applying for credit

[blackjack007]

for you f/t traders out there who get most of their money from trading... have you ever applied for credit? what do you put down as your profession and income, and how does the lender verify income?

in particular, i'm considering leasing a car.

 

[silver914]

The last time I was asked to verify my income was at least 20 years ago. Your credit history should speak for itself. Carmakers/lenders (Toyota, GM, Honda...whoever) care more about the timeliness with which you pay rather than how much you make, until you hit a high debt to income ratio.

Just put retired for occupation and your annual income as investment income. I wouldn't bother getting too detailed. It'll just make them ask questions. Keep it simple.

By the way, yes I have had dealerships and yes I have leased cars. And yes my current income is from trading.

 

[5Pillars]

Quote from blackjack007:

for you f/t traders out there who get most of their money from trading... have you ever applied for credit? what do you put down as your profession and income, and how does the lender verify income?

in particular, i'm considering leasing a car.

Bank statements and/or tax returns with good credit (no installment or revolving debt) and I have never had any problems with leasing cars at A paper rates. Last car I leased was a SL55 MB and they only needed a credit app - no verification of income was needed.

 

[Reaver]

Generally most financial institutions have ratios they use to streamline the income verification process.

If you are on a certain credit tier, they look to see how much you claim for income vs your score vs how much you are applying for and whether it's secured or not.

Depending on your score these ratios may tighten or loosen. Generally with A/A+ rating no income verification is required.

So yes, as mentioned earlier, your credit rating generally speaks for you as far as income goes, as long as you have A/A+, other than that, have tax returns/statements on standby.

P.S. 9 times out of 10 you are a fool if you accept dealer financing. Go to a credit union for Pete's sake. By definition they are not-for-profit...which generally translates into a lower rate for you, and better service to boot.

 

[5Pillars]

Quote from Reaver:


P.S. 9 times out of 10 you are a fool if you accept dealer financing. Go to a credit union for Pete's sake. By definition they are not-for-profit...which generally translates into a lower rate for you, and better service to boot.

EXCEPT when LEASING, as you can get incentivised LEASE RATES (lower money factors) from the dealerships with specials that are going on at times. ALSO, you may be able to get TAX CREDITS to reduce your sales tax in some states when the dealers are dealing on certain inventory!

I got a very good money factor on my SL and I also received TAX CREDITS - cut my state sales tax to almost 1/2 of what it would have been. LOOK at the whole financial picture before you lease or buy - there can be some major financial advantages going one direction versus another.

 

[silver914]

Quote from 5Pillars:

EXCEPT when LEASING

Agree 100%

The make and model of vehicle is the biggest factor to consider when leasing. For example: I would lease a pick-up truck almost all of the time. My last 6 pick-ups have been leases. I would NOT lease any american sedans. Make sure to find out the lease factor before gtting into one. More often than not you can excersize the option to purchase the vehicle at the end of the lease(the residual) for less than market value. A couple of times I have sold the vehicle just before the lease is up for more than the residual and then paid off the residual at a profit. Also eliminates any terms applicable upon returning the vehicle like damage and wear and tear on the vehicle. They(the dealer) can be picky when you go to turn it in. Can end up costing a couple thousand just to turn it in. Depends.

 

[Reaver]

Quote from 5Pillars:

EXCEPT when LEASING, as you can get incentivised LEASE RATES (lower money factors) from the dealerships with specials that are going on at times. ALSO, you may be able to get TAX CREDITS to reduce your sales tax in some states when the dealers are dealing on certain inventory!

I got a very good money factor on my SL and I also received TAX CREDITS - cut my state sales tax to almost 1/2 of what it would have been. LOOK at the whole financial picture before you lease or buy - there can be some major financial advantages going one direction versus another.

Yes, I agree. Sorry I missed that in my response. Good thinking. I was only speaking of financing a purchase, even though the OP mentioned leasing. My bad. Thanks for clarifying 5P.

 

[blackjack007]

Quote from silver914:

The last time I was asked to verify my income was at least 20 years ago. Your credit history should speak for itself. Carmakers/lenders (Toyota, GM, Honda...whoever) care more about the timeliness with which you pay rather than how much you make, until you hit a high debt to income ratio.

but how do they know if your dti ratio is high if they don't verify income?

 

[silver914]

Quote from blackjack007:


but how do they know if your dti ratio is high if they don't verify income?

They just take your word for it when you write down your income on the credit application.

That was kind of glossed over in a previous post by someone. The lenders just look for consistancies in an application for credit. The focus is more on moving metal than the risks associated with the loan. Remember, especially with leases, most of it is done by a branch of the manufacturer. Back in the day when auto loans were handled by a true third party they perused your application much more thoroughly. Nowadays since the goal is to get the car down the road and worry about the money later they don't verify income unless a flag pops up.

A flag would be a recent career change in conjunction with a late pay on a credit card or two. Age also has a lot to do with it. The times I have seen requests for income verification involved younger individuals, say in their early twenties, that recently started a commission only based job as a salesman. These types of situations also typically have limited credit history.

If you have a solid credit history, say you score a 700 or better on a Beacon report, and you have a mortgage(they pay attention to mortgages, any big monthly payment that you show a history on) and you've been showing the ability to pay those obligations, they don't care where you get the money from. You could put down "bank robber" and get approved.

I hope this helps.