What checks are done for car finance?

Roman Danaev

7 July 2021

If you are eager to purchase a new car and looking for a lender to help you out with car finance, you should bear in mind the obligatory car finance requirements. They may vary from one lender to another; however, as a rule, certain checks are done for a car finance by any institution before you get a loan. Those checks involve:

  • Proof of identity
  • Proof of address
  • Bank details
  • Employment history
  • Driving licence
  • Credit score

Proof of Identity

Car financing specials always start the check with personal information, identity proof in particular. It is an essential step to avoid any fraud. You will have to provide the following data to approve identity's credibility:

  • Current full name and previous name if you changed it in the past
  • Birthdate
  • Marital status
  • Place of residence

Proof of Address

Along with the proof of identity, the check will include verification of address. The period that car finance companies take into account amounts to 3 years at least.

It is of the utmost importance to provide comprehensive and accurate data. For instance, if you rent a home and moved a lot within the last three years, make sure to list all the locations in detail.

You may think that some address information is insignificant for car finance, yet it can affect the lender's decision severely despite good credit or a stable income.

You will have two options to pass this check and prove your address.

  • Deliver utility bills (gas, power, water, etc.)
  • Provide a relevant bank statement

The document of proof must be issued no longer than three months ago to fit the requirements.

Bank Details

To apply to finance a car, you will need to share your bank information. Mostly, that refers to your bank account, bank sort code, and bank office address. This way, a car finance company checks the account you will use for future car loan payment. Make sure that you are either a sole or a joint holder of the account.

Employment History

Car finance brokers will also require information about your current job, such as your employer, the position you are taking in the company, and your salary. Besides, if you've taken several jobs over the past three years, it is important to provide every job title and employer information.

In the case of self-employment, you can still count on getting finance for a car. To prove your income, you will need to provide information about your bank account with the total amount available, records of the incoming sums, tax return, etc.

Those documents help lenders to evaluate whether you'll be able to make monthly payments for your vehicle or not.

Driver’s Licence

A driver's license is an obligatory document that proves your legal right to drive. Its checks are done for car finance without exceptions. So, if you count on getting finance for a car, make sure that your license is valid.

In case of any obstacles, such as loss or misplacement of your license, you can provide other ID documents, for instance, a passport. If the DVLA holds your license, your car finance specialist will directly turn to them for validity confirmation.

Credit Score

The official check includes the credit history examination. Depending on a good or bad credit rating, the lender decides to approve your loan. With the help of credit, agency lenders perform a thorough check of your credit report.

Poor credit usually signals that the borrower might not be able to pay the debt in full. A good credit score, on the contrary, demonstrates your responsibility to make regular repayments. So, it is always better to run a credit check and be prepared in advance.

How long doesit take for car finance to be approved?

From preparing the necessary documents set and filing your car finance application, the financing institution will need some time to proceed with your request.

Usually, it takes about 1-2 business days, yet this period may vary in different situations. For instance, car finance for bad credit can take a bit longer if the borrower seems unreliable.

Upon completion of the necessary checks, you will receive certain feedback:

  1. Approval. When your application is approved, the agreement comes into force, and your financing specialist transfers the amount of your loan to a car dealership.
  2. Rejection. Your application may get rejected. In this case, the financing company considers you an untrustworthy borrower and evaluates the risks as too high. Then you can work on improving your conditions and apply for car finance once again.
  3. Pending request. Such a situation does not mean bad news. Sometimes to make a final decision on your application, the financing company will request additional information. Make sure to provide it accurately for a better outcome.

It is always possible to influence the process of application approval. All the provided information needs to be correct and up-to-date. The more attention you pay during the preparation of the documents set, the easier and quicker the check will go.

Do car dealerships do hard or soft credit checks?

When you apply for car finance, it is of the utmost importance to check whether the car dealership does a hard or a soft credit check. It is due to the fact that hard checks never come unnoticeable. They always leave traces in your credit report to demonstrate to lenders your credit application.

In some cases, it is undesirable because if lenders see your numerous attempts to get a loan, they will be less likely to grant you the approval. Besides, hard checks affect your credit rating negatively.

That is why soft checks are preferential for borrowers. However, agencies tend to charge lenders for searching. Besides, a soft check is charged more and takes longer than a hard one. That is why specialists are eager to use hard checks more frequently. Soft searches are made less beneficial for them.

It is always important to learn about the search type with your financing company in advance in this connection. It helps to avoid unnecessary credit rating damages and marks in your report.

We always strive to perform safe soft checks for our customers to find a perfect lender and purchase the vehicle of their dreams.

Will I be approved for car finance?

Getting approved for a car finance is always possible. The chances depend on your initial conditions, yet there will be no problem if you meet the lender's criteria.

Although it is important to keep in mind the type of check, if you make several applications, make sure that the car dealership uses the soft search to eliminate your credit score damage.

At Carplus, we have a wide range of partnering lenders who work with different types of borrowers despite their good or poor credit scores. Therefore, we can always work on finding the best car finance options to meet your possibilities and needs.

Besides, our strong point is to perform soft search checks only to keep your credit history safe and find a lender that suits you best.

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