What Does it Mean to Be a Reference for Someone Buying a Car?

If someone you know is buying a car, they may need to have a list of personal references to give to the lender. This is common, especially for those with bad credit, and there's nothing to worry about if you're listed as a reference for somebody.

Why References Are Needed

What Does it Mean to Be a Reference for Someone Buying a Car?Lenders usually ask for a list of personal references as part of the auto loan approval process. Subprime lenders – the kind that specializes in bad credit financing – typically ask potential buyers for five to eight references complete with full names, addresses, and work and personal phone numbers. The lender keeps this list of references on hand, and may contact them to verify information about the borrower.

The borrower should let you know ahead of time that they plan to list you as a reference. This way, you’re not caught off guard if the lender calls you and asks about the buyer and their recent vehicle purchase.

Other Requirements for Bad Credit Auto Financing

A list of personal references is just the tip of the iceberg when it comes to getting bad credit car financing. Subprime lenders also typically ask for additional documents, and don't expect to get approved if you can’t come up with them.

The specifics vary by lender, but you should generally provide proof of each of these things:

  • Income – A recent computer-generated paycheck stub from your current employer. This must show your year-to-date earnings, and be from a single source.
  • Residency – A recent utility bill, in your name, at the address listed on the application.
  • Phone – A recent phone bill, in your name. It can be a landline or contract cellphone.

On top of that, you usually need a down payment. Most subprime lenders ask for a minimum of $1,000 or 10 percent of the vehicle’s selling price, whichever is less, but make sure you ask the dealer about this requirement.

The Bottom Line

Being listed as a reference for someone buying a car doesn’t hurt your credit score or leave you open to any threats – you’re simply there for the lender’s peace of mind. In fact, you may never even be contacted, so don’t sweat it if someone you know asks to list you as a personal reference.

If, on the other hand, you’re a buyer looking to finance your next vehicle and you have bad credit, we want to help.

At The Car Connection, we match consumers to dealerships in their area that specialize in helping buyers with less than perfect credit. The best part is that the service we provide is free, fast, and doesn't put you under any obligation. Get the process started by completing our simple and secure auto loan request form today.


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