When you’ve gathered all your documents and send them in to the various financial institutions for a car financing loan quotation, what really happens from there and what do the banks and financiers really look at? The Smarter Finance Company wants to help you gain an understanding of your car financing plan so read on!
Identification and Income
The financing company needs to know who you are! The first documents that they are going to go through is your identification and income documents to make sure that you are really who you say that you are. They need to verify your address and contact details so that they can get in touch with you should you default on the installment plan later on and also that you don’t have a criminal record or something really dodgy like that. Your driver’s license also comes into play here as they will use information like how long you have been driving and your driving track record to do further risk assessment later on in the analysis. The banks and financiers also need to know that you’re really working where you say you are working at, that your reported income is legitimate and also how much that income is, again to do further analysis of whether you’ll be able to make payments towards your financing plan.
Risk Assessment and Ability to make Repayment
Your Credit History and Credit Score come under this segment. Besides collating the information provided up above, this is where the real number crunching comes into play. Gathering the information is just the beginning of the analysis since the bank and financiers now have to decide whether they’ll be comfortable with going ahead to lend you a bit of money despite that little misdemeanor when you were 12 or that long holiday you took last year where you didn’t earn any income for 2 months. Generally, the bank wants to ascertain that if they loan you money, that they will be able to get it back eventually and timely, with interest. And that will determine whether your loan will be approved and in what amount. In addition, there are internal guidelines and rule books that need to be consulted on top of all the accounting.
Current Market Rates
The last component of analysis is the prevailing market rates and outlook. Financial institutions are very finicky about their assets and if they see that the forecast looks bleak, they may want a higher interest rate so that the real value of the money they’ve loaned you will hold through the downturn. At the same time, they want to make sure that they are earning money too, so you can be sure that their rates will reflect not only inflation, but a little extra so that they make a profit from loaning you some money.
If all this information is making you get stressed out, then why not let us help you with applications and ensuring that you get the approval you need for the car you’ve got your eyes on! Give The Smarter Finance Company a call or drop us an email with your questions and let us get in touch with how we can help!