Traceability
The lender will want to know that they have the correct address for a customer and will use the electoral register to confirm it. It is key that a customer registers themselves on the electoral register as soon as they change address. It will tick the ‘traceability’ box and improve their credit score. The lender will also check for entries on the credit register as evidence of the applicant being at the address. However, if the customer is not on the electoral register, they will need proof that they live at the address, perhaps by providing a recent utility bill or bank statement.
Affordability
The taxi trade has traditionally operated with cash and, despite the vast range of Electronic Payment Technology now more widely available than ever, the use of cash is still widespread. If cash is not deposited via a Bank or Building Society, proving a cash flow, it can often cause issues when applying for loans, due to the lender being unable to confirm that a customer has the income to afford a purchase. This is a key factor in the lender’s decision making process.
However, lenders also use other ways to assess the affordability of a loan. For example a lender will often ask for gross annual income and will assess any information detailed on the credit register to see if a customer has had experience of a similar size loan to that which is being applied for. In the absence of this they may ask to see the last three months bank statements. To summarise the key affordability indicators for lenders:
- Gross Annual Income – The lender will want to know what the customer earns annually and assess the impact that the new or additional vehicle will have on their disposable income. This information is used by the lender to establish the affordability of the loan, so let them know.
- Credit Limits – Another factor the customer needs to consider is to try and leave room on their credit cards as a lender views the customers usage of credit cards as an important part of the assessment.
- Existing Agreements (Conduct) – It is very important that a customer keeps the payments on any existing agreement up to date and let the lender know if this will be settled or if the loan is required in addition to any existing agreements.
- Bank Statements – As a part of the Affordability assessment, the lender may ask to see a customer’s bank statement to check whether the loan appears to be affordable but will also study the statements to see if financial commitments are being made on time. From the bank statements, the lender will learn about the applicant’s attitude to repayment and if commitments are being paid on time. Providing commitments are being met, and the account is utilised properly i.e. No unauthorised borrowings/ Within any overdraft Limit, the bank statements will add value to the application. NOTE that regular payments to online betting sites are frowned upon: they could affect whether you obtain credit.
Historic credit problems
The Taxi Shop has worked hard to establish relationships with lenders who may consider customers with previous issues on their credit file. If a customer has had credit issues you can be assured The Taxi Shop will investigate the case fully to try and assist with the purchase of a new vehicle.
Lenders understand that anyone can go through financially difficulties from time to time. But it is important that a lender can see that there have been attempts to repay the debts. It is also crucial to repay any historic debt as well as ensuring current financial commitments (however small) are kept up to date. These types of actions will be key in demonstrating their financial position is now operating properly.
Give your application the best chance of success
- Make sure you are on the electoral register
- Be up front with your gross annual income figure
- Keep some room on your credit card/overdraft limits
- Keep your payments on any existing commitments up to date (especially in the proceeding months before applying for a new loan)
- Keep your bank account in order in case you need to provide the last 3 months statements
- Make arrangements to pay off any historic debt, keep copies of any arrangement that you have entered into to confirm you are making an attempt to repay
Use our free credit checker to find out what you can afford.
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