What lenders look at besides your score

Many people start with their credit score, as if it settles the matter. It does not. A score sums up how credit has gone for you in the past. It does not show everything about your finances today, such as shift work you picked up recently.

Here is what a lender may look at besides your score.

Income

Lenders generally want proof of regular income, according to the Financial Consumer Agency of Canada (FCAC). How steady that income is, and how long you have had it, can affect the answer.

If you receive income such as Employment Insurance, a pension, disability benefits or the Canada Child Benefit, list it on your application and bring documents for it. Each lender decides which income sources it will count.

Stability and existing debts

FCAC says lenders generally want to see a bank account and a permanent address, and will likely consider the debts you already have. That includes regular payments such as rent or a mortgage, other loans and support payments.

Choose a payment that fits your real monthly budget, not just the numbers on paper.

Down payments and trade-ins

A down payment lowers the amount you need to borrow. A trade-in does the same when the vehicle is worth more than you still owe on it. Ask each lender how a down payment would change the offer.

In Manitoba, when you trade a vehicle in to a dealer toward another vehicle, retail sales tax is generally charged on the price after the trade-in value is deducted. Some conditions apply, which we cover in our guide to how a trade-in works in Manitoba.

Does applying affect your credit?

Auto Approved does not pull your credit itself. A lender may check your credit when it assesses your application. Canada has two main credit bureaus, Equifax and TransUnion, and a lender may use either one. FCAC lists how often you apply for new credit as one of the factors in your score, and says checking your own report or score does not affect it.

Ask before anything is submitted on your behalf. In Manitoba, your consent must be obtained in advance in most cases before a credit check is done.

Keeping your file moving

Missing paperwork is one delay you can control. A lender cannot finish reviewing a file while proof of income, such as a pay stub, is still missing.

Gather your documents before you apply. They are all listed in the document checklist.

What happens after you apply

FCAC explains that most dealerships arrange car loans for you with a lender. Your application is reviewed by a lender, and the lender decides whether to approve it and on what terms. Ask about the total cost of the loan, not only the payment.

When you are ready you can start an application online in about two minutes, or read how bad credit car loans work at Auto Approved first. If you would rather ask questions before anything goes anywhere, call 204-781-9992.

Auto Approved has been selling used vehicles in Winnipeg since 2000 and arranges financing through lenders.

Sources

• Financial Consumer Agency of Canada: Personal loans

• Financial Consumer Agency of Canada: Car financing options

• Financial Consumer Agency of Canada: Credit report and score basics

• Manitoba Public Insurance: Retail sales tax

• Manitoba: The Retail Sales Tax Act, C.C.S.M. c. R130, s. 2(9)

• Manitoba Consumer Protection Office: Your personal credit record

General information only, not financial, legal or tax advice. Lenders make the credit decisions on any financing, and rules, taxes and rates can change, so confirm the details for your own situation before acting.