Personal Finance

What Do You Need To Buy A Car

By David Krug David Krug is the CEO & President of Bankovia. He's a lifelong expat who has lived in the Philippines, Mexico, Thailand, and Colombia. When he's not reading about cryptocurrencies, he's researching the latest personal finance software. 4 minute read

What Do You Need To Buy A Car? Buying a car, whether new or used, is a very straightforward process: decide on a budget, limit down your options for vehicles to test drive, weigh the advantages and disadvantages of each choice, and then sign the papers to buy your ideal automobile.

What to carry when buying a car is an issue that is sometimes overlooked, but it is critical.
Although filling out paperwork isn’t the most exciting part of the automobile purchase process, you won’t be able to drive away from the lot until you have done it. As a result, here are five critical documents to bring with you (and why) on your next car-buying trip to the dealership, so you can avoid any unnecessary delays.

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Documents to bring when you buy a car

Loan pre-approval application

Get pre-approved for an auto loan if you don’t have the money to buy a car outright and don’t plan on using a credit card to buy a car (yes, you can do that). In this way, you’ll know how much you’re able to borrow and how much you’re able to spend realistically. Additionally, you’ll be able to narrow your search to just include vehicles in that price range.

In addition, you’ll be able to negotiate more effectively with the dealer because you won’t be tempted to accept any finance that comes your way. It’s possible that the dealership would try to beat your lender’s interest rate if they truly want to close the deal.

Proof of income

You’ll need to provide proof of income in order to acquire financing from either the dealership or your bank. Lenders won’t provide you a loan unless you can show a regular source of income and the ability to make monthly payments. If you want to think about it another way, you’ll need proof that you’ll be able to pay back the loan. Depending on the lender, even your current company may be called to verify your work history.

Before going to a dealership, you should bring proof of income. If you have recent pay stubs or bank statements, these are fine.

Proof of car insurance coverage

Before you can drive your new automobile off the lot, you may have to produce evidence of insurance for it, depending on the dealership and the lender. A possible exception to this rule is if you already drive a vehicle that is covered by auto insurance. Car insurance modifications must be made quickly so that your new vehicle is covered for regular driving and use.

Each automobile has different insurance costs, so acquire an estimate from each of the finest car insurance providers for each vehicle you’re considering. In this approach, you can see which cars are within your price range. To get an insurance coverage, you’ll need to supply your insurance agent with information about the automobile you’ve chosen, such as the VIN number, the car’s mileage, and the model and year.

Proof of identity

When you go car buying, you must bring a form of identification that is legitimate and acceptable. Proof of identity will be requested by the dealership, bank, or credit union to verify your identity. It’s common for most government-issued identification cards to be accepted as proof of identity.

Proof of residence

The address you provide in your application will require proof of residency. In order to prove your residency, you’ll need the proper documentation. You may wish to verify with the lender to see if it accepts the papers you need before applying for the loan.
To demonstrate where you live, the following documents are typically accepted:

  • Bank statements from the last few months
  • Current lease or mortgage contract
  • Debts accrued on credit cards
  • Bills for electricity and gas.
  • The tax bill on my home
  • A statement of insurance or a policy

Trade-in paperwork

In certain cases, trading in your old automobile might save you a lot of money on your new one, but it’s more complicated than turning over the keys to your old car. Along with your vehicle (obviously), be sure to include all of the keys, the title, the registration paperwork, and any other documentation you may have received from the DMV.

It’s a good idea to bring over any service records you’ve saved, since this will demonstrate that you took good care of the vehicle and raise its resale value.

Bank account information (for trade-ins)

If you haven’t finished paying off your existing vehicle, don’t forget to bring your loan information, including your account number, to the dealership. Call the lender and explain that you’re trading in the automobile, and inquire about their preferred method of facilitating the transfer of funds.

Having equity in a car is possible if the trade-in value exceeds your loan debt. As a down payment, the dealer will pay off your current loan and provide you a check for the balance. There are two options if the assessed value is less than the loan amount: you can pay the difference personally, or you may put the difference in a new loan. Because you’ll be racking up interest on the new loan, it’s a more expensive option.

Bottom Line

For first-time buyers, expect to spend a couple of hours in the dealership, no matter how prepared you are for the process of purchasing a vehicle. Make sure you know what to bring with you when purchasing a vehicle.

Preparing ahead of time for the trip to the dealership might help speed things up. In other cases, it may even prevent unexpected journeys to the bank or to your house. Make sure you have all of your documentation in order before you go out and buy a new car.

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