There are multiple ways to get a car loan. You can go to a dealer, you can go to a car loan broker, or you can go to a lender directly.
While each option has its advantages and disadvantages, they all have one thing in common: you have wasted your time if you don’t get approved for the loan.
Compounding the pressure is the fact that each time you apply for a loan, this is recorded on your credit file, which is accessible to all lenders.
Too many applications can make you look desperate for a loan and damage your credit score, so you can’t afford to make multiple failed applications.
Here, we look at how you can avoid problems and maximise your chances of getting approved for a car loan straight away.
Should I use a car loan broker or go direct to a lender?
Pros of a lender
If you know exactly what you want and have done it multiple times, a direct retail product might be a good option. You get the benefit of talking directly with the lender, and there is no double handling of documents. The downfall of going direct is that you may have to go to three or four lenders and have three or four applications on your credit file before you get the outcome you need. Aside from the credit implications, it’s also a lot of hassle, wasted time and paperwork for you.
Pros of a car loan broker
If you go to a broker like carloans.com.au, we can do the work for you. We know what the rules are, what lenders are looking for, what they’ll accept and what they won’t. That means we know from the start what lender to place you with so you get approved first time.
We can choose the lender according to your specific requirements such as lowest interest rate or exit fees, and your personal circumstances, such as a bad credit record.
The other benefit with choosing a car loan broker is that if objections do crop up with a lender, we’re experienced enough to know if there’s a way to resolve that or move around it.
If you go direct to a lender yourself and they say they can’t approve it because of a problem, you are likely to just accept that answer and move on to another lender and get another black mark on your credit file. By contrast, we may know a way to overcome that problem because we have done it thousands of times.
One of our customers applied for a loan directly with a lender and was rejected because he had only been one month in his current job. We presented the loan back to the same lender and asked for an exception based on the fact that he was in a qualified professional position and had previous experience in the same role and industry. We got the exception and he was approved. The lender’s internal loan specialist had not been experienced enough to get an exception from their own credit team, but we succeeded!
Start by filling out an application online or call us and we’ll do it for you. Either way, we will start by getting to know you and what you are trying to achieve. Once we understand you and your goals, we can then place you with the lender who offers the highest likelihood of success.
What documents will I need to get my car loan approved?
After you have spoken to us, it’s time to start pulling together your documents. The sooner you can provide them, the sooner you can get your loan approved. The biggest delay with getting a loan is usually getting initial documentation from the borrower, and then follow up documentation if the lender requests more.
The documents required will vary depending on the lender. That will also be part of our conversation before you apply. If you tell us you don’t have access to certain documents, such as an unrestricted driver’s license, we can find a lender that may accept that.
- Driver’s license
- Last two pay slips
- Last three month’s bank statements
Additional documents that may be required
- A PAYG summary/ATO notice of assessment
- An employment contract
- Rental income statements
- Rates notices
- Repayment history on previous loans
Too much documentation
Sometimes borrowers will provide too much documentation, which can cause issues! We’ll make sure you give the lender exactly what they need to approve the loan and no more.
Why might I have trouble getting approval?
A lot of products in the market are designed for a specific customer who is PAYG, owns their own home, and has savings in the bank. If you don’t meet these very narrow criteria - even through something as minor as changing employment recently - you may have to try a bit harder to get a loan. Many of the things that raise a flag with lenders aren’t abnormal in any way, they are everyday things and they aren’t necessarily bad.
We know which lenders and products are flexible in certain areas and which aren’t, so we can go straight to the right place to get you a loan.
What can I do to improve my chances of getting a car loan?
Here are some things that you can do to maximise your chances of getting approved for a car loan. Just remember that while they are great to have, missing one or two of these is not a deal breaker.
- Make sure you pay your bills on time
- Demonstrate a good repayment history on a current or recently paid-off loan
- Have savings in the bank, a trade-in vehicle or a deposit for the new car
- Have a stable employment and address history (one or two jobs and addresses in the last three years)
- Don’t make too many credit enquiries
What if I have defaulted in the past?
We work with some lenders who specialise in lending to people with bad credit records. In the vast majority of cases, our customers will be approved for a loan the first time. Even if you have been unable to get a loan because of your record, even a short period of successfully paying your bills and other loan repayments can show that you’ve turned over a new leaf and improve your prospects of getting approved for an affordable loan.
We had a customer who was struggling to get credit anywhere because she had some unpaid defaults on file. The only loan offer she had received had an interest rate of 28 per cent! The bad credit specialist we approached for her said “no” but come back in three months and, if you can show us clean accounts with no dishonours, we will approve the loan. She came back in three months and we got her the deal at a rate that was 15% cheaper than her previous offer with lower fees!
Your Credit file
When you talk to us, we’ll have a quick look at your credit file so we can work out which lender is most likely to approve you. This doesn’t put an inquiry on your file and it doesn’t affect your credit score. Once we’ve sent your application to a lender, they will do the full credit check that stays on your record.
How fast could I expect to get an approval?
This will mainly depend upon which lender you apply to and how quickly we can get documents from you.
On average, it takes between three days and a week.
We’ll do our best to meet your time frame. If speed is very important to you, we have lenders who focus on giving quick approvals. Get a quote today to get started.