Buying your own car can be incredibly exciting. However, securing the funds can put a damper on things, as you'll have to apply for an auto loan and make sure you get approved. The approval process takes two to four days on average, and your chances of approval depend on multiple factors like your credit history, the documents you provided, and identity verification.
When you have your eye on a car, you'll want to get it as soon as possible. To help you secure your new purchase, here are four tips to keep in mind to improve your chance of having your car loan approved:
1. Prepare Your Documents
Lenders will need various documents to verify your identity and make sure that you can pay off the loan in full. Gathering the necessary documents will save you a lot of time and smoothen the loan application process, as you won't be scrambling to get what you need, leaving plenty of room for mistakes.
Some of the documents you'll need are proof of your identity, like a driver's licence or a passport. This ID card will provide the lender with your legal name, age, if you are a citizen, and if you have dependents. You'll also need to supply proof of income so they can determine if you can comfortably repay the loan, so these documents may consist of your recent payslips and bank statements. Other documents they'll ask of you include those on your debts, loans, assets, car insurance, and information about the car you want to purchase.
2. Review Your Finances
Before applying for an auto loan, be sure to check your finances and see if they're in good shape. Taking on a loan is a significant financial commitment, and you'll want to ensure you can afford the amount you would like to borrow. Checking how much you can contribute to a car deposit will inform you of your financial position and the feasibility of getting auto financing.
3. Get Pre-approved
If your documents are prepared and you've done a thorough check on your finances, it's time to obtain pre-approval. Car loan pre-approval is when a lender hypothetically agrees to lend you money to purchase your car, although it's important to note that this is not a guarantee. The pre-approval is still subject to credit approval and an invoice from the dealership.
While getting pre-approved doesn't secure you a loan, it certainly improves your position when negotiating with the dealer for a better price. You can also get pre-approved for a loan on the day you apply, making it incredibly convenient.
4. Visit the Dealer
You can finally visit the dealer to iron out the purchase agreement when you've obtained a pre-approval. When you get the invoice, bring it to the lender, as they can process the final approval. They will also reach out to the dealer directly to arrange the payment, which is a process that takes only a few days.
Things That Can Delay Your Car Loan Approval
If you want the approval process to go as fast as possible, you'll want to avoid things that can delay it. These include having a bad credit history, as it can lead to the denial of your application. However, it can also mean that the dealer needs more documents from you.
The larger a deposit you can make, the easier it will be for a lender to approve your loan application. If your deposit is too small or non-existent, the lender will likely ask for even more documentation.
Buying a new car is easily a financial milestone you can be proud of, but the process of getting a loan can be intimidating. By following these tips, you'll have an easier time getting approved, bringing you closer to owning the car of your dreams.
Wealthy You offers the fastest car loan approval in Sydney. We can help you secure low-rate loans with flexible terms to fit your budget, whether you're buying a new car, caravan, motorcycle, boat, or camper. Apply for a loan with us today!