Buying a 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 the 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.
Loan pre-approval application
If you don't have the cash to purchase a car outright and you don’t plan on putting the car on your 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.
Provide 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.
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 the insurance company for each one 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.
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.
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 and account information. 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.
And one last thing to remember...
It would be a shame if you gathered all the necessary paperwork and arrived at the dealership without your driver's license. If you're hoping to test drive a new or used car, make sure you double-check your wallet before you arrive at the dealership. Typically, car dealerships will make a copy of your driver's license before you hit the road with one of their vehicles.
The bottom line on what to bring when buying a car
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.