Because it’s something people typically do less than ten times (usually much less) in their life, financing a vehicle is a subject that poses a lot of questions from young and old alike. That’s why my blog is here! With that being said, today’s hot topic is what exactly banks and lenders are looking for when they assess your credit. Find out what to be prepared for, and you’ll feel all that more confident when your time comes to get into your next great used vehicle.
It seems simple, but people tend to either overshoot or underestimate what they can afford when it comes to their monthly vehicle payments. How do they decide if you can afford the payments? Lenders look at your current debt and its payments; things like a mortgage, other vehicles, student loans, or other types of loans. They compare this to your current income and how it is paid out. From there, individualized calculations are made to determine if the monthly payments are realistic.
It makes sense that lenders what to know if you can afford payments, they also want to know if you’ll make them. When lenders look at your credit score, it gives them an idea of how likely you are to repay your loan based on past experiences with repaying debt. Debt isn’t a bad word, and it’s how you build credit. When you’re building credit, you’re repaying that loan on time and in full. Your score and any blemishes (or lack thereof) will help lenders to determine their level of comfort in lending to you, if you’re likely to pay the loan back, and what rates would be appropriate for your loan.
At first, it seems silly that banks want to know where you work, but the real question is: are you employed? The follow-up question is: at what income are you employed? Lastly, they want to know how long you’ve been employed with the same employer. These questions give information surrounding how reliable you (and your income) are, if you’re past a probation period and secure in your employment, and how much money you’re making each month to compensate for monthly expenses such as rent and groceries, as well as other debt.
These are the three biggest considerations from banks when assessing you for a used vehicle loan. If you’ve spotted yours, submit your online finance application today. I’ll review it thoroughly to ensure you’re connected to the best lender for your situation and give you a call with the good news. Questions? Ask me anything! I’m always ready and happy to help make your financing process a smooth one.