Is a Bank Account Needed to Get a Car Loan?

There are many things needed to get approved for a car loan. The list of specific items is determined by the bank or lending institution where you apply. It is possible to get approved for a vehicle loan without a bank account, but most lenders won't allow it.

Requirements

Most lenders approve car loans based on your credit score, income and how well you have paid your credit obligations in the past. At the time your application is submitted or shortly after, the underwriter will check your credit score with the three major credit bureaus. The underwriter will also request certain documentation such as pay stubs, tax returns and statements from all of your bank or investment accounts. The type of documentation requested will depend on the type of loan you want.

Bank Statements

The lender wants to see documentation because it gives the underwriter verification that the information on your application is accurate. Your pay stubs and tax returns show the underwriter you are employed or have a steady income stream. Your bank statements show you have the ability to manage your money, increasing the lenders confidence in approving your loan. Investment account statements show the lender you have some assets, which also increases confidence you will meet your loan obligations.

Bank Account

Having a bank account gives the lender more proof you can manage your money. Your account will show you are paying your bills and depositing money. Some lenders offer discounts if you allow your monthly car loan payment to be deducted automatically from your bank account.

Considerations

If you are thinking about applying for a car loan and don't have a bank account, it would improve your chances of getting approved if you had one. If you aren't able to open an account because of age or problems with maintaining bank accounts in the past, try adding yourself as a joint account holder with someone who is able to open an account. Some banks have accounts specifically for people who have problems opening one.

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Most Important Tips When Buying a Used Car

If it's time to trade in your current vehicle for a "new used" car, you can do it by walking into a dealership and choosing a car based on cosmetic appeal alone -- or you can do your homework and take your time before you make up your mind. If you take your time and make a decision based on a mechanic's report and maintenance records, you're much likelier to be happy with your choice.

Get a Mechanic

When you are looking at a car, don't commit to one right away. If you see one that you might be interested in buying, let the salesperson know you want to get an independent mechanic to look at the car before you make any decisions. This should cost you approximately $100, which is a small price to pay if it prevents you from having to pay for expensive repairs in the future. Ask him for a written report that includes all the problems and how much he would charge to make repairs, suggests Tips on Buying a Car.

Certification Program

Ask the salesperson for a copy of the precertification inspection paperwork. This paperwork should include everything that was evaluated, as well as mechanical problems that were found and repaired. Find out if the certification you're looking at is a manufacturer certification. Any pre-owned cars with a manufacturer-provided certification are easier to bring back for any needed repairs.

Check Exterior

Check the exterior of the car you're interested in. Look for chipped paint and dents on the body. Look closely at the gaps between the body of the car and the doors -- any unevenness may indicate the vehicle was involved in an accident. Push down on all four corners of the car you're interested in. They should go down and spring back up with no hesitation. Open and close the doors. If you feel any resistance, the car may have been involved in an accident, according to Tips on Buying a Car.

Dealership History

Ask the salesperson how the dealership obtained the vehicle. If it was bought at auction, ask to see any mechanic's reports to verify the roadworthiness of the vehicle; if it was traded in, ask for the maintenance records so you can verify it was serviced regularly and on schedule.

Check Engine and Fluids

Pop the hood of the vehicle you're looking at and look at the engine. If you're not mechanically inclined, take someone who knows his way around cars with you. Check the oil -- it should be a clear golden color, free of dirt, indicating it has been maintained regularly. While you are checking the engine oil, check other fluid levels, such as the coolant, transmission and brake fluids, recommends Tips on Buying a Car.

Test Drive

Ask for an overnight test drive, promising you won't put any more than 100 miles on the odometer. You'll have to provide proof of insurance and fill the gas tank if it has a full tank when you take it. Take the mechanic or someone else with you as you drive the car. Compare notes.

Mileage Check

Verify the mileage shown on the car. Use the vehicle registration paperwork and the trade in paperwork to ensure it is accurate.

CarFax Report

Ask to see a CarFax report. Check to see that the VIN on the car matches that on the report. The CarFax report lets you know if the car has been involved in any previous collisions or if the title is unclear.

Test Vehicle Equipment

Turn the headlights, windshield wipers, turn signals, air conditioner and heat on and off, making sure they work. Test the seats, checking to see if they adjust easily. Have someone press the brakes as you check to see whether the lights work properly. Look at the maintenance log, noting whether the vehicle has been maintained on the recommended schedule.

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What Happens If You Do Not Turn a Car in at the End of a Lease?

As stated in your lease contract, you must turn in your vehicle at the end of the leasing term. While repercussions and penalties are further stated in your contract, you can expect significant penalty fees or a repossession if you do not return the car, as the vehicle is not yours if it is not paid for.

Contract

Go to your lease contract to review bank penalties. Your lease contract also lists the lease buyout amount, or your last lease payment which is due upon the end of your term to keep the car. Most banks try to contact you before your lease is up to help you determine your best lease-end option. Contact your bank if you want to keep your car or extend the term; do not simply keep it past the lease end date. Some banks allow lease extensions, allowing you to stay in your car longer.

Lease End Options

You can finance the amount owed on the vehicle if you want to keep it. You do not have to finance through your leasing bank, you can choose whichever lender you would like. You can also return your lease and walk away at the end of the term. Or, you can trade it in for the buyout amount and put the vehicle toward another car purchase. If you're concerned about over-mileage or other leasing fees, trading in or selling privately may prove your best bet.

Repossession

If you fail to return your lease and do not contact the bank to work out a purchase or lease extension, the bank can repossess the car. The terms of repossession are further discussed in your contract, but usually one missed payment is all it takes. The bank will hire a repossession company to collect the car, whether it be from your home, work or a parking lot. The bank does not have to notify you if it plans a repossession because you acknowledged the terms when you signed your contract.

Credit Reporting

Late payments and repossessions are both reported to the credit bureaus, damaging your credit. A repossession significantly effects your credit rating, and it is unlikely you will be able to lease again for years to come, as good to excellent credit is required to do so. To avoid the negative and expensive consequences of damaged credit, call your bank to determine your options or work out a payment plan if you owe money.

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What Are the Qualities I Need to Lease a Car?

Car leasing banks require good to excellent credit for application approval. Expect to provide your credit information when applying for a lease. Aside from credit score and history, leasing banks also determine an applicant's debt-to-income ratio, which is the lessee's ability to pay his monthly lease payment. If you're turned down for a lease, consider financing instead.

Good or Excellent Credit

Expect to provide a credit application to lease a vehicle. A leasing bank reviews all of your current and past accounts, including payment history, length of time on accounts, credit score, account balances and available credit. If your report shows past-due accounts, such as previously reported late payments or current past-due payments, judgments or charge-offs, you aren't likely to obtain a lease approval. You may, however, apply for a lease with a co-signer, or someone who has good credit who can secure your lease.

Debt-to-Income Ratio

Aside from your payment history, a leasing bank also reviews your debt-to-income ratio. This ratio is used to determine whether or not you can afford a lease payment. The leasing bank requires proof of income and compares it to the amount of debts you pay out each month, which are listed on your credit report. You'll also provide the cost of your mortgage or lease payment on your credit application. Even with a good credit score, you application can be declined because of your debt-to-income ratio.

Ability to Stay Within Leasing Provisions

A leasing contract restricts your vehicle use. Before applying for a lease, make sure you understand all contract requirements and possible penalties and fees. Expect to stay within your mileage allowance. If you go over the allowance, you may pay as much as 30 cents per mile. You must also maintain and repair your vehicle throughout the leasing contract. At the end of the contract, the leasing bank inspects the vehicle and charges you for any repairs or maintenance not completed. If you can't abide by a lease contract, you might find yourself paying thousands of dollars at the end of the lease term.

Considerations

If you don't meet standard leasing requirements, you can still purchase a new car. You may choose to finance the vehicle instead. You may obtain a loan approval even with blemished credit. Financing also allows you to drive your vehicle as you please. You won't have to abide by mileage or wear-and-tear restrictions. Rather than pay for a vehicle's depreciation and return the vehicle as you would with a lease, your payments result in full vehicle ownership if you finance.

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Can You Buy a Car While on Unemployment With a Cosigner?

Unemployment is a form of temporary income. Most lenders won't approve a loan without a stable income and verifiable employment. A cosigner, however, secures the terms of your loan with his income and credit rating. Whether or not you'll obtain a loan approval depends on your and the cosigners credit history and income.

Debt-to-Income Ratio

Lenders review each loan applicant's debt-to-income ratio. This ratio consists of the money you and your cosigner have coming in compared to the amount of debts you have to pay out. Because your cosigner is as responsible for the car loan as you are, the lender considers his total debt responsibility. If your cosigner's debt responsibility isnt in line with his income, the application might be declined. Your cosigner must also prove he can afford the payments even though you plan to make them.

Payment History

Aside from a good debt-to-income ratio, your cosigner must also have good credit, which requires an established history of paid accounts. For example, a cosigner who just opened a credit card as his only piece of credit history isn't likely to prove an ideal cosigner. He shouldn't have any repossessions, bankruptcy, tax liens, foreclosures or past due payments listed on his credit report. Even if you have excellent credit yourself, using a cosigner with a poor payment history might affect your chances of a loan approval.

Preapprovals

To ultimately determine if a cosigner can help you obtain a car loan while youre on unemployment, apply for a loan preapproval with your cosigner. Check the rates of lenders before you determine where to apply. Once you find a lender, apply with your cosigner and secure your loan before you start shopping for a car. Approval processing differs by lender, but you might wait up to one week for the lenders decision.

Other Options

If you can't obtain a loan while on unemployment because of cosigner issues, wait until you're working again before applying for an auto loan. Consider using a buy here, pay here lot, which is a dealership that lends directly to buyers. These dealers often lend to people with credit issues who can't obtain a loan elsewhere because of income, employment history or credit score. Rates are often higher and require a shorter term for quick payoff, but might prove an ideal option if you need to purchase a car immediately.

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Hints and Negotiating Tactics When Buying a Car

Negotiating the price of a new car can intimidate prospective buyers. Car dealers never automatically offer the lowest possible price of a vehicle and always attempt to make the most profit possible. In order to negotiate successfully, you need to be an informed and determined buyer.

Determine Dealers Costs

Find out what the dealer most likely paid for a certain vehicle by searching for dealer invoice pricing. Also, research the Manufacturers Suggested Retail Price (MRSP). Determine if your car choice has any rebates or dealer incentives. You can find all of this information by searching on Edmunds.com. To calculate dealer cost, add together the dealer costs, delivery fees (which average about $800) and advertising fees (which average about $300). Then subtract any rebates and incentives and also subtract three percent of the MSRP (a holdback amount that the dealer gets the manufacturer when it sells a car). Negotiating Dynamics explains that most dealerships need to make at least a three percent profit on every car sold. CarBuyingTips.com recommends that customers offer five percent over the dealer's cost.

Shopping Around

Negotiating Dynamics suggests that you get quotes on automobiles from at least three or four dealerships in your area by visiting local dealership websites. After you get the quotes, make phone calls to all of the dealers to verify quotes and indicate to the salesperson that you want a lower price closer to the invoice price of the car. At this point, the salesperson will most likely suggest that you come to the dealership to discuss the deal further. Make an appointment with the salesperson of your choice.

Appointment Negotiating

When you meet with the salesperson, offer to pay the price that you have calculated as the invoice price to a reasonable profit of three to five percent. If the salesperson argues that your offer does not reflect the actual invoice pricing, then ask to see the actual invoice and negotiate based on the invoice.

Continued Negotiations

If you cannot reach an acceptable price at your first appointment, leave and plan to continue negotiations by phone or at a follow-up appointment. Negotiating a car purchase may take some time if you really want to get the lowest possible price. If you lose focus or get impatient, you will likely pay more for the car in order to halt negotiations.

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How to Change a Car Registration

Every state requires drivers to register their cars, trucks and SUVs before driving them on public roads. While laws vary by state, many of the procedures are the same. You can also change your registration if you change your name, transfer the car from a parent to a child or move.

Requirements

Your state's department of motor vehicles will supply a list, either in a brochure or on its website, of the information you need to present when you apply for a change of registration. Besides valid identification, one of the most important things you'll need is a copy of the title to prove that you own the vehicle. If you don't have the title because you are still financing the car you'll need to supply a copy of the bill of sale or a letter from the financing company that holds the title naming you as the owner. Other requirements include a check for the registration change fee and an insurance card to prove that you have a policy that meets your state's minimum standards.

Process

Once you have the required documentation and information, you can apply for a change to your registration. Your state's department of motor vehicles will offer a form called a change of application form, or a similar name. This is the form you'll need to fill out and submit along with copies of your documentation. Once the department has your request it will take several weeks to print and mail out your new registration. If your former registration is no longer valid, the department will issue you a temporary registration that serves as proof of vehicle registration. Driving without a valid registration is a violation that can lead to fines.

Where to Go

Most states allow drivers to change their registration information by visiting a department of motor vehicles office. If you change your address or other basic information only, you may also be able to make the change when you renew your registration online or through the mail.

When you buy a new vehicle, the dealer will apply for your registration for you. If there is not time to apply for a registration the dealer can issue a temporary registration and include an estimated charge for the registration cost on the bill of sale. This means that you may owe an additional fee or receive a refund from the dealer once the department of motor vehicles processes the application and issues a permanent registration.

Moving Between States

If you move from one state to another, you'll need to change your registration to reflect your new state of residence. Most states limit the amount of time you can wait to change your vehicle registration once you take up a permanent residence. Besides providing proof of ownership and other documents related to changing a registration, you may need to submit to a vehicle inspection. This inspection determines that your car's vehicle identification numbers, or VINs, match your records. You may need to also submit to a safety inspection or smog test to make sure that your car complies with the new state's auto registration guidelines.

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