When I owned car dealerships, I never understood the practice of spending several hours selling a car, then rushing through the credit application process. After all, if the loan is not approved by a lender, it was all for naught. Yet, it happened all the time. If you have good or perfect credit, odds are phenomenal that you will be approved, but for everyone else, the credit application is very important. It tells the story of why you should get the loan you are applying for. If you don't fill out the application properly and thoroughly, and a lender is between approval and denial, a good credit application could swing the decision your way. Here are some things to keep in mind when filling one out at the dealership.
Tell the Truth: First and foremost, tell the truth. For those with a lower credit score, they are going to verify the information, so lying will only hurt you, plus it is against federal law to lie on a credit application. Don't stretch the truth on job time, residence time, income, or anything else on the application. If you give false information, most lenders will immediately deny your application.
Be 100% Accurate: Speaking of income, it is critical you are accurate. Potential lenders will base much of the credit decision on outstanding loans versus your monthly debt. It is called your debt-to-income ratio, and if your debt is too high, you will be denied or approved at a higher interest rate. Know your gross monthly income, and base it on something factual like a check stub. If you have any additional income, like a second job or child support/alimony, put that down too, just be prepared to prove it.
Know Your Dates and Numbers: If you are going to go through a dealership for financing, take the information you need for the credit application. Write down your gross income exactly. If you've lived in your residence less than five years, take your previous address with you. The same goes for job time, if it is less than five years, take contact info for your previous employer so it can be verified. Carry with you checking and savings account numbers, your mortgage company and that account number too.
Have Other Car Loan Info Handy: Previous car loans are a major consideration for the lender. Have that information with you, even if it's been a while since you paid off the loan. I hope it goes without saying that the accuracy of your social security number is especially important.
Don't Rush Through Application: If your credit is not stellar, take the time to fill out every line on the credit application, even if the dealership or lender is trying to rush you. They should know better, but you are the one fighting for this loan. They may ask for "four friends or relatives" names, addresses, and phone numbers, so be prepared for that. They may want phone or utility bills before approval, be prepared to provide those if you are in the high-risk category. The more information you provide, the more credit worthy you will appear.
Even for people with great credit, there is some anxiety in filling out a credit application. There is a sense of relief when you know you are approved. Take your time, do the application accurately, and you'll up your chances of driving away with the car of your dreams.
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