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Why do I need pay stubs, proof of car insurance, and a buyer's order before I get pre-approved for an auto loan?
"I'm confused by the documents my credit union needs to pre-approve me for a car loan. They want pay stubs, proof of insurance (which I thought you get after you buy the car), and a buyer's order (don't know what that is).
Does this sound right? Why do they need these?"
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
“Yes, this is correct. Pay stubs prove that you have income. With them, the credit union determines your debt-to-income ratio, which is one of the most important factors in getting approved.
A buyer’s order, also known as a purchase order, shows all the relevant information on the vehicle, including the VIN, taxes, fees, options, warranty, etc. This is just to verify the car you want is indeed the car that you’re going to buy.
Proof of insurance guarantees you’ll get
car insurance
when you buy the vehicle. This also makes sure you don’t have any incidents that could prevent you from getting your insurance. Shop around on websites like Jerry
, and note that usually the insurer you choose will fax the information to your lender.”View full answer
- Gregory R.
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