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How to qualify for a car loan

9 requirements most lenders look for in an applicant.

Updated

Fact checked

In general, the most important factors on any loan application are your credit and income. But you’ll also need to think about the vehicle you want to buy, the down payment and more before you apply. If you can’t qualify on your own, take some steps to up your chances of approval.

What are the requirements to get a car loan?

Most lenders require some or all of the following criteria to get approved for a car loan:

Strong credit

The credit score you need to get a car loan depends on which lender you apply with. While there are car loans available to all credit types, you’re more likely to get approved with at least good credit — that’s a 670 credit score or higher.

If you have a 600 or even 500 credit score, it’s still possible to get a car loan. But you’ll have less of a selection and higher rates.

Regular income

You can’t get a car loan without showing that your income can support the monthly repayments. Some require you to work full time, while others accept part-time work or government benefits. And you’ll need at least one of the following documents as proof:

  • Most recent pay stub
  • W-2 form
  • Social Security or government benefits statement
  • Bank statements
  • Most recent tax return

If you’re self-employed, there’s a chance you’ll need to submit more documents to prove your income — if you can qualify at all.

Low DTI ratio

Lenders generally look for a debt-to-income ratio (DTI) under 43%. This means your monthly debt payments and bills are less than 43% of your monthly income before taxes.

While lenders often don’t advertise this as a requirement, most consider it and have maximum DTI criteria for all applicants.

Eligible vehicle

Your lender might have limits on what model and make they’ll finance. If you’re buying a used car, you’ll have to also meet mileage and vehicle age requirements.

Usually, the vehicle can’t have more than 100,000 miles or be more than 10 years old, though it varies by lender.

State-issued ID

Federal law requirers lenders to verify your identity by checking a government-issued ID. Typically, they’ll ask for a driver’s license, permit or non-driver ID card issued by the DMV. Or, you may be able to use a passport or other ID that your local government issues.

Resident of eligible state

Using a passport or other ID that doesn’t include your address? Lenders generally ask to see proof of address, like a utility bill, to verify that you live in an eligible state.

Working phone number

Most lenders require you to provide a phone number on the application as a required field. Like the DTI, you won’t find this in most eligibility requirement lists.

But you generally can’t even fill out a prequalification form without a phone number — let alone the application. Lenders like to use this to get in touch if necessary. Not having a phone number also looks like a lack of stability to a lender, which would likely disqualify you from a loan.

Personal reference

While not common, some lenders ask for the name and contact information of people who can vouch for your trustworthiness. There may be restrictions on who you can choose — sometimes family members aren’t allowed.

Down payment or trade-in

While it’s possible to finance 100% of your new car, many lenders require a down payment. These usually start at around 10%, though you’ll generally get a better deal with a down payment of 20% or higher.

What else do lenders consider?

In addition to hard eligibility requirements, the following factors can also play into your application:

  • Where you’re buying the car. Generally, lenders favor cars bought directly from a dealership. Many won’t allow private-party purchases, and those that do often charge higher rates.
  • New vs. used. Used car loans tend to come with higher rates than financing a new car.
  • Loan amount and term. Credit unions in particular offer different ranges of interest rates depending on your loan amount and term.
  • General credit profile. In addition to your credit score, lenders consider factors like how much debt you have in your name and the length of your credit history.

Apply for a car loan today

Data indicated here is updated regularly
Name Product Filter Values Minimum credit score APR Loan term Requirements
Carvana
No minimum credit score
3.9% to 27.9%
1 to 6 years
18+ years old, annual income of $4,000+, no active bankruptcies
Get pre-qualified for used car financing and receive competitive, personalized rates.
car.Loan.com Car Loans
300
Varies by network lender
Varies by lender
Must be a US citizen with a current US address and employed full-time or have guaranteed fixed income.
Apply with a simple online application to get paired with a local auto lender. No credit and bad credit accepted.
CarsDirect auto loans
Varies by network lender
Varies by network lender
Must provide proof of income, proof of residence, and proof of insurance.
Save time and effort with this lending service specializing in beginner-friendly or subprime car loan.
Auto Credit Express Car Loans
300
Varies
Varies
Must be employed full-time or have guaranteed fixed income of at least $1,500/month and be a current resident of the US or Canada.
Get connected with an auto lender near you, even if you have bad credit.
Monevo Auto Loans
500
3.99% to 35.99%
3 months to 12 years
Credit score of 500+, legal US resident and ages 18+.
Quickly compare multiple online lenders with competitive rates depending on your credit.
LightStream Auto Loans
Good to excellent credit
Competitive
2 to 7 years
Good or excellent credit, enough income or assets to afford a new loan, US citizen or permanent resident, 18+ years old
Quick car loans from $5,000 to $100,000 with competitive rates for borrowers with strong credit.
LendingTree
Good to excellent credit
Starting at 3.09%
Varies by lender
18+ years old, good to excellent credit, US citizen
Compare multiple financing options for auto refinance, new car purchase, used car purchase and lease buy out.
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Compare up to 4 providers

6 ways to increase your chances of getting a car loan

Even if you think you’ll qualify, these steps can increase your odds of getting a good deal:

  • Check your credit score. Knowing your credit score can help you compare lenders by eliminating those that you won’t qualify with.
  • Check your credit report. Look for mistakes that might be affecting your score — and contact your creditors if you find any.
  • Shop around. You can apply for multiple car loans without majorly hurting your credit, as long as you keep your applications to a 14-day window. Credit bureaus treat this as rate shopping and only count one hard inquiry on your credit report.
  • Get preapproved. Getting preapproved with several lenders can help you make a more accurate comparison of rates without fully committing to the loan.
  • Save up for a big down payment. The more you can put down, the less you’ll need to borrow. Smaller loans are often easier to qualify for — and lenders like to see you have some skin in the game.
  • Apply with a cosigner or coapplicant. If you’re missing a key requirement, look for a lender that accepts cosigners or coapplicants to make up for that shortcoming.

Is it easier to get approved for a personal loan?

Not necessarily. Personal loans usually don’t require collateral, which is more of a risk to the lender. That’s one of the reasons why they tend to have higher rates and shorter terms than your typical car loan. While you can use a personal loan to buy a car, it might not be your best option.

Bottom line

Most lenders want to see that you have good credit, low debts and the income to pay off a loan. Generally, you need to show that you’re financially stable enough to make your repayments on time. Check our guide to auto financing to find a car loan to apply for today.

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