Reference Conditions for Bad Credit Car Loans

Part of the typical auto loan process for credit-challenged car buyers is the requirement for a list of personal references

We know lenders

Take it from us: if you have less than perfect credit and you need a car loan, there’s a real good chance that, at some point in the process, you’ll need to furnish the lender with a list of personal references.

 

At Auto Credit Express we understand this is the case because, for over two decades, we’ve been helping car buyers with poor FICO scores find dealers that can arrange for approved auto loans for them.

We use the word “help” because, unlike buy here pay here (BHPH) dealers, these loans can help reestablish car credit and, at the same time, also raise a buyer’s credit scores. But because these loans carry a higher risk than a traditional auto loan, there are a number of additional procedures that must be followed in order for these lenders to fund a loan (essentially pay a dealer for the vehicle).

Poor credit car loan documentation

In addition to the typical documentation requirements for an auto loan such as proof of insurance and a valid driver license, lenders who work with car buyers that have credit issues typically tack on additional items called “stipulations” or “stips”.

In most cases, one of these stips is a list of references.

Understanding references

What do lenders mean by a reference? Thankfully it’s a lot simpler than it might seem. As far as they’re concerned, a reference is simply someone who knows you. This person can be a relative, friend, co-worker, your pastor or even your boss.

Under most circumstances, six of these references will be sufficient. Some lenders ask for only four, but since a few require more it’s always a good idea to have a list of at least six available.

Reference process

In addition to the person’s name, you’ll also need to supply the lender with their address and either a work, home or cell phone number.

Before adding anyone to the list, be sure to get permission from them to use their name as well their address and phone number. In addition, you need to be aware of the fact – and you need to let your references know – that during the verification process there is the very real possibility that they may be contacted by the lender in order to confirm that they know you.

A time saving tip to keep in mind: To keep the loan process as efficient as possible for both you and the finance department at the dealership, you’ll want to bring your reference list with you when you on your first dealer visit. The more information the finance manager has, the easier it will be to obtain a loan approval.

As we see it

Our experience has shown that it’s a good idea to have a list of six references – complete with their addresses and phone numbers – with you when you visit the dealership for the first time. If you do this, you’ll find that the application process moves along more smoothly and, just as importantly, more quickly.

One more thing we’d like to point out: if you’ve had past credit problems we want you to know that Auto Credit Express can help you find a dealer that can give you your best chance at approved auto loans.