Buying either a new car or a used car is pretty self-explanatory: set your budget, narrow down the field of cars and test-drive each one, review the pros and cons for each option, and sign on the dotted line for your dream car, right?
Well, sort of, except for all the other steps in the middle — and the very important question of what to bring when buying a car.
While handling the necessary paperwork might not be the most exhilarating part of the car-buying process, you won’t be leaving the lot without completing it. So, to make sure you’re in and out of the dealership with as few hiccups as possible, here are five essential documents to bring with you (and why) on your next trip to the car lot.
7 documents to bring when you buy a car
1. Loan pre-approval application
If you don't have the cash to purchase a car outright and you don’t plan on buying a car with a credit card (yes, that's something you can do), the first step will be getting approved for an auto loan. That way, you’ll have an idea of how much you can borrow, and you can set realistic expectations about how much you can afford to spend. It will also help you focus only on cars that fall within that price range.
With a car loan pre-approval in hand, you'll also be able to make better negotiations with the dealer, since you won’t be tempted to take whatever financing is available. If the dealership really wants to make the sale, it may even try beating the interest rate your lender is offering.
2. Proof of income
Regardless of where you get your financing, whether it's the dealership or your bank or credit union, providing proof of income is a must. Lenders won’t be willing to shell out money if you aren’t able to show a steady income and an ability to make monthly payments. In other words, you’ll need to prove you can pay back the loan. Some lenders may even contact your current employer to verify it.
Before you head to the dealership, make sure you have proof you’re bringing in money. This can be a few months’ worth of recent paystubs or bank statements.
3. Proof of car insurance coverage
Depending on the dealership and the lender that’s financing your new car, you might need to show proof of insurance for the new vehicle before you’re able to drive it off the lot. However, if you already have auto insurance on your current vehicle, you may be able to use it to take your car home with you. You’ll be expected to make the changes to your car insurance policy in a timely fashion so your new car is insured for regular driving and use.
Insurance premiums differ depending on the car, so if you aren’t sure exactly which car you’ll be buying, get a quote from each of the best car insurance companies for each vehicle you’re considering. That way, you’ll know where each car fits into your budget. Once you’ve decided on a vehicle, you’ll need to provide details of the car to your insurance agent, such as VIN, mileage, make, model, and trim, so they can issue you a policy.
4. Proof of identity
When you’re ready to purchase a car, be sure to have a valid and acceptable proof of identity with you. It’s essential that the car dealership, bank, or credit union has proof that you are who you say you are and will require identification. Acceptable forms of identification typically include most government-issued IDs, like a valid driver’s license, state ID, or passport.
5. Proof of residence
You’ll be asked to prove you live at the address you say you do. That means you’ll need to be ready to provide acceptable documents as proof of residency. You may want to check with the lender beforehand to see what documents it accepts.
Here are a few commonly accepted forms of proof of residence:
- Recent bank statements
- Current mortgage or rental agreement
- Credit card bills
- Utility bills
- Property tax bill
- Insurance statement or policy
6. Trade-in paperwork
Depending on the car, trading in your old vehicle can be a great way to reduce the price of your new ride, but it’s not as simple as handing over the keys. Aside from bringing the car with you (obviously), make sure you bring all sets of keys, the certificate of title, vehicle registration paperwork, and any additional paperwork you may have from the DMV.
If you’ve kept all your maintenance records, it's a good idea to bring those as well, as it will show you took care of the vehicle and it can positively impact the trade-in value.
7. Bank account information (for trade-ins)
If you're still paying off your current car, don't forget to bring details of the loan with you to the dealership, such as the lender's contact information and your account number. You may want to call the lender yourself, explain that you’re trading in the car, and ask how they’d like you to facilitate the transfer.
If the appraised value of your trade-in is more than your loan balance, you’ll have equity in the car. The dealer will pay off the loan and cut you a check for the remainder, which you can use as a down payment on your new car. If, however, the appraised value is less than the loan amount, you’ll either have to cover the difference yourself, or you can roll it into the new loan. Rolling it into a new loan will be more expensive, as you’ll have to pay interest on it.
FAQs about buying a car
What credit score do you need to buy a car?
There’s no exact credit score number required to buy a car, as it depends on the type of loan you’re looking for and the lender you’re working with. If your credit score is less than 600, you may not qualify for loans from many lenders or the loans you do qualify for will have higher interest rates. Credit scores near 800 and above will have a better chance at qualifying for the best car loans available.
How should I dress to buy a car?
It shouldn’t matter how you dress when you go car shopping, but it can unfortunately affect your experience at dealerships. The way we dress can often influence salespeople in a certain way because they consciously or unconsciously think we can or can’t afford a new vehicle. Your clothing may also affect the prices and deals you’re offered.
Dressing too casually can give the impression you aren’t taking car shopping seriously or you don’t have the money needed for a new vehicle. Dressing too nicely might have people thinking you’re made of money and you won’t get the best deals. Overall, it’s best to dress nice and neat, but not erring too much on either the casual or fancy sides.
Is it better to finance a car through a bank or dealership?
There is no overall better option when deciding to finance a car through either a bank or dealership. The better option will depend on your financial situation and what’s available. The rates can vary from both banks and dealerships, so it’s best to look at any offers from both and see what suits your needs the most.
Often the finance department at a dealership will present you with a few different potential lending options to choose from — including itself, banks, and even credit unions — so you’ll easily be able to do a side-by-side comparison of the potential loan terms on offer. These offers are typically preapprovals that are based on a soft credit check to your credit report. Keep in mind that a preapproval for a loan doesn’t necessarily reflect the actual rate you’ll get once you choose a lender and an official hard credit check is performed. That said, the preapproval should be in the general ballpark.
The bottom line on what to bring when buying a car
If you're a first-time buyer, be ready to spend a couple of hours at the dealership, since the process of buying a car requires a bit of time — no matter how prepared you are. And, of course, make sure you know what to bring when buying a car.
Having everything you need before heading to the dealership can help the process from dragging on even longer. It may even prevent any unplanned trips back home or to the bank. Make sure all of your paperwork is in order, and go get yourself a new ride.