What Lenders Consider in a Van Finance Application

What Do Lenders Consider When Assessing a Van Finance Application?

There is no single factor that guarantees approval for van finance. Lenders assess the application as a whole, and their criteria can vary by lender, finance product, vehicle and applicant.

Van Finance Company is a UK commercial vehicle finance broker and vehicle supplier. We can introduce applications to a panel of UK lenders, but the lender makes the final decision. Van finance is subject to lender criteria, credit checks, affordability and approval.

What may a lender look at?

Depending on the application, a lender may consider:

• your overall credit profile;

• affordability;

• income and existing commitments;

• whether you are employed, self-employed, a sole trader or applying through a limited company;

• the information and documents supplied with the application;

• your address history and identity details;

• the amount being financed and any deposit;

• the vehicle and its intended use; and

• the lender’s own product and eligibility criteria.

The importance of each factor varies. One detail should not be treated as a reliable predictor of approval, decline, rate or deposit requirement.

Credit profile

A lender may review your wider credit history as part of its assessment. This can include information such as repayment history, existing borrowing, recent applications and adverse credit events recorded on your credit file.

A consumer-facing credit score may be relevant, but it does not by itself determine whether an application will be accepted. There is no universal minimum credit score that applies across all lenders.

Specific subjects such as defaults, CCJs, IVAs, bankruptcy, debt management plans and little or no credit history are better considered in their own detailed guidance. In this broader article, the key point is that lenders look at the overall credit profile alongside the rest of the application.

Affordability, income and existing commitments

Lenders may assess whether the proposed repayments appear affordable alongside your income and existing financial commitments.

They may consider the information you provide about income, regular outgoings, existing borrowing and other commitments. The exact approach varies by lender and application.

There is no single income level or debt ratio that guarantees approval or automatically prevents it. Affordability is assessed in the context of the complete application.

Employment, self-employed and business circumstances

Your circumstances may affect what information a lender asks for and how the application is assessed.

An employed applicant may be asked to provide information about employment and income. A self-employed applicant or sole trader may be asked for information that helps evidence income or business activity. A limited-company application may involve checks on the company, its directors and relevant business information.

The exact evidence required varies by lender and application. Van Finance Company does not apply a universal minimum employment period, self-employed trading period or limited-company trading period.

Application information, documents and address history

Accurate and consistent information helps the lender carry out its checks and can reduce avoidable delays.

Provide the information requested by the lender or broker accurately, and supply any documents requested for the individual application. This may include evidence relating to identity, address, income, employment or business circumstances, but there is no single document list that applies to every applicant.

Lenders may use address history as part of identity, credit and application checks. Where address history is requested:

• provide your current and previous addresses accurately;

• make sure dates and address details are consistent with the rest of the application; and

• explain material changes or discrepancies if the lender or broker asks for clarification.

Missing or inconsistent address information can delay checks or lead to a request for further information. Moving house recently does not automatically prevent someone from getting van finance, and there is no universal minimum period you must have lived at your current address.

Amount financed and deposit

A lender may consider the amount being financed as part of the overall application.

A deposit normally reduces the amount that needs to be financed. Where the other agreement terms are unchanged, financing a smaller amount can reduce the monthly repayment.

A larger deposit should not be treated as a guarantee of approval or a better interest rate. The effect of any deposit depends on the lender, product, vehicle and complete application.

The vehicle

The vehicle itself may form part of the lender’s assessment. Lenders can have their own criteria covering matters such as:

• age;

• mileage;

• value;

• vehicle type; and

• intended use.

These criteria may affect whether a particular vehicle is eligible for a particular finance product or lender. There is no single vehicle-age or mileage cut-off that applies to every lender.

Intended use

How the van will be used may be relevant to lender or product eligibility. For example, general business use, specialist use or the type of commercial vehicle may affect whether a lender is prepared to finance that vehicle under a particular product.

Describe the intended use accurately if asked. The effect depends on the lender, vehicle and agreement.

Lender criteria vary

Different lenders do not assess every application in exactly the same way. They can differ in how they approach credit history, affordability, business circumstances, documents, vehicle criteria and other parts of the application.

That is why an outcome from one lender does not automatically predict what every other lender would decide. As a broker, Van Finance Company may introduce an application to a lender from its panel, but it cannot guarantee acceptance or a particular outcome.

How to be ready for an application

Application readiness is mainly about giving the lender a complete and accurate picture, rather than trying to change your financial profile before applying.

Useful practical steps include:

• complete requested information accurately;

• provide documents the lender or broker asks for;

• make sure income, employment or business details are consistent;

• give accurate current and previous address details where requested; and

• explain material changes or discrepancies when asked.

Supplying particular documents does not guarantee approval. The evidence required and the final decision depend on the lender and application.

The broad answer

Lenders assess van finance applications by looking at several connected factors rather than one detail in isolation. Your credit profile, affordability, income and commitments, employment or business circumstances, application information, address history, deposit, amount financed, vehicle, intended use and the lender’s own criteria may all be relevant.

The lender makes the final decision after assessing the application against its own requirements.

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