It’s well known that first impressions are almost always wrong. At a glance, you can’t really get the full picture of someone’s moral and personal make up. It’s difficult to tell in brief passing what kind of person someone really is. The point is that it’s difficult to say what constitutes someone’s integrity and trustworthiness. It’s especially tough to evaluate on paper whether or not someone is worth your time, energy, and personal investment. This is true as ever in the Canadian auto loan industry.
Lenders use FICO credit scores to determine how fit someone is to receive his or her loan. In the Canadian used car industry, around 82% of consumer purchases are financed with loans. This means that, for most Canadians, financing is the only way to get the used car of their dreams, good credit or not. So while it is still important for prospective used car owners to develop good credit, there are a few, slightly more intangible factors that contribute to lenders’ decisions.
Let’s start with the simple stuff! So, the basic idea of lending is that a financial institution gives an individual, the money needed to make some sort of purchase for themselves. In return, the individual slowly repays the institution with manageable monthly installments that ultimately net a profit for the institution without wreaking too much havoc on the individual’s bank account. So when evaluating a potential client, lenders are really just asking themselves, “Can this person repay their debt consistently over time”.
This means that your job as the loan recipient is just to prove that you are capable of doing so, through whatever means necessary. With each passing year, the Canadian used car industry moves more and more product. In tandem, the Canadian auto loan industry provides assistance with more and more of these purchases. This means that gaining approval is not only possible, but also probable for Canadians with any kind of credit. It’s just a matter of selling your financial strengths and downplaying your weaknesses.
So, one thing lenders could look at other than your credit score, is employment history. The ability to handle the constant responsibility of a job, combined with the promise of a regular salary, spells success to most lenders. Being employed at the moment, is obviously the most thing. This tells lenders that you have a consistent stream of revenue, which they can easily just dip their toes into. However, it’s also important to have a long established record of employment, as it speaks to your character and overall capacity for handling responsibility.
Ridetime works closely with auto loan lenders whose approval policies include provisions for employed customers with poor credit. In fact, several of Ridetime’s lenders can actually almost get anyone approved, who has a valid Canadian driver’s license, and make at least $1500 / month. Employment is an easy and effective way to make a positive impression on potential lenders, no matter what kind of credit you have.
Another important consideration is the idea of “Liquid Assets”. A liquid asset is something you own that can quickly and easily be sold and converted into cash. This includes savings accounts, money market accounts, government bonds, or even stocks.
This tells lenders that if push comes to shove and you find yourself needing some fast money to continue paying your debt, you can easily do so. It also, again, paints an image of you as a responsible and fiscally accountable adult who is more than capable of handling their debt.
The next consideration is almost so obvious that it feels a little dumb. When deciding whether or not to approve a loan, lenders look at how much money will be up in the air until the debt is paid. So, if you can do anything to minimize the amount of money that’ll be up in the air, then you’ve got a better chance of getting approved.
What we’re saying is, on the day you go in to apply for a loan, if you offer to make a considerable down payment up front then you’re more likely to be approved. The larger your down payment is, the less your debt is, which is good news for both you and your lender. What’s more, it again paints you as a capable and well-equipped adult who is skilled at saving and spending their money effectively.
Ridetime, and their network of lenders, know that first glances rarely paint a full picture. They’re ready and willing to work with every customer to get them approved. Bad credit isn’t the end all be all, it’s an easily surmounted hurdle, especially when you have a helping hand.