What Do I Need to Finance a Car? (2024)

FAQs

What does my bank need to finance a car? ›

Most used auto loans go to borrowers with minimum credit scores of at least 675. For new auto loans, most borrowers have scores of around 730. The minimum credit score needed for a new car may be around 600, but those with excellent credit often get lower rates and lower monthly payments.

Last two recent pay stubs (if you have more than one job, bring the stubs from those as well) Proof of residency (any current utility bill should do, such as water or electric) List of references (not including anyone living in your household)

How much should you put down on a car? One rule of thumb for a down payment on a car is at least 20% of the car's price for new cars and 10% for used — and more if you can afford it. These common recommendations have to do with the car's depreciation and how car loans work.

Very simply, a tax return or paystub will do the trick. Since most paychecks are deposited electronically, you may have to log into your company's payroll system and print a recent paystub. Be aware that the lender may call your employer to confirm that you work where you say you work.

Key takeaways

An auto loan can benefit you because it spreads out the expense of the car, leads to ownership and can help you improve your credit score. Some drawbacks to watch out for include being stuck with the same car for longer, possibly expensive monthly payments and the risk of damaging your finances.

You can borrow from $1,000 to $100,000 or more with a 700 credit score. The exact amount of money you will get depends on other factors besides your credit score, such as your income, your employment status, the type of loan you get, and even the lender.

A hard credit check, hard inquiry, or hard pull is triggered when you apply for a new car loan, mortgage, apartment lease, or other line of credit.

What credit score is needed to buy a car without a cosigner? People with prime credit scores of 661 or higher likely don't need an auto loan cosigner.

In a Nutshell. If you're applying for a mortgage or rental agreement, you'll likely need to provide proof of income. Some common documents to have on hand: paystubs, tax returns, W-2 and bank statements, among others.

Is one paystub enough for a car loan? ›

To verify your income for an auto loan, you may only need to provide your lender with your latest W-2 or one or two recent paystubs. Be aware that lenders may call your employer to verify that you are currently employed with them. In this case, it may also be helpful to provide a copy of your employment agreement.

Drawing from our experience, lenders typically require the last two to three months of pay stubs to verify your income. This is done to ensure you have sufficient funds to make regular loan payments.

How much should you put down on a car? A down payment between 10 to 20 percent of the vehicle price is the general recommendation. But if you can afford a larger down payment, you can save even more money on interest payments over the life of the loan.

Consider putting at least $6,000 down on a $30,000 car if you're buying it new or at least $3,000 if you're buying it used. This follows the guidelines of a 20% down payment for a new car or a 10% down payment for a used car.

As a very simple example, borrowing $32,000 for five years at 6% will require a payment of $618.65 per month, with a total interest payment of $5,118.98 over the life of the loan.

Many lenders require a down payment — whether that's cash or the trade-in value of your current vehicle — so your loan options will be limited if you can't offer money upfront.

While job offer letters provide proof of employment and basic salary information, you probably won't be able to get a car loan with only a job offer letter. Most lenders require pay stubs with year-to-date income since your monthly take-home pay plays a major role in determining whether you qualify.

Some car dealers who issue auto loans (Opens in a new Window) in-house do prefer you finance with them, because financing is part of how they make money.