Underwriting – a guide
"Responsible lending" is a phrase that now dominates the finance industry. The need to ensure affordability has never been so strictly monitored as it is today. Wreckless lending by many major banks & financial institutions was/is a huge factor for the global financial crisis.
As the UK has seemingly pushed it's way through recent times of austerity and financial difficulty, the financial landscape has changed drastically and in these times of recovery, institutions will seek to remain vigilant with their lending.
Much of the risk being taken by finance providers such as those that facilitate the leasing of your car or commercial vehicle, has seen an increase in fraudulent applications. As such there is a need (and rightly so) to further protect themselves and their customers. This is why, if you have applied for finance recently, you will have been asked for more supporting information than ever before.
Being able to provide copies of items such as proofs of address (domestic bills and or bank statements etc.), proof of ID, Driving Licence/Passports are now the norm. Although this may appear to be an overly forensic request from finance companies, it is to ensure you can confirm you are who you say you are, to protect your identity.
The bullet points below provide further insight as to what Finance Companies would ideally like to see accompanying finance proposals such as these.
What exactly is required will depend on the vehicle required and the associated risk but the more information you can provide, the greater the chance you have of an approval.
Where possible please provide the following where applicable:
For Business based finance applications:
- Audited/certified accounts
- Or Up to date management accounts
- Or Business Bank Statements
- Financial budgets and projections
- Directors details (home address, DOB, years at address)
- Bank credit facility letters
For Personal contract finance applications, the following information can be used to support your application and should be collated and readily available:
- Confirmation of home address, D.O.B, years at address
- Proofs of address
- Copy driving licence
- Bank statements
In addition to the above, it may also be worthwhile to sign up to the free trial offered by both Experian and Equifax, the credit reference agencies used by most finance companies. By utilising the trial, you can ensure your financial history is as you would expect and swiftly challenge any discrepancies.
There are other factors that can influence underwriting decisions, such as...
- Exposure on current commitment*
- Directors Personal Guarantee*
- Cross company guarantee*
- Repayment term and profile (how many advanced rentals?)
(*) Denotes preferred required information for Business contracts ONLY
In summary, the more information you can provide to assist in proving who you are, and you have the ability to repay the credit you are applying for, the greater likelihood the finance decision will be a positive one.