One of the largest purchases that someone will ever make will come when they buy a car. Due to the significance of a car purchase, many car buyers end up having to take out a loan to finance the purchase of it. When you are looking to take out a car loan, you could find that the application process is challenging and the approval standards are high. If you are going to apply for a loan, you should try to make your application look as good as possible. There are several tips that you can follow that could help to improve your application and increase your chances of being approved for a loan with an affordable interest rate.
Know and Improve Credit
When you are looking for car finance in Sydney and in other cities, one of the most important things that you need to do is understand and improve your credit. A credit score and history will continue to be one of the most important underwriting factors for any car application. Due to this, you should check your credit before you plan on applying for a car loan. When you are able to do this on time, it will ensure you are able to know if your credit will hinder or improve your application.
If you are concerned about your credit, there are a few actions you can take to improve your score. Some of the best things that you can do would include paying down your credit card balances, bringing past due accounts current and having negative fraudulent information removed. All of these actions could lead to an immediate improvement in your score, which should be reflected within a month or so.
Larger Down Payment
When you are going to purchase a car, taking out a loan could make a lot of sense. However, when you finance a car, you should also expect to put forth a down payment. In general, the larger that your down payment is, the more it will appeal to a car lender as it reduces their risk. If you have the cash available to do so, you should try to put down at least twenty percent towards the purchase. Any less than this and the lender could consider it a risk that could result in a higher interest rate or full denial.
Include All Income Sources
Part of the process when you are going to apply for a car loan is to provide your income sources. The lender will want to ensure that you are able to pay for the car on a monthly basis. If the car payment looks too expensive compared to your income, it could hurt your application. To improve your application, you should identify all of your income sources. Even including interest or investment income or money from a side hustle could improve your application to the point where you receive approval.
Choose Where to Get Loan
Choosing where you get your loan from is another important factor. There are plenty of places where you can get your loan. This can include getting it from a bank or credit union that you already have a relationship with. If you go this route, a past successful relationship with deposit accounts or loans could boost your application. You could also try to get a loan from the dealership as they will be enticed to approve your loan in order to close the sale.
Get a Co-Signor
If you are struggling to be approved for a car loan, you could consider getting a co-signor. When you have a co-signor, the individual will be taking on responsibility for your loan payments if you fall behind. Due to this, the credit of the co-signor will be taken into consideration when it comes time to approve your loan application. With a co-signor, you can improve your chances of approval and receive a better rate.
As you are applying for a car financing, it is important that you make your loan application look as attractive as possible. If you choose to follow these tips, you could improve your application and approval likelihood. This will help you to get into the car of your dreams while also enjoying an affordable loan payment.
About the Author:
Ray is a sought after thought leader and an expert in financial and money management. He has been published and featured in over 50 leading sites and aims to contribute articles to help novice financial planners. One of his goals is to impart his knowledge in finance to educate and help ordinary people create and achieve their financial goals.