App version: 0.1.0

Car Loan Requirements: How to Get Approved

Car Loan Requirements: How to Get Approved
Kelly Boyer Sagert

Kelly Boyer Sagert

Updated December 3, 2021
Share this article:
Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
Requirements for car loans can vary from lender to lender, and so can the types of documentation needed for approval. There are, however, many similarities in what a lender will request, including vehicle documentation and proof of identity and income.This post will provide a helpful overview of car loan requirements that you can use when shopping for an auto loan and choosing a lender to ensure you have everything in order when you’re ready to apply.

What Documents May Be Required for a Car Loan?

In general, expect lenders to require the following documents:
  • Proof of identity
  • Proof of income
  • Proof of residence
  • Vehicle documentation
  • Proof of insurance
Lenders also will likely have credit score parameters, as well as standards for what’s required in a down payment. While there’s no set credit score you’ll need to get an auto loan, borrowers with good or excellent scores (in the mid 600s and up) tend to have an easier time obtaining a loan and securing better rates.

Auto Loan Requirements: Proof of Identity

A requirement for a car loan you’ll need to meet is providing proof of identity. These are the types of documentation lenders will likely accept to confirm that you are who you say you are:
  • Government issued IDs
  • Passport
  • Birth certificate 
Read on for more specifics on each of these documents. 

Government Issued IDs

Official photo IDs are commonly used to identify a person, including when applying for a car loan. These include driver’s licenses, state-issued IDs and U.S. military identification cards. Another frequently required government issued ID is your Social Security card.

Passport

Passports are typically used when someone wants to travel to a foreign country, but lenders may ask for one to confirm the identity of loan applicants. If you don’t have one, you can find information about how to get one at this U.S. government site. Processing times can vary, based on the time of year, and receiving one may take longer during the pandemic.

Birth Certificate

You may already have yours. If not, and if you’re U.S.-born, contact the vital records office in your state to request a duplicate. You may need it fairly quickly to meet your car loan requirements. If so, ask about expedited service options.

Auto Loan Income Requirements: Proof of Income

As part of the requirements for getting a car loan, a lender will typically require you to prove how much income you earn to ensure that you make enough to qualify for the loan. There’s no universally required income to get a car loan, but a pre-tax monthly income of at least $1,500 to $2,000 can serve as a general guideline.Ways to prove your income include providing the following:
  • Pay stubs
  • Bank statements
  • Wages and tax statements 
Note that no income verification car loans do exist.When applying for loans that do require income verification, here are more specifics about what might be needed.

Pay Stub

One of the simplest ways for a lender to get a quick snapshot of your income is through your recent pay stubs. So, if you get paper ones, keep them. If you have online ones, share them. If you don’t have all you need, ask your employer for copies.

Bank Statements

The lender may ask to see recent bank statements, which can show how much money comes in (although directly deposited paychecks will be net, not gross) and how much is going out. This, in combination with pay stubs, may be all that a lender requires.

Wages and Tax Statements

Some lenders will want to verify wages with copies of your tax returns. They may request the most recent return or more than one year’s worth. If you’re self-employed, this can be the best way to indicate what you’re earning (through your Schedule C).

Requirements for Getting a Car Loan: Credit History

Credit score requirements for auto loans can vary by lenders — and it’s generally true that, the higher the score, the better the chance that you’ll get a good interest rate with favorable terms. Overall, a lender wants to see that you’ve handled your debt well in the past because that’s a good predictor of how you’ll manage it going forward.If your credit score isn’t quite where you’d like it to be, be prepared to share with the lender how and why it happened, along with your plan for making your car payments on time in the future. Sometimes, a lender will require you to get a cosigner with good credit before approving the loan.

Auto Loan Requirements: Proof of Residence

Lenders will want to verify where you live, and there are numerous methods they might find acceptable, including:
  • Utility bills
  • Government issued IDs
  • Property tax bills

Utility Bills

Bills for gas, electric, water and the like will list an address, and a lender can compare that with what you’ve provided on your car loan application. 

Government Issued IDs

The lender can also compare the address on your application to what’s on your driver’s license and Social Security card (or other acceptable form of a government issued ID). 

Property Tax Bills

These bills demonstrate that you’re paying taxes on a particular property. You may directly receive them, or they may be part of an escrow statement from your mortgage lender. 

Vehicle Information

When buying a car, your lender of choice will need information about the vehicle, including the purchase agreement from a dealer or person. Key pieces of information within the document will include the price; the make, model and year of the vehicle; and its vehicle identification information (VIN), among other things.

Current Vehicle Registration

A vehicle must be registered in the name of the current owner for it to be legally driven on public roads. If you buy a car from a dealer, new or used, they usually provide you with at least a temporary registration; other times, they’ll handle the whole process. If not, you’ll need to check with your local Department of Motor Vehicles (DMV) to see how to transfer the registration into your name.

Requirements for Auto Loan: Proof of Insurance

Your lender will want to see that you’re able to get insurance coverage on the vehicle you’re buying. What’s required can vary, based on the state in which you live and the specific requirements of the financial institution. In general, however, you’ll need to have car insurance on your new ride before you can drive it out of the dealership lot.Proof of insurance can include:
  • Insurance ID cards
  • Coverage letters
  • SR-22 form
Here’s more about each.

Insurance ID Cards

Traditionally, insurance ID cards have been paper, but there are now digital cards that have the same information. This includes your name and policy number, along with vehicle information and dates of coverage.You’ll need to have proof of insurance with you when driving, as your ID card lists relevant information that law enforcement will want to see in case of an accident. 

Coverage Letters

You can also use a declaration page, which provides an overview of who is covered (and who, if anyone, is specifically excluded); your policy number and coverage dates; the make, model, year and VIN of the covered vehicle(s); and other relevant information.

SR-22 Form

This is a certificate that verifies that you have at least the minimum amount of car insurance required by your state. “SR” stands for “safety responsibility,” and it’s a form of certification that confirms you have enough insurance without getting into the specifics of your policy.

Method of Down Payment

As part of a lender’s car loan requirements, you may need to make a minimum down payment. This can include a combination of cash that you’ll put down and the trade-in value of a vehicle that you’ll turn over to the dealership.How much of a car down payment should you make? The traditional answer has been 20%, but not everyone puts down that much. To answer this question for yourself, find out what a lender requires and also consider your finances and how they may change over the next several years (meaning, over the term of the car loan).

Do You Need Any Additional Documents to Refinance a Car Loan?

With an auto loan refinance, a lender will typically want the same type of information that was needed for the original loan along with information about your current loan, including the lender and outstanding balance. That said, check with your lender of choice to make sure that you have all of the documentation required.As another consideration, when deciding what lender to choose, also ask about the auto refinance time frame and determine whether it’s workable for you.

The Takeaway

Auto loan requirements can vary by lender with documentation often needed. This may include verification of your identity, income, residence and auto insurance, along with additional information about your financial situation, your credit history and the vehicle being purchased. When refinancing a car, similar information is typically needed, along with details about the outstanding loan on the vehicle. To compare offers from multiple lenders in the Lantern by SoFi network, fill out just one convenient car loan refinancing application.
Photo credit: iStock/Saklakova
The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.SOLC112209

About the Author

Kelly Boyer Sagert

Kelly Boyer Sagert

Kelly Boyer Sagert is an Emmy Award-nominated writer with decades of professional writing experience. As she was getting her writing career off the ground, she spent several years working at a savings and loan institution, working in the following departments: savings, loans, IRAs, and auditing. She has published thousands of pieces online and in print.
Share this article: