The initial stages of applying for an auto loan are similar to the process of applying for any other form of unsecured credit. The most important decision to make before buying your new car is whether to shop by lender or dealer. If you find a car at a dealership that insists you use a specific lender, the terms may be less favorable than those offered by a major bank.
Authorized Dealer
Many lenders will lend you money to buy a car only if you're dealing with an "authorized" trader -- a firm they're happy to do business with. If a loan provider stipulates that you have to buy a car from a dealer it's approved to qualify for an auto loan, ask for a list of authorized traders near you. Some lenders offer a function to search for authorized dealers on their website. You won't need to submit the details of the dealership you're considering when you make your initial application, but make sure that you're using a trader that has the approval of your chosen lender before you proceed. If you're not fussy about what company you use as a lender, ask about financing at any dealership. If you decide to use a lender recommended by your dealer, make sure you thoroughly read the terms and conditions of your loan before signing anything.
Personal Details
When making your initial application -- be it online, over the phone or in person -- you must provide a range of personal details. Give your full name and address and any previous addresses if you've lived in your current home for less than three years. Submit details about your employment, including your annual income. Nearly all lenders need your Social Security number, while others may ask for additional details such as your driver's license number. The information you provide is checked against records held on you by credit bureaus to confirm your identity and assess your credit-worthiness.
Proof
If the checks carried out by your lender prove unsatisfactory, you may be asked to provide further proof of your identity, address or income. Forms of accepted verification vary by lender, but state-issued documentation, utility bills, bank statements and pay slips from your employer commonly are requested.
Documentation
Before your loan is approved and you drive your new car off the lot, your lender needs a purchase order detailing the full price of your car, including any extras, from the dealer. You also need to provide proof of full insurance coverage if your lender is to be named as the lien holder.
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