What Lenders Look at when Approving You for a Used Car Loan
Buying a used car is a great way to save money since you avoid the large depreciation that comes with buying a new car. In fact, most new cars almost lose half their value within the first year of their lifespan. Therefore, buying a used car is the only financially smart way to purchase a new vehicle for your use. However, you probably will need to look into financing if you want to buy a used car which may be making you a little nervous. Before applying for a used car loan it may be helpful to know what exactly a lender will be looking at when they make their decision.
When it comes to financing, credit score is usually the predominant measure used to determine if someone is credit worthy, and the same is true for pre-owned vehicle financing in Woodburn OR .If you do not know your credit score there are now many free places online where you can check your credit score, or once a year you can go receive your credit score from each of the three major reporting bureaus. Factors that influence your credit score include your debt ratio, payment history, length of credit history, and new credit applications.
Income is vital to get approved for a used vehicle loan because it determines whether or not you can actually afford the used car you want. You need to prove that you have a steady source of income that makes you able to pay your loan on a monthly basis in order to get approved. In the case of married spouses you can use your spouse’s income as a source of income if necessary but depending on the loan provider you may or may not have to have them co-sign.
Another major factor that preowned car financers look at is the length of the credit history of the applicant. Credit history will impact whether or not a loan is issued as well as the interest rate that is attached to the loan. The better credit history you have the better interest rate you will receive. It also will often determine the amount of a used car loan you are approved for. Someone ha has a history of delinquent car payments will not likely receive a good interest rate or a high loan, whereas someone with a long and healthy credit history will get a better offer.
Finally, your employment history will also play a role in determining if you will be approved for a car loan or not. A stable job history with the same employer for the last few years will look much more positive than a job history that includes changing jobs every few months. Staying with the same employer also shows consistency that lenders like to see when deciding if someone can be trusted to make monthly payments long term. You may be asked to provide employment references as well so a boss that is willing to speak on your behalf is a definite plus.