When it comes to getting approved for car finance, it can be something of a nightmare. It seems that there are more and more barriers to getting car finance and when you do get approved, the rates aren’t what you might consider favourable. However, there are a few tips and tricks that can help you get approved for car finance as well as getting a good interest rate on the loan. So here are our top 5 tips for getting approved for car finance.
1. Check your Equifax Credit Report
The first step to getting approved for car finance is finding out what your credit rating is like. Trying to get approved for car finance without knowing your credit score is a little like trying to make a cake without eggs, flour, milk and butter. It’s doable, well sort of, but it’s going to be hard and probably won’t be as great as you’d hoped. Your Equifax Credit File will not only give you an indication of whether you are likely to get approved for car finance, but what kind of interest rate you could be eligible for.
If you find you have a good credit rating and haven’t had any defaults listed, then you can move on to the next step without worrying too much, but if your credit rating is a little below par or you have defaults listed, then it’s time to start looking at ways to improve and protect your credit rating. In either case, this is where you need to consider seeking the help of a finance broker. The reason for this is that brokers can often get you a better deal by talking to lenders on your behalf and explaining why, for example, a default on your credit file happened. If you have a good credit rating, this is still a good idea because finance brokers know the specific criteria each financier uses to assess an application. A good finance broker can compare dozens of financiers against your profile and the details of the vehicle you are buying to accurately gauge which financier will be able to offer you the best finance deal.
Finally, if you have outstanding defaults with lenders, you could also consider arranging to make payments to clear the defaults. This shows any future lenders that you are taking responsibility for your debts and they are more likely to approve you for car finance. You can view a free copy of your Equifax Credit Report at www.mycreditfile.com.au
2. Consider saving up some money for a deposit
Once you know what your credit score is, you can move on to the next step – saving for a deposit. Saving for a deposit is one of the most essential steps in securing approval for car finance. Even if you have a good credit score, having a deposit saved can help you. Deposits give lenders and financiers a sense of peace of mind when lending to you as you are putting up some of your own money. This lessens their risk and brings down the size of the loan and in turn your monthly repayments. It can also help you to secure a lower interest rate as there is less exposure for the lender – can’t hurt to try right?
3. Compare car finance products to get the best deal
One of the rules of obtaining car finance is not to simply rush in and accept the first deal you are offered. You may have been rejected by several lenders, but there are always different avenues that you can explore. One of the easiest ways to compare car finance products without putting too many enquiries on your credit file is to talk to Approved Car Loans. We will compare finance products from over 35 lenders to find the best deal for you. Some of the deals that we can access aren’t readily available to the public and aren’t available through other broker firms. However, if you are planning to approach lenders directly, always remember the golden rule – too many enquiries in a short space of time can have a negative impact on your ability to be approved for finance, no matter how good your credit file is.
4. Consider a co-borrower
One barrier to car finance can be that you simply don’t have a credit history. If you are young or haven’t built up any form of credit rating previously, it can be very difficult to obtain car finance. One way of improving your chances of succeeding is by asking someone to be a co-borrower for your loan.
A parent or partner are the most common choices for a co-borrower, however you need to make sure that whoever you ask to be a co-borrower has a good credit rating and stable employment as lenders and financers will be taking the co-borrower’s details into account when considering your approval and rate. Again, the better the credit rating and overall profile of the co-borrower, the lower the risk for the lender.
5. Consider a newer vehicle over an older one
It may seem like a rather strange idea if you haven’t taken out a car loan before to be applying for a newer vehicle rather than an older one. But newer vehicles tend to attract a higher rate of approval and lower interest rates from lenders with the lowest rates available on the market reserved for brand new and demo vehicles. Again, this comes down to newer vehicles carrying less risk for lenders.
Though you may end up spending slightly more to purchase your car, you will get the peace of mind of having a newer car in better or brand new condition and possibly even a lower interest rate.
There are many different things that you can do to increase your chances of being approved for car finance, but one of the easiest ways of finding out about your car financing options, as well as saving yourself time and money, is to speak to Approved Car Loans.
Our friendly and knowledgeable finance consultants are on hand to make arranging your car finance easy. With our direct access to over 35 lenders, we can be sure to find and compare the best finance deals that are tailored to your specific financial situation. So whether you have good credit, adverse credit or have never had credit, we will help you to get approved for your car finance.
Speak to your Approved Car Loans Finance Consultant today on 1300 4 CAR LOANS for more information or get your best rate quote online today.
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