Do I need a bank account to be approved for a car loan?
Although having a bank account is a great tool for many things, it is not necessary to consider it for an auto loan approval. We cover what you need when applying for a car and general auto lender requirements.
Bank accounts and car loans
One thing you’ll need to qualify for your next vehicle is qualifying income, but you don’t need to use a bank to apply for a car loan. Although many borrowers are members of financial institutions, if you have the income and meet the requirements, you can apply for a car loan without a bank account.
Bank statements are sometimes used to prove things like residency or that you receive certain types of fixed income, but computer-generated check stubs serve as proof of income if you have W-2 (earned) income. You also don’t need to have a bank statement to prove your residency, as a recent utility bill in your name can do the trick.
Does it make it easy to pay or apply for a car loan if you have a bank account? This is possible if you go through your financial institution. If you have bad credit, applying to a credit union or bank of which you are a member can increase your chances of approval, especially if you have been a member for a while. Generally speaking, credit unions are a bit more lenient on their credit terms, but that’s not a guaranteed approval when you have credit issues. You may need to work with a bad credit car lender if your credit is not the best.
Special Auto Loan Financing
If you have a lower credit score and are applying through a subprime auto lender, you wouldn’t need a bank account either. Subprime lenders are third party lenders, and they are more concerned with your ability to pay for the vehicle than your personal choice of whether or not to have a bank account.
Since most traditional lenders cannot finance low credit borrowers, it can be difficult to find a lender who can work with bad credit. It’s there that special financing dealers get in the game.
Special finance brokers are registered with subprime lenders, and subprime simply means bad credit. These lenders use your ability, life stability, and general willingness to pay an auto loan when considering financing for you.
What does ability, stability and willingness to pay mean to you? This means proving that you have the income to pay the loan, that you are financially and in your living situation stable, and that you have a down payment that shows the lender that you are in the game.
Having a bank account doesn’t tell lenders whether or not you can afford a car loan or that you’re a stable, ready borrower — your pay stubs and other documents can do the talking.
Meeting Subprime Loan Requirements
The specific requirements of a subprime lender will vary, and they also depend on your specific situation. However, we have a list of requirements that you will likely need to meet if you are looking for a bad credit car loan from a subprime lender:
- Revenue – Subprime lenders generally need to see a minimum of $1,500 to $2,500 per month before taxes to meet income requirements. Prove your income with a recent computer-generated pay stub.
- Alive – Lenders require you to have lived in the same area for about a year. Prove your residency with a recent utility bill in your name showing your current address.
- Identify – You can prove your identity with a valid driver’s license showing your current address.
- Work phone – Prove you have a working phone with a recent phone bill in your name. Must be a contract cell or landline phone; no prepaid phones.
- Deposit – Although not required immediately, you will need a down payment of at least $1,000 or 10% of the sale price of the vehicle to obtain a bad credit car loan.
- Personal references – Expect to need around five to eight personal references with contact information like phone number, address, email and possibly their relationship to you. References can’t be someone who lives with you, but they can be just about anyone else.
As you can see, none of the above requirements require you to have a bank account! Having one can be useful for building up your savings or applying for a credit card, but as long as you can prove you are able and willing to pay for a car, you can apply for a car loan without a bank account.
Next step in car financing
Now that you know what lenders are looking for when you apply for an auto loan, you can start looking for dealerships that offer the loan options you need. If you have bad credit, it can pose a bit of a challenge – how do you know which dealerships work with subprime lenders? Luckily, we know that and can find one in your area so you don’t have to.
Here has Auto Express Credit, we have created a network of dealers who are signed up with subprime lenders, and our connections are nationwide. To start finding a dealer with the resources you need for your credit situation, complete our car loan application form. There’s never any obligation to buy anything, so get started now!