Why Are References Important When Buying a Car with Bad Credit?

In order to qualify for a bad credit auto loan, you need to have an array of documents that prove you meet the lender’s requirements. One of these is usually a list of five to eight personal references. These references are used for verification purposes, and the lender may or may not contact them to make sure you are who you say you are, or to verify additional information about your vehicle purchase.

When filling out your personal reference list, it’s important that you let them know ahead of time in case the lender does contact them – you don’t want them to be caught off guard. Plus, it’s common courtesy to ask someone if it’s OK to include them.

Information Needed for References

Why Are References Important When Buying a Car with Bad Credit?When you fill out your personal reference list, you need to include basic information about them. The information needed varies by lender, but you generally should provide five to eight references with full names, addresses, and personal and work phone numbers. Some lenders may ask for email addresses, too.

As for who your references can be, they can be close friends, family members that don’t live with you, co-workers, or anybody else you know on a personal level and feel comfortable asking. In some cases, the lender may require you to have two or more references that are family members – and, usually, one can live with you in this instance.

Personal References’ Responsibility

Listing someone as a personal reference doesn’t mean they’re responsible for your car loan, nor does it affect their credit score. Their only responsibility is to answer basic questions asked by a lender if one reaches out to them.

Your references are also not there to verify personal information such as your income. However, they can expect lenders ask them to verify your address, phone number, or identity if they're contacted.

Additional Bad Credit Car Loan Requirements

Now that you understand the importance of having personal references, what other requirements do you need to meet? Subprime lenders that work with credit-challenged consumers ask that you provide additional documents to prove you meet the other requirements. These include:

  1. Proof of income
  2. Proof of residence
  3. Proof of a working phone
  4. Valid state I.D. or driver’s license
  5. A down payment

You can read into these auto loan requirements here for further information on how to provide these five things.

The Bottom Line

You typically must have a list of personal references in order to take out a bad credit car loan. It’s just one piece of the bad credit financing puzzle, but it’s important. When you have your list of references – plus the other required documents prepared – and are ready to get the financing process started, we’re here to help.

At The Car Connection, we work with dealerships all around the country that specialize in helping buyers with imperfect credit. We'll work to match you with a dealer in your area after you submit our online auto loan request form. Get started today!


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