For people who don’t work in the finance industry—and let’s face it: even for a lot of people who do—there’s a lot of mystery behind how someone is approved for a loan. Today, we’re setting out to de-mystify the application process for our credit applicants particularly, but we hope that the information provided gives good insight into applying for loans in general, especially when it comes to being asked to provide personal and professional references.
The Importance of References On a Loan Application
Like a lot of loan agencies, we do a thorough reference check for every credit application we process. By diligently checking references, we ensure that our candidates have a strong support system that will encourage them as they rebuild their credit. References can play a very important roll in your loan approval, because a good word from a long-standing contact, friend, or employer speaks volumes to your personal character, and sends the signal that you are “a good bet.”
Who Should I Name As a Reference?
The best references include individuals who know you personally and can vouch for your honesty. The other purpose for providing a lender with references is to provide a way of reaching you if there are issues with your loan or your vehicle, so listing people who you regularly keep in contact with is also a good idea. Because they are different from co-signers, personal references do not have any responsibility for your loan.
While we can’t speak to other institutions, at Easton Motors, you can typically provide both character references and professional references. Professional references, like your employer or a previous lender, can vouch for your responsibility in professional relationships. (Hint: You may be able to use of your landlord as a professional reference on your application—this can go a long way towards showing that you can consistently and responsibly repay large bills). There are times we do call your employer to verify length of employment to give you the most favorable approval, and most institutions have some sort of metric to give their applicants a better rate or lending amount.
Are Loan References Really Ever Called?
Every bank and lender is different, but we typically reach out to references throughout the loan approval process. While the questions sometimes vary, applicants should prep their contacts to be able to confidently and truthfully answer the following:
- Can you verify how long (applicant) has been at their address?
- Do you know where they work?
- How long have you known (applicant)?
- What is your relationship—personal or professional—to (applicant)?
How Loan References Help You
If there are inconsistencies during your approval process, your references can clear up those discrepancies, and give your lender extra peace of mind when it comes to approving your loan.
Save Time with References
Save time on your credit application by preparing a list of top prospective references before you decide to apply for a loan. Don’t write down any name. Carefully choose the best people for your application—remember: your references play an important role in your final approval. Get permission, too. You should only use someone as a personal reference if you have their permission, and never surprise your friends or family member with a surprise call from a credit acceptance agency. The more information an underwriting department has up front, the better for you, and the quicker your loan may be approved.
Good references can help you get a bad credit auto loan approved, so don’t be shy about asking people for help. After all, that’s how we all move forward in life!
Have more questions about loans at Easton Motors, specifically? Check out our popular Frequently Asked Questions page for more information.