Life’s big changes require big evaluations.  Buying a house, a car, starting a business.  These choices determine what your future looks like.  Before you can make the change in your reality, you’ll likely need to seek financial assistance.  Predictably, an auto loan is a consumer’s first introduction to securing financing.

Whether you envision the speedy sports car or a spacious SUV, you have a picture of what your daily driver is going to be.  What doesn’t appear in that daydream are the obstacles to secure the loan.  Knowing what to expect going into the loan process might make it a little less daunting.  What do you need to get a loan? What to bring when going to apply?  

Step 1 : Be prepared... What to bring when applying for an auto loan, a checklist:

 While we review the steps of the auto loan process, think about gathering these key items.  Which drawer you have to dig into, or account to log onto- where is that password?

  • Proof of income/employment
  • Credit and banking history
  • Proof of residency
  • Valid driver’s license
  • Proof of Auto Insurance

Step 2: Determine your limit

 Review your funds to determine the amount available for both the down payment and the monthly installment.  While you may have a dream car in mind, you should first find your dream price range.

In preparation for applying for a loan, it is helpful to know your credit score.  This 3 digit number will determine whether or not you are eligible and at what rate.  Credit scores range from 300-850, a good credit score is 700+.  Lenders are generally willing to work with folks who have a non-prime score, at the cost of a higher rate.  


Before you hit the lot, shop for your loan.  There are auto loan providers available online.  Check with your local bank or credit union.  The prequalification verifies that you are a candidate for a loan.  It is advised that you do your pre-qualifications all within the same 2 weeks.  Your credit score may be affected if it is checked multiple times.  However there is a 14 day span, a shopping window, where multiple inquiries are considered one event as to not drag down your score. The prequalification does not guarantee that you will be approved for a loan.  Consider the interest rate, terms, and additional fees when choosing your provider.

Step 4: The FUN part

Once you determine your spending capacity you can shop for the car.  Take test drives, drink stale coffee.   The dealership will be able to offer loan options, but arriving with financing options gives you the upper hand.  Stay within your price range.

Step 5: Complete the paperwork

Whether you decide to use the dealership’s financing option or your own, it’s time to finalize your loan.  Whether you opt to use the dealer’s financing options or your own, you will need to provide verification:

Back to the checklist: What do you need to get a loan?

Proof of income/employment

  • Provide paystubs from the last month, along with copies of tax returns from the last 2 years.  Check with your employer for verification of employment, or use an online service

Credit and banking history

  • Your credit history is important to the lender.  Bring copies of current bank statements, and outstanding loan records

Proof of residency

  • A utility bill is sufficient to provide proof of residence, or show a lease agreement or mortgage statement.

Valid driver’s license

  • Prove your identity and your ability to drive the car off the lot.

 Proof of Auto Insurance

  • Call your agent! Coverage be provided ahead of time, which will relieve both you and your carrier of some scrambling.

Step 6: Drive, Drive, Drive

This ones self explanatory. Take a joy ride- you’ve earned it.

Step 7: Make payments

Your Lender will provide a schedule of payments.  You can pay online or mail a check. Make payments on time in order to keep your credit score in good standing.  You’ll want a prime score for your next big purchase: your home!

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