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Before you can drive off in your dream car, you'll need to do some paperwork. Documents that may be required when buying a car include a loan pre-approval application, proof of income, proof of car insurance coverage, government ID, and more.
Handling the necessary paperwork might not be the most exhilarating part of the car-buying process, but you won't be leaving the lot without completing it.
8 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.
Once you have an idea of how much you can borrow, you can set realistic expectations about how much you can afford to spend on your new vehicle. You can then look for cars that fall within that price range. You'll also have a better idea of what, if any, add-ons you can afford.
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 option 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 for a successful car purchase. Lenders won't be willing to shell out money to car buyers who aren't able to show a steady income and the 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 your income information.
Before you head to the dealership, make sure you have proof of income. This can be recent paystubs or bank statements for a few recent months.
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3. Proof of car insurance coverage
Depending on the dealership and the lender that's financing your brand-new car or used vehicle, you might need to show proof of insurance for the vehicle you're buying 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 new car home with you. You'll be expected to contact your insurance agent and make the changes to your auto 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 for each vehicle you're considering. You can use vehicle identification numbers (VINs) or each car's year, make, and model to get a quote. That way, you'll know where each car fits into your budget.
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4. Proof of identity
When you're ready to purchase a car, be sure to have 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, such as:
- Valid driver's license
- State ID
- Passport
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5. Proof of residence
You may need to prove to the dealership or the lender that you live at the address you say you do. This means providing proof of residency that may be one of these commonly accepted forms:
- Recent bank statements
- Current mortgage or rental agreement
- Credit card bills
- Utility bills
- Property tax bill
- Insurance policy
6. Trade-in paperwork
Depending on the car, trading in your old vehicle can be a great way to reduce the price of the car you're buying, but it's not as simple as just handing over the keys.
Aside from bringing your used car to the car dealer, you should also bring all sets of keys, the certificate of title, vehicle registration paperwork, and any additional paperwork you may have from the Department of Motor Vehicles.
If you've kept all your maintenance and service records, it's a good idea to bring those as well, as a demonstrated record of taking care of the vehicle could 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 paperwork concerning 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 should have equity in the car. The dealer may 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.
8. Discount and rebate information
Some car dealerships may offer certain discounts to attract customers. These discounts may be aimed at certain groups, such as military members or first responders. Some car dealerships or auto manfucaturers may also offer rebates, which are a form of cash back that you get after completing your sale.
Whether you're hoping to qualify for a discount or a rebate, make sure to have the supporting documents you need. For example, if you are a member of the military, you may need to provide proof of your status, such as a military ID.
FAQs
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 find it difficult to qualify for loans from several lenders, or the loans you qualify for may have higher interest rates. Credit scores near 760 and above should have a better chance of qualifying for car loans with lower interest rates rates.
How should I dress to buy a car?
It shouldn't matter how you dress when you go car shopping, but it may affect your experience at dealerships. The way we dress may 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 purchase prices and deals you're offered.
Dressing too casually can give the impression you aren't taking car shopping seriously. Dressing too nicely might have people thinking you're made of money, affecting the qualify of the deal you may get. Overall, You may prefer dressing nice and neat without 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 clear winner between financing a car through a bank or dealership. The better option typically depends on your financial situation and the financial options available to you. Bank and dealership interest rates can vary, so it's best to look at the offers you get and see what suits your needs the most.
The finance department at a dealership may present you with a few different potential lending options to choose from — including the dealership itself, banks, and even credit unions.
These offers are typically pre-approvals that are based on a soft credit check to your credit report. The actual offer and interest rate are determined after a hard credit check is performed with the lender you chose.
Bottom line
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.
It's especially important to make sure you'll have uninterrupted insurance coverage, either via your current policy or a new one. Buying a new car may even be a good time to switch insurance providers. Check out our list of the best car insurance companies for some options.
Now, make sure all of your paperwork is in order and go get yourself a new ride.
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