Underwriting Explained

This underwriting guide is here to help you understand what is meant by the term underwriting, the role of an underwriter and how the process works.

Creditplus definition of underwriting

Underwriting is the process that some finance lenders will need to put applications through in order to approve it for finance. Often this is a manual process that will involve somebody looking into key areas of the application to determine the associated risk of lending money to an individual.

The role of an underwriter

Some of the most important people in the car finance approval process are the underwriters. The underwriters will manually assess the risk of lending to an individual based on their credit history and circumstances, and ensure that the cost of the cover is proportionate to the risks presented by the individual concerned. Once they have looked into the case, they will make a decision as to whether or not they will lend to the customer based on this information.

How the underwriting process works

Here at Creditplus, we have a panel of lenders who finance all of our customers so we are not responsible for underwriting the applications. When an application for finance is received, our experienced sales team will make a decision based on the status of the application as to which lender to propose the customer to - it is at this stage in the process that the application will undergo a full credit check and be fully underwritten. If the application is accepted depending on the customers credit score the underwriters might then ask for additional documentation to support their case such as payslips, bank statements, and proof of employment. It is then the responsibility of our payouts team to speak directly with the customer and request this information. 

How to prepare for your car finance application

To ensure the underwriting process is as quick as possible, you will want to ensure you have all the documents you may need before you start your application. Proof of income is essential, so bank statements or payslips for the last three months would be useful. You will need proof of identity, in particular your driving licence as you also need to be able to prove you are legally allowed to drive. Proof of address may also be useful, as well as any documentation that can prove you work where you say you work. If you are making a joint application, make sure you have all the information for your joint applicant too.

Wikipedia definition of underwriting

Underwriting refers to the process that a large financial service provider (bank, insurer, investment house) uses to assess the eligibility of a customer to receive their products (equity capital, insurance, mortgage, or credit). The name derives from the Lloyd's of London insurance market. Financial bankers, who would accept some of the risk on a given venture (historically a sea voyage with associated risks of shipwreck) in exchange for a premium, would….

Source: Underwriting Wikipedia

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