Last updated: 22/10/2020 | Estimated Reading Time: 4 minutes
What checks are done for car finance?
Applying for car finance is generally an easy, straightforward process. There are, however, certain checks that take place in order for a finance application to be processed and approved. Knowing what these checks are and why they are done may help you to get your finance application processed quickly and without hesitation from providers.
In This Guide:
- What checks are done for car finance?
- Proof of identity and personal details
- Driver’s license
- Address and address history
- Proof of income
- Credit score
- Employment details and history
- How long does it take for car finance to be approved?
- How to get the best car finance deals
What checks are done for car finance?
There are several different types of car finance products available, but the application and check processes remain similar with each one. Below, we’ll list the different types of checks that are generally administered.
Proof of identity and personal details
To apply for car finance, you will need to be able to prove your identity. You can prove your identity by submitting copies of your driver’s license or your passport along with your application forms.
Read your forms carefully for information on which type of proof of identity is best received.
Since you're applying for car finance, lenders will expect that you have a valid driver’s license. Without one, most finance providers will automatically reject an application. To confirm the authenticity of your driver’s license, the finance company may also contact the DVLA.
Address and address history
Many financial institutions will not only want to have proof of your current address but they may also be interested in your address history (sometimes up to 3 years). This is to ensure that you will be traceable if you fail to pay any monthly instalments. If your address history is erratic, then this could be cause for concern.
Proof of income
A lender may ask you to provide proof of income to ensure that you can afford to pay your monthly premiums. Most providers will be happy with bank statements that follow 3 successive months whilst others will also insist on having copies of your payslips as well as your employer’s details.
The lender will scrutinise your income in accordance with your expenses to see if you will be able to meet the agreement terms. If they feel you will not have a realistic amount in your account to pay your monthly instalments, then your application may be rejected.
Lenders want to know about your credit history so they can decide how likely you are to repay your loan. Lenders will, therefore, use a credit agency to get an understanding of your financial history and current financial position. They will study your credit report to determine if you are responsible when it comes to paying your debts.
The better your credit score or rating is, the better the chances are that your car finance application will be approved.
Employment details and history
Upon applying for vehicle finance, the lender may ask for the name and full address of all your employers for the last three years. This will help them to determine whether you can hold a job and secure an income until your repayments have all been made.
You will also need to provide your current job title and salary. If you are self-employed, then the lender will typically need to see past bank statements in order to verify your income.
How long does it take for car finance to be approved?
Once you have handed in your car finance application forms and all accompanying documentation, then you will need to give the finance company time to administer their checks and enquiries.
It typically takes 1-2 business days for a car finance application to be given an overview. Once the checks have been completed, then one of three things will happen:
- Your application is approved. Upon approval, your contract will be activated and the funds will be released to the relevant dealership or broker.
- Your application is rejected. If your application has been rejected, then the financial company in question has deemed you too much of a risk and they do not trust that you will be able to abide by your terms of the agreement.
- The finance company will request more information. If this happens, then it means that your application is being considered but added necessary information is needed before any decisions can be made.
To ensure that your application is approved swiftly and smoothly, we encourage you to provide all of the correct information and documents right at the beginning of the application process. This way, you may even be able to drive away in your new car on the very same day!
How to get the best car finance deals
Before starting the car finance application process, it’s best that you shop around for car finance deals that will suit your needs and your budget.
Our advisers will be able to help you find the plan that you need to purchase the car you want. Simply fill in our user-friendly form and we will provide you with the information you need to make a researched decision.