A clear picture of what it takes to get an auto loan approved will help remove the guesswork from your car buying experience, and help you prepare your financial situation for the car financing commitment you’re about to undertake. The requirements for approval change is somewhat based on the specific lender, but the general guide to applicant worthiness remains consistent. Keep this guide in mind while you start shopping for your next car, and the loan you will use to finance the expense. 
Know Your Credit
It simply does not make sense to make your credit report accessible to your potential lenders without familiarizing yourself with its contents first. Every consumer is entitled to a free annual credit report that lays out how your score was calculated. Look over the credit report carefully for any errors and ways you can improve your score before applying for your auto loan.
Most lenders, excluding sub-prime financing companies that cater their loans to those with credit limitations, follow a strict credit worthiness model when arriving at the interest rates and principal amount for which you qualify. A credit score above 700 will receive the lowest interest rates, and gain approval the easiest. If your score is above 600, you can expect to rely more on your income for approval and will be offered mid-range interest rates. A credit rating between 500 and 600 can make auto financing difficult to find without a cosigner and without needing to pay a substantially higher interest rate.
Provable Income
You need to be able to prove your income to the lender you choose for your auto financing. One of the first applicant requirements lenders will look at is your provable income, which means your wages or salary for which you can provide proof in the form of paystubs, W-2’s, salary contract, or income tax returns. Lenders want to know that you have ongoing income that can support the monthly car loan payments.
Identity and Residence
The average adult who goes out to buy a car should have no problem providing proof of both identity and residency. Lenders want to be sure you are who you say you are, and that they can find you in the event you stop making your required payments.
Bring your valid driver’s license and either your social security card or valid passport with you as proof of identity. Proof of residence is usually given in the form of utility bills, lease agreements, or other official documents that indicate your legal residence. Without proof of both who you are and where you live, no reputable lender will approve your car’s financing.
The basic requirements of an approved auto loan do no change much from one lender to another, whether you are working with an in-house dealership loan provider or an online loan company. Be prepared to meet these requirements before you start shopping for your next car to avoid surprises during the negotiation and financing process.
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