Going for a car loan can be a bit daunting particularly if you are a first-time borrower or you have a bad credit history. Don’t let that worry you. It is important to do your research when financing your new or used car and these 7 Tips will definitely help you get a better understanding of how to get your car loan approved.
1. Get all the required information and documentation together in one place ready to be submitted. Not sure what you need? Check out ‘How to get your first car loan’. The key focus from the start is to understand the loan to value ratio (LVR). Make sure the car you want to finance is within the Loan to Value ratio set by the lender. This formula can differ slightly between lenders and ultimately your interest rate offered can increase if this number is too high.
2. Consider how many credit enquiries you make. The more enquiries you make on your credit file reduces your credit score. A finance broker is a smart way of investigating your options without actually making enquiries through many different lenders
3. Avoid small cash loans typically known as payday lenders. This highlights cash flow stress and lenders generally decline you if you have used these types of loans within the last 6 months
4. Where possible make sure you enquire for a loan when you have been at your job more than 3 months. This limits issues with probationary periods.
5. If you have a choice to go full time or casual with your new employer always take the full-time position as most lenders have between 6 and 12-month minimum restrictions on casual employment.
6. If you are looking at renting property going via an agent is a much smarter way than via a private option. Some lenders consider a rental ledger via an agent as credit related and look more favourably on an approval.
7. Whilst we can’t guarantee this will get you your loan it will definitely make a difference.