- Posted 17 Dec
- 0 Comments
You’re excited. You’ve just found the perfect car and now all you have to do is arrange the car finance to secure it…. Only you’re not sure if you’ll get approved.
You don’t understand the process and you fear that any attempt to apply for a loan will only result in your credit score falling further.
Follow the guidelines below to ensure your next car finance application is approved.
Clear debts and show savings
If you’re working with a broker or lender to secure a car loan, and even if you’re securing the car against the finance, showing that you can meet your current obligations and save will go along way to getting approved.
By showing these two things, you’re demonstrating that your financial situation is stable, even if your credit score might not be that great.
Stay within your budget
When looking for a car, make sure that you find something that is within your means. You may get rejected by a lender if you ask to borrow too much. Don’t forget about the hidden fees and expenses such as stamp duty, insurance, registration plus ongoing maintenance costs. A lender will be factoring these in and comparing that with what you can actually afford. Make sure you’re aware of these costs too so that you find a car that fits in with all of the above.
Consider other options
If you’re not having much luck getting approved, consider the option of having a guarantor or security for the loan. If you can get a secured loan, this means that your car would be the collateral. The risk is that should you fail to meet your obligations, the lender can repossess the car.
If this is the first time you’re getting finance, you might need to find someone to guarantee the loan for you. This person is responsible for the loan should you default on it, so make sure that you can afford the loan in the first place to avoid this happening.
Make sure you do plenty of research before you apply for any loan. You can easily compare loans without having to apply for them by checking out their details online. If you do apply, this means that they will complete a credit check on you, and this will be recorded on your credit history.
Using a broker is a good option in this regard, as they can present the best options to you without you have to apply to multiple lenders.
Make sure you understand your own credit history before you start applying for loans, as this will show you what you can and can’t apply for and where you’ll need to look for finance in the first place.
If you need help securing car finance, chat to the team at Australian Credit and Finance today.