Things You Need When You Are Buying a Car

Most states require at least liability insurance to register a vehicle. If you plan to finance your car, your lender likely has its own specific insurance requirements as well. Before pursuing a car purchase, make sure you have all you need to satisfy a dealer, lender or state requirements for a car purchase.

Payment

Determine how you will pay for your car before you begin to shop. If you intend to use an auto loan for your purchase, obtain a pre-approval from an auto lender of your choice. Use your loan terms to adjust your shopping price range so you can stay within your budget. If you plan to pay cash for your vehicle but plan to take it from an account that requires you to apply for your funds, such as a money market account, submit necessary withdrawal forms before you shop as well. Otherwise, either payment can take up to a week to receive, which can affect your purchase.

Credit Requirements

If you want to apply for an auto loan, expect to submit a credit application to your lender. You must have a valid Social Security or tax identification number to apply. If you plan to pursue a lease or other manufacturer offer, such as low-rate financing, you must have good to excellent credit. Many lenders require proof of income, so expect to provide a previous paystub or previous tax forms if you are self-employed. Auto loan providers also like to verify at least a two-year address and work history.

Insurance

Most states require proof of insurance coverage for vehicle registration. If you purchase from a dealership, you'll have to provide proof of insurance before you leave with your vehicle. Most states require at least a liability policy for registration, although auto loan providers require more coverage. If you finance or lease your vehicle, you'll need to purchase a full-coverage insurance policy, which includes liability, comprehensive and collision coverage. Check with your insurance provider before purchasing a car, as you may find that the cost of coverage requires you to readjust your purchase budget.

State and Motor Vehicle Requirements

Whether purchasing from a dealership or private seller, you'll have to pay fees for registration and title application that differ by state. Rates for sales tax may differ by town or county. Depending on your area, you may have to complete emissions or safety inspections before or immediately after purchasing your car. Because these fees are required, budget for them ahead of time. If you intend to finance or lease your car, you can roll your fees into the lease or loan amount. Otherwise, budget appropriately. Call your state's motor vehicle department or ask a dealer which state fees you'll pay.