Remember that the definition of buy here pay here dealers is that these dealerships finance the customers directly. This makes each dealer make his own criteria on what is needed to be able to trust that their money that is invested in the customers, is not going to be lost. This makes writing a rigid table with actual requirements an almost impossible task to achieve. However, here are the basic requirements as well as hints of why would dealers need them.
1. Some sort of identification with picture of the customer that is asking for financing approval for verification.
2. A recent bill to prove the address of the customer in case the payments are not paid on time. Although most identification cards, like the state ID and the driver’s licence, have the customer’s address, it can often be several years old and hence the address is not updated to the most recent one but a bill would have the recent address.
3. Proof of income – This can be from check stubs or direct deposit into a bank account with the bank statement present to show as proof. Or it can be from Social Security Disability income or other reliable sources. Each dealer would have their own measurement of what is reliable income sources. Remember that some dealers are aiming to be able to garnish wages in case the payments are not paid and vehicle is not returned or can’t be found to repossess.
4. Some places require a bank statement to reveal how the customers spend their money. If there are other car payments that show up on the statements, then the dealers would take this into account when calculating the approved loan amount to be granted to the customer. More life expenses means that this customer is less likely to be able to pay large monthly payments, even if his income is high.
5. Down payment money – This differs greatly from dealer to dealer and from car to car and even from customer to customer. Here is why, first, some dealers are running incentives while others are not. Second, customers might be asking for very expensive vehicles. Third, customers may be asking for average priced vehicles but their income proven can not cover the monthly payments as well as life expenses so the dealers ask for higher down payments to lower the risk involved with such deals. Customers need to keep in mind that even if dealers are asking for no money down, it does not mean for customers not to have any cash available. The reason is that customers, in most states, are still required by law to pay all the taxes on the vehicle as a lump sum in the beginning of the sale. Also, there are registration costs that need to be paid by the customers.
6. References – Many dealers require that customers provide references from family and friends. Basically, the dealerships would contact these people and ask them for information about the whereabouts of the customers when needed. This is meant as a secure way for the dealers to be able to track down the customers in the event that the payments are not paid and the vehicles cannot be traced to repossess.