Buying a car on finance is unfortunately one of those things in life that are awfully stressful if you don’t have the right information. Armed with a little bit of preparation, car finance can actually be a pretty straightforward thing, especially if you go with the right service. So, you’re now thinking: what documents do I need to apply for car finance? 🤔 Well, we’ve got you covered: to help you cruise through your car loan, we’ve put together a guide to what documents are needed to apply for car finance. Let’s dive right in.
The Required Documents When Applying for Car Finance
So you are probably wondering, what is required when applying for car finance and and even "do u need anything to to apply for car finance?" Well the answer is yes, you will need to provide certain information and documents to apply and get approved. Let's go through what you will need when making your car finance application:
The first thing you’ll need to have on hand is your ID when applying for car finance. It will have to be photographic proof of identity, which can be your fully valid driving license or your passport. With traditional car finance providers, you might have to send in a paper copy of your ID with your application form. However, with Carmoola, all you’ll have to do is hop onto our app for a fully digital ID check - it only takes a few seconds!
Your Proof of Income
In order to prove to your lender that you can afford the loan you’re applying for, you’ll have to provide proof of your income. This will often be three months’ worth of bank statements, or payslips if you’re in full-time employment. If you’re self-employed, lenders will usually accept bank statements only, though you may find that some lenders don’t cater to self-employed applicants. Or if they do they might need proof of your profits from you accounts or an SA302 from HMRC. If you’re on benefits, some lenders will count this as a form of income and will let you add it to the list, provided that more than half your income comes from employment.
Bear in mind that some lenders can call your employer to check that you really do work there. Don’t worry though, it’s illegal for them to give any information about your loan to your employer.
If you’ve ever asked yourself “why do they need bank details for applying car finance?”, well, it’s because depending on your employment status, your lender will need to have tangible proof that you earn enough money to cover the loan. Without that, you’ll be considered a risky candidate, and your application will be rejected.
Your Proof or Residence or Address
Traceability is a huge part of car finance. Your lender is going to want to make sure they can get a hold of you if you suddenly stop paying back your loan one day. That’s why they’ll ask you for a proof of address, which could be:
- A recent utility bill (usually less than three months old) which could be your electricity, water, gas, or landline provider.
- Your council tax bill
- Your tenancy agreement if you’re a tenant
Any document you provide as proof of residence must show your full name and correct address. Make sure the documents are recent ones, or your application may be delayed. Also, another important thing to note is that you can’t provide two of the same documents to prove your income, your ID, or your address - they have to all be different. By the way, you’ll be requested to provide proof of address no matter how good your credit score is.
What if I Don’t Have Three Years’ History in the UK?
There are actually so many reasons why you might not be able to provide three years’ worth of income, employment, and address history for your car finance application. It could be because you only recently moved to the UK, so you don’t have consecutive years of banking or housing here. Maybe you only just got your first job, or you went abroad and closed down your bank account. Well, though it requires a bit more leg work, it’s not necessarily a problem.
Some car finance providers do overseas checks, which will allow them to look at your previous addresses in countries other than the UK. You may also find that other lenders don’t perform these checks, so they’ll be less lenient. In that case, you might have to apply with a guarantor or a joint applicant. It’s just a matter of finding the right lender that you can talk to and explain your issue to.
How Do Lenders Check My Credit Score?
Unfortunately for some and fortunately for others, credit checks are a crucial part of car finance. Your credit report is an open book that tells all about how good your credit management skills are. You can view your credit report at any time for free on various websites like AnnualCreditReport.com or Experian. Once you formally apply for a car loan, your lender will ask a credit agency to perform a credit check for you. On your credit report, your lender will be able to see:
- Any current or past employers that were listed on any of your past credit applications
- Your personal information like your names, any addresses that were ever disclosed, and your date of birth
- Any bank accounts you ever opened, even the ones that are now closed
- Any loans you’ve taken out, and their current status
- Any bankruptcies you may have on public record
- Any credit inquiries, which are whenever you applied for a loan and the lender performed a credit check
Making sure you’ve sent out the right documents is a way of speeding up the car finance process. If you’re in a rush and want things done fast, it’s best to get everything ready in advance and spend time carefully looking through the list of the required documents to make sure you haven’t missed anything.
Once you’ve sent out all of the correct documents, your finance company can take anywhere between a few minutes to a few weeks to approve your car loan. They might even request more information if any of the documents aren’t sufficient, or they might even reject your application after a few days.
Here at Carmoola though, you’ll get an instant decision. You won’t have to wait around to know if you’ve been approved for your car loan or not. We also have tons of guides and helpful articles, in case you need a little bit of guidance. We’re open 24/7, so we’re always available to help you get your car loan. We’re passionate about helping our community get their dream car 😍 🚗 Download Carmoola today!