You have just found a perfect car, but you do not have the funds to pay for it. Luckily, you can still own the car by taking a car finance loan and paying the loan in convenient installments. However, before heading to any Australian lender, consider the following areas to increase chances of your loan being approved and getting better rates.
Check your credit score
Your credit score influences your car finance lender’s perception of your creditworthiness. A high credit score shows that you are responsible in fulfilling your financial obligations. You can be rewarded with lower interest rates, which in turn lower the cost of car financing.
Get a credit report before getting your car finance loan. Check for any errors or records that are not updated and have them corrected. You can also boost the credit score by paying your loans on time or picking small loans such as credit cards and paying them on time.
Shop for better car finance loan rates
You should shop loans just as you shopped for your car. Your first lender or dealer financing may not be offering the best rates. Check your bank, credits unions, and other Stratton Car Finance lenders before taking an offer. The lower the rates, the cheaper it will be to pay for your loan.
Borrow within your means
Your car finance request may be rejected if you are asking amounts you cannot pay comfortably. Lenders look at your average monthly income and obligations before approving your loan. Remember you will also be maintaining your car, fueling it and must have car insurance. Therefore, pick a car whose loan value you can pay comfortably and remain with enough disposable income to maintain it.
Compare first before applying
Research for different car finance offers in the market before making an application. Talk to lenders and brokers too. When you make an application, the lender does a credit check. The credit check will show up on your credit report. It can be a negative entry if your application is rejected. Play safe. Get different offers for comparison but apply when you are sure you have high chances of being approved.
A guarantor or security increases the chances of being approved
Secured loans are more likely to be approved as the lenders view them as less risky. You can get a friend or relative to guarantee the loan on your behalf. You can also secure the loan with title to your property or the car that you are buying. However, remember that the lender might repossess your security if you default on the loan.
It is a good idea to save a portion of the total cost of the car. Most lenders like to see your commitment by way of a downpayment. It demonstrates that you are stable and are willing to protect your car investment. Target 10 to 20 percent of the total value of the car as a downpayment.