Personal References Important for Bad Credit Car Loans?

When you have bad credit and need a car loan, lenders ask you for supporting documentation to confirm the information on your application, including a list of personal references. References are much more than a name and number you give a lender "just in case." In fact, they're more important to your auto loan than you might realize.

Important for Bad Credit Car Loans


Why References are Important

Lenders don't collect personal references just in case they can't get a hold of you one day. Sure, this is one of the reasons they ask to have a list of family and friends on file, but it's much deeper than that.

Personal references are just one part of the supporting documents you need to bring to the dealership. They help add another level of security for lenders, especially when a borrower doesn't have a good credit history. Proving to the lender that you're responsible and that you have people who can vouch for you goes a long way to offsetting the risk of lending to a borrower with poor credit.

Lenders use your personal references as a way to protect both themselves, and you. These references provide:

Information verification – Lenders may ask your personal references to confirm some of the information on your application, such as where you live and your place of employment.

Identity information – They need to make sure that you are who you say you are.

Backup contacts – Just in case you miss a payment, or the lender is having trouble getting in touch with you, personal references provide another avenue they can use to reach out to you.

Additionally, by verifying your information with an outside source, lenders are reducing the possibility of loan fraud, which is a growing problem in the US as identity theft becomes more prevalent.