This Is How You Can Qualify for a Car Loan

Credit: A good credit score is something between 670 to 739. If your score is higher, then that’s even better.  Scores like these will help you get decent terms from lenders. But you should know that lenders have their own formula to figure out who they can offer what.

Lenders can also offer you a car loan if you don’t have a great credit score. They may charge you a higher interest rate or require a cosigner who has good credit history. There are also lenders that specialize in helping people with bad credit. But, ideally, improve your score before you apply for a loan.

Income: Lenders like people that have a steady source of income. They may consider your job situation and offer you terms accordingly. You may need to prove your employment status or your situation if you’re self-employed by sharing bank statements. Speak with lenders and discuss the details and documents required so that you can complete your application quickly.

Identity and residence proof: If you have an established relationship with a bank or a credit union, they may not require these details. But if you’re applying to a lender for the first time, then you’ll need to provide a government-issued ID and proof of residence. This also helps the lender know where the car will be parked in case you default on your payments, and they need to repossess the vehicle.

Preapproval: You can ask a lender to run a soft credit check and review the possibility of you getting preapproved for a car loan and what rate of interest you could qualify for. If the lender says that you can’t be preapproved, you needn’t bother applying. A soft credit check also doesn’t hurt your credit score. But you can do this and check the terms being offered by multiple lenders.

Down payment: Making a large down payment or trading in your current car, or both will help reduce how much you borrow. This will make getting a loan with lower interest rates easier.