If you are in the market for a new set of wheels, you may be considering a car loan to fund your purchase. But how exactly do you apply for a car loan? This guide is here to help you with the basics of a car loan application and how to get the best deal possible.
How do I qualify for a car loan?
First, make sure you’re eligible to apply for a car loan. This involves proving your identity and providing documents showing financial capability.
The most common requirements potential borrowers must meet to be eligible to apply for a for a car loan include:
- Be at least 18 years of age.
- Be an Australian citizen or permanent resident.
- Have a consistent income to meet lending requirements.
Every lender has their own set of lending criteria that potential borrowers must meet. Some may only approve car loans for applicants who meet a credit score threshold.
In some cases, if borrowers don’t have a credit history or have never applied for a loan before, the lender may request a guarantor. This means a parent or another relative can guarantee repayments will be made if you are unable to make them.
What documents are needed for car finance?
When you’re applying for a loan, it’s best to have all the necessary documents on hand to avoid any delays. Often, loan approval is stalled due to missing documentation. Common documents needed for a car loan include:
- Personal information – You'll need to provide documents that verify your identity. You can submit a copy of your valid ID, like your driver’s license, passport, or birth certificate.
- Vehicle details – Lenders also have an eligibility criterion when it comes to the car you’re planning to buy. You need to provide details such as make, model, registration number, engine number, and purchase price.
- Proof of income – This includes bank statements, payslips, and tax returns. Documents provide proof that you’re capable of paying back the car loan.
- Assets and liabilities – These include properties, bank deposits, personal loans, home loans, and credit cards.
Some lenders may require specific financial documentation. It’s best to review the requirements beforehand so you can prepare them accordingly.
How do I apply for a car loan?
Once you’ve made sure that you’re eligible to apply and have the needed documents, it’s time to start your application. Here's a quick overview of what you need to do:
Check your credit rating
Your credit rating or credit score represents how trustworthy your reputation is as a borrower based on your financial history. This can affect how likely a lender is to approve your application.
A high credit score is more likely to be approved than a low one. Lenders may offer better rates and loan features to those with good credit scores. If you do have a low credit score, you may need to explore bad credit, no credit car or second chance finance options.
Fill out an application and submit documents
Every lender has their own application process. Usually, it starts by filling out an application form. Some lenders may require you to go to their office to get a form, while others offer convenient online applications.
The same goes for documents. Some may need physical copies of your financial documents and bank statements, while other lenders let you submit them online. It’s best to reach out to the lender before applying for a loan. Call the lender or dealership to ask about their application process so you know what to expect.
Wait for a response
Once you’ve submitted everything, all you need to do is wait for the lender’s response. This usually takes between one to three business days. It may take longer depending on the lender’s approval process or if there are any additional documents that you need to provide.
If you’re approved for a car loan, the lender will deliver the settlement documents you need to sign so you can receive the funds for your vehicle purchase.
How to get the best deal on your car loan
Shopping around is a great way to learn about what car loans are available. Look at the interest rates and comparison rates to see where you can get the best deal. Also, speak with lenders and dealerships to learn about any loan features that can help you save money.
A downside of shopping around for a loan is that it takes a lot of time and effort. With so many lenders and dealerships out there, it may be difficult to go through all of them yourself.
If you’d like an easy and hassle-free way to get a car loan, consider an expert brokerage like CarLoans.com.au. We do all the work while you get all the benefits. All you need to do is tell us what you’re looking for over the phone or online, and we’ll find a car loan that suits your needs. From application to settlement, we’ve got you covered!
Get in touch with us today by calling 1300 889 669 or get a free quote today!