Auto Loan Approval Bad Credit

Lowell Riggs · April 8, 2015 · Short URL: https://vator.tv/n/3d1b

Criteria Followed by Lenders to Approve an Auto Loan Application

When you apply for an auto loan, your application is forwarded to underwriters for a review of the details mentioned, which helps them determine your credibility. They closely verify each part of your financial statistics to decide whether you will be able to pay monthly installments or not. Thus, if you wish to avail an approved auto loan, you should know several factors taken into consideration and improve your odds before applying.

Credit Score

Different bureaus contain information about the credit activities of individual residents in different states, which includes details about one’s credit cards, mortgages and loans. Each bureau has pre-defined criteria to create a scorecard of the individuals, which is used by lenders to verify the credibility of a loan borrower. This score is based on different factors like your credit card balances, payment history, length of history and others. A higher credit score is preferred by lending institutions, thus you can be sure of auto loans approval if you have a better score.

Credit History

Credit history is also considered as a vital aspect by many lenders, which can have either the same or the opposite impact on your application. For instance, if you have made on-time payments for your previous loans, but have got a poor credit score due to some other reason, a lender would show interest in your application. On the contrary, if there have been gaps in payment of installments with a good score, you might get a negative response from an underwriter. So, maintaining a good record will also help you avail benefits of approved auto loans.

Income & Debt-to-income Ratio

Apart from the past records, present financial stability is also a vital aspect, which determines your ability to repay the loan installments. Lenders ask for a genuine proof for the verification of your fixed income, where you can use pay stubs, bank statements, tax returns or any other proof to verify that you are earning a regular income. Debt-to-income ratio also holds an equivalent importance as it determines how much amount you can save each month for loan repayment. Thus, it becomes easy for salaried employees to get pre approved auto loans for bad credit, though terms might be strict as compared to the one for a good credit holder.

Assets

An immovable asset like a property or movable ones, including a vehicle or others except for liquid funds can be used as collateral, while liquid funds can be used to make down payments. So, these assets are also given an importance during the process of application review. A lender might ask for the suitable documents to verify the ownership of assets and official verification of funds in your bank account before approval.

Thus, if you are willing to avail approved car loans, you should check with all the above factors and try to remove any negative point for better odds.

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Lowell Riggs

I have more than 6 years in the field of ecommerce column writing.i writes online articles pertaining to banking and loan buying online. my articles talk about the current banking trend and also give the nuances of loan buying online.

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