Why Do Car Dealerships Need References?

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By

Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.


, - July 15, 2019

In order to get approved for bad credit auto financing, subprime lenders ask for additional documents such as proof of income and residency. On top of that, they require a list of personal references. The purpose for these references is so the lender can verify that you are who you say you are, and have another way of contacting you.

The Importance of References

Having personal references gives the lender a sense of security. It means they can reach out to people who know you personally in the event they can’t contact you, but it also helps provide additional protection, such as:

  • Employment and residence verification – Lenders may reach out to your references to confirm your place of employment and/or residence.
  • Identity fraud – If your reference claims to not know you, this is a red flag that could be a sign of identity fraud, which is a common issue in the US.

The likelihood of the lender contacting every single reference you list is slim. If they do reach out, they’re most likely going to contact two or three to make sure that the information you provided is correct.

Choosing the Right References

Depending on the lender, they typically ask for around five to eight personal references. To be on the safe side, make sure you have eight ready to go. You don’t technically need to have the list when you first visit the dealership, but you do need to provide it before you take delivery, so it's better to have it ready.

When you’re filling out your list of references, make sure to include these four things:

  1. Full names
  2. Complete home addresses
  3. Home (cell or landline) and work phone numbers, if applicable
  4. Email addresses

CarsDirect Tip: Let your references know that you plan on including them on your list for the lender. This way, if they do receive a phone call from your lender, they aren’t going to be caught off guard and think it’s a scam.

The Bottom Line

Having a complete list of references is just one thing you need in order to get approved for car financing with bad credit. You need to also have proof of income, employment, residency, and a working phone.

If you have your list of references ready and feel confident in taking the next steps and starting the auto financing journey, CarsDirect wants to help you get started.

We match car buyers to local special finance dealers to get them the financing they need. Getting started is a snap, just complete our free and easy auto loan request form today! What are you waiting for?

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.


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