Do References Play an Important Role in getting Auto Loans?
Purchasing a car is a decision that requires prior preparation and research along with a considerable investment. Securing an auto financing deal becomes a crucial step in your car buying process. For instance, the loan amount will give you an idea about the budget you should stick to, your current payment ability and the term of your auto loan. Many a times, dealerships ask you to produce a list of references before approving your auto loan. Usually, references help to locate you in case the lender cannot connect with you. If you are credit-challenged or suffering from a low FICO score, references become pivotal in obtaining car financing.
How do References help you in getting An Auto Loan?
1) Increased Creditworthiness
The primary role of a reference is to determine your reliability. Many auto lenders ask for a list of references from you before initiating the reference check. Ideally, the auto loan application asks for six references. Make sure your reference list is a mixed bag of character references as well as professional references. Character references will include people who know you personally, for instance a family member or a close friend. On the other hand, professional references can include a past employer or a co-worker who can help to determine your responsibilities in the work spectrum. Good references can ease your auto loan approval process as the lender can draw a clear picture of your payment capabilities.
2) Good Credit Score Leverage
A bad credit score can certainly put your application further down in the loan approval process and seem like a roadblock in obtaining your dream car. However, references can reverse the wheels of fortune. The presence of two or three strong references with good credit score can certainly build your goodwill in the eyes of the lender. While putting down the names as your references, it would be a good idea to speak and signal them that they would be contacted by the dealership or lender. Therefore, leveraging the stellar credit score of your references will smoothen the financing process for you.
Bottom Line: Prepare Ahead; Talk to your References
Whenever you put down any reference, it is wise to make sufficient preparations. Make sure you choose people who have been positively associated with you in the past. The major reason for picking people who will speak in your favor is because it reflects strongly on your character. Additionally, make sure you carry a list of references before filling it in the auto loan application form. Asking for permission from your references also prepares them well in advance. Thus, the presence of references will speed up your process of auto loan approval and help you in obtaining the car of your dreams.