Personal references are a must when you're applying for a car loan and you have credit issues. Reference requirements vary by lender, but when you’re dealing with a subprime lender, they typically ask for five to eight detailed personal references. Let's take a look at some general guidelines about personal references for auto loans.
When you're applying for an auto loan, subprime auto lenders require a list of references to verify that you're you and to verify where you live. Lenders also want to make sure that you aren't making an automotive straw purchase, which happens when someone buys a vehicle for someone who can’t get financed on their own. Following up with your list of references is just standard procedure for these lenders, and they may or may not contact any or all of them.
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 their references know ahead of time that they plan to list them as a reference. This way, they’re not caught off guard if the lender calls and asks about the buyer and their recent vehicle purchase.
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 who 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. The level of detail, as well as the number of references you need, varies from lender to lender.
Most lenders aren’t going to accept anyone you live with as a reference for a car loan, but they're usually okay with you listing relatives. Some prefer that you do. For example, special finance lender Consumer Portfolio Services allows you to list one reference who lives at the same address as you and prefers that you list at least two relatives.
The bottom line: it all depends on what your particular lender requests, and what their loan programs allow.
Listing someone as a personal reference doesn’t mean they’re responsible for your car loan, nor does it affect their credit score or mean that they’re going to be spammed with car financing offers from dealerships. Their only responsibility is to answer basic questions asked by a lender if one reaches out to them.
They’re simply a personal contact of the buyer, so they shouldn't be alarmed if they receive a call from a lender asking them to verify that they know the buyer. References are also not there to verify personal information such as your income. However, they can expect lenders to ask them to verify your address, phone number, or identity if they're contacted.
It's a good idea to make sure you reach out to your references before listing them for your lender, so they know what to expect if they receive a call. If you're struggling with poor credit, you need to understand that personal references are required by most subprime lenders that you need to work with if you want to get approved for an auto loan.
Plus, being listed as a reference for someone buying a car doesn’t hurt their credit score or leave them 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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