Applying for credit can be a daunting task, especially if it’s for a large amount of money. Part of this is because from mortgages to car loans, you’ll need to ensure that you have the right paperwork to hand. There are often lots of things you’ll need in order to complete the application, so to make it as straightforward as possible, it’s a good idea to dig these things out before you start!
The Initial Application
We act as a broker, so will take your details, and do our best to match you with a car loan provider, with which you meet all the basic criteria.
The online application process shouldn’t take more than a few minutes to complete, and you should then get a decision on screen. You’ll then be directed to the lender’s page, where you’ll be able to make an application using the paperwork listed below.
What Paperwork Do You Need?
There are a few bits of paperwork you’ll need to track down before you make a car loan application with a direct lender. The four main things will be your driving licence, proof of identity such as your passport, proof of earnings, and your bank account information. The lender will need to see each of these things in order to confirm that all the details you entered on application are correct.
It goes without saying that when you apply for car finance, you’ll need to show that you have a valid driving licence! This doesn’t have to be a full driving licence though – you can still take out vehicle finance with a provisional licence.
You’ll need to provide a clear scan or photo of your driving licence, with all the information clearly visible. Your driving licence not only shows that you’re legally able to drive, it will also act as proof that you’ll be the registered keeper and owner of the vehicle you buy.
Proof of Identity
While your driving licence does act as proof of identity, you may also need to provide further documentation, such as your passport. Alternatively, you might be asked for a selfie, with you holding your own driving licence. This will help protect against fraud, and is an easy way to confirm your identity.
Proof of Earnings
In order for the lender to verify that you’re able to afford the agreed repayments, they’ll need to see proof of earnings. This is known as an affordability check – the car finance provider has to ensure that you won’t be putting yourself in any difficulty by making the monthly instalments.
You can show your wages through a wage slip, providing a bank statement, or by using open banking. The latter is a way for lenders to see your bank statements without you needing to download them, and despite what the name may suggest, the lender can’t access your bank account.
You may also need to provide proof of your employment. This could be covered by your bank statements or payslips, but some lenders ask for further details of your employment history. They might ask for the names and addresses of your employers over the last few years, and for you to provide details of any gaps in your work history. There is no need to worry if you were out of work for a brief period – the lender is simply looking to see that you’re currently earning a stable income.
Bank Account Details
So that you’re ready to start making your monthly payments, the lender will need your bank details. This will include your sort code, account number, and the name on the card. If you have a joint bank account, you may also need to provide details for your partner.
What Other Info Do You Need?
There are other things it’s a good idea to keep close by when making a car loan application. For instance, if you’re hoping to trade in your old car, you should have details of that vehicle to hand. And when it comes to your new car, even if you’re not sure what make and model you want yet, it’s sensible to at least have a price limit in mind. You may also wish to consider what features you’re hoping to get with your new vehicle, along with any applicable warranties.
You may also need to check your credit rating before applying for vehicle finance. If you’re looking to find out what sort of rates you’ll be offered, and a rough idea of your monthly repayment amounts, you can use a car loan calculator. And in order to get the most accurate estimate, you’ll need to know what category your credit rating falls under.
Overall, it may seem like you need a lot of things to apply for credit, but these are the sorts of things you’d need for most big applications!