Financing a Car Purchase – What are stips?

If you have ever purchased a car, you may have heard the term “stips”. But what are stips and why are they required?

“Stips” is short for stipulations, which refers to any information that a lender may require to approve your loan application.  Some common stips included driver’s license, proof of income, references, employment verification, proof of residency, proof of insurance, and bank statements.

So, why do lenders require stips? In short, to make sure the information on your loan applications is accurate and fits within their lending guidelines. Different lenders may require different stips depending on their lending guidelines, the amount of the loan, and your credit history. Depending upon your credit score, the lender may require more stips to determine your ability to repay the loan.

Stips may also be required to ensure that lenders are complying with federal regulations and state laws.

It is understandable to feel a little overwhelmed by stips requirements, however, being prepared in advance can help make the process smoother. To ensure the fastest experience possible, having the following items will ensure that you are prepared for any stips the lender may require.

  • Driver’s License – ensure that your driver’s license is not expired and has your current physical address.
  • Proof of income – your most recent check stub with deductions listed
  • References – contact information for 3-5 personal references that live outside of your home
  • Employment verification – you can ask your HR department to reach out to the lender and verify employment to speed up the process
  • Proof of residency – a utility bill dated within the last 30 days with your current physical address included
  • Proof of insurance – current insurance card or declaration page
  • Bank statements – copies of your 3 most recent statements

While it is possible that you may not be required to provide any stips, being prepared can ensure that your car purchase goes as quickly and smoothly as possible.