Are You a Good Risk and Can You Prove It?


How to Make Yourself Look Good to a Lender

Here you are, just starting your first full-time job after becoming independent and putting University behind you. To get to work you are relying on friends or family to drive you because the public transport system around your area does not service your workplace. You know this situation can’t continue and you have just started the process of trying to buy your first car.

Don’t Fall Prey to Loan Sharks

This is a very special occasion for anyone, but unfortunately it is often spoiled by a lack of access to affordable finance. Some people become desperate enough to resort to borrowing from companies that charge exorbitant interest rates, but for a young person just starting out, this should be a “no go zone.” There are alternatives to traditional auto lending institutions.

Traditional lending institutions have fairly strict policies and procedures when it comes to approving loans and a young person with no credit history would have a hard time satisfying their requirements. They are answerable to boards and shareholders so they are not too keen on taking risks and having to explain themselves if too many of their loans fall over.

What is the Car Financing Alternative?

Car financing companies have more flexibility when it comes to making loan approval decisions. This does not mean that they had out money to anyone who asks, but they have different criteria to lending institutions. They are in business solely to finance vehicle purchases, and they are prepared to bend a little when it comes to assessing the suitability of a loan applicant.

Make a Case for Being a Good Risk

How do you prove that you are a good credit risk? The most important issue to a lender is to know if you are a good risk. Make no mistake, they want their money but they also are realistic enough to know that if a person has stable employment that pays enough for living expenses and to repay a loan, some references from reputable people and can present themselves well in the application process, chances are they will do the right thing.

If you have a bank account showing a regular savings pattern, and have a budget that shows how you allocate your salary and what is left to pay a car loan, you are providing a strong case. You have established on paper that you are responsible, reliable and careful with money.

Car financing companies have helped self-employed people, pensioners and people with a bad credit history in the past to get finance. They have their own policies and procedures and will try to help when a client is struggling with repayments. If this happens to you, contact them immediately to discuss what is happening. Don’t wait for them to contact you. This is the biggest mistake people make when they fall into arrears.

Do everything you can to prove to the car financing company that you are a good risk. Once your loan is approved you can look for your dream car, thank your friends and family for ferrying you around until now and experience the thrill of car ownership.