Part of the secret sauce of success with any auto loan is preparing your paperwork properly in advance. That way, the lender has everything they need to make a decision and enough to answer any question they might have. However, the required paperwork for a car loan is not always so obvious.
While it may not sway their decision either way, it should enable them to make a much faster decision. Our auto loans team explains the documents needed to buy a car in Canada.
Documents Needed to Buy a Car
There is a lot of paperwork involved in any finance application. As the lender doesn’t know you and has never met you, they have to make their decision based on what they see.
Making sure they see everything they need to view the application favourably can make a genuine difference.
Here’s what you’ll need:
Proof of ID and Address
You’ll need proof of ID to prove you are who you say you are. Your Canadian driver’s license works here as it can also demonstrate you’re eligible to drive the car you’re buying.
Depending on the lender, you may be asked for a selfie holding your driver’s licence to prove you are who you say you are.
Proof of address can also be partly satisfied with your driver’s licence. Other acceptable forms include utility bills with your address printed or other formal letters or notifications that list your address.
Proof of Income
Proof of income helps satisfy the affordability requirement. This will show the lender you can afford the loan payments and that borrowing won’t put you into financial hardship.
Proof of income can be bank statements, salary statements or wage slips, proof of investments, rental income statements, pension statements or whatever official notifications you receive around your income.
Typically, three months of bank statements covers a lot of this but the more paperwork you can provide, the better.
If you’re self employed, you’ll need your latest tax return and business bank statements too. You should also present as much paperwork as you can proving a steady, reliable income where at all possible.
Proof of Settled Debts
If you have just settled an auto loan, paid off a credit card, paid off a personal loan or settled another form of finance, you may be asked for that too.
If that settled debt hasn’t yet been updated on your credit report, you’ll need to provide proof that it has been settled so it isn’t counted against the amount you’re planning to borrow.
If the account is marked as settled or closed on your credit report, you won’t be asked for this.
If you’re planning to use a cosigner or co-borrower, you’ll need their paperwork too. It’s the same requirement but for them as an individual.
Like many areas of life, preparing for a auto loan is all down to the preparation. Knowing what the lender will require, what will help support your application and what is necessary to get what you want can make all the difference to the speed and outcome, hence this post.
For those of you who know that you have a challenging credit situation, please visit Dixie Auto Loans where we have a team of credit specialists ready to help you get approved for a car loan today.