the process is quick and easy! When applying in person at any of our branches, hand your documentation over to any one of our Customer Service Specialists.

Want to get started with applying for an auto loan with us -  get rolling today:

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