5 Things You Need to do Before Applying for a Car Loan

Looking for a Car Loan and not too sure where to begin? If so, you’ve come to the right place. Applying for a Car Loan can be a stressful experience, especially if you have never been through it before. To get the best car finance deal there are a few things you need to do before hand. Doing a few small things before you apply for a car loan can save you thousands in the long run.

Here are 5 things you need to before applying for a car loan.

1. Find your Credit Score

The first thing that every car finance lender looks at an applicant’s credit score. Before you think of applying for a car loan find out what your credit score is. There are many providers online that can give you your credit score free of charge.

The benefit of learning your credit score is it gives you an understanding of your lendability. Your credit score is what lenders will judge you on, so it is so important that you try to do everything in your power to make it the best as possible.

Knowing your credit score early gives you the ability to make changes and improve your score before you apply. The better your credit score is, the less risk you are to a lender, and the better the interest rate they will offer, it’s that simple!

2. Research how Car Finance Works

The last thing you want to do when it comes to car finance is go in blind. Before you look to get car finance it is so important that you research and understand how car finance works. One of the mistakes that many car buyers make is they confuse car finance interest rates with the common home loan rates. Car finance interest rates are much higher than home loan rates.

Before you apply for Car Finance do your research, talk to different lenders, look at the different loan types that are offered for car finance, and most importantly understand interest rates. The more knowledge you have on Car Finance the better positioned you will be in.

3. Understand Fees and Costs

Before you apply for car finance you need to understand how the costs will impact your life. Remember there are more costs associated with owning a car than just the loan itself. You need to pay for upkeep, petrol, servicing, registration, and green slip, all these costs add up.

Before you start speaking to lenders it’s important you understand how much you can afford to pay each month. Keep in mind you need to also have a buffer in case of any interest rate rises which can happen.

4. Have a good deposit

This is arguably the most important point! To have the best chance of gaining car finance you need to have a good deposit. The more you have as a deposit the less finance you need.

Above all else, when you have a good deposit available, it shows lenders that you have a history of saving, which will ultimately increase your credit score and total lending ability. It is important that you try to aim for 10 – 20% deposit at a minimum. Having a larger deposit will ultimately limit how much you pay in the long run.

5. Get pre-approval

It is always a smart idea to get pre-approval before you start looking for a car. Pre-approval is when a lender agrees to lend you a certain amount of money as a loan. The benefit of getting pre-approval is it gives you an accurate understanding of how much you can borrow and how much you can afford. Many car buyers often make the mistake of looking for a car first without knowing how much they can borrow. The problem with this is many people look at cars that are outside of their lending capacity.

Pre-approval ultimately makes the car buying process that much smoother. You will know your cut-off price and you can communicate that early to sellers you are looking to buy from.

Final Word,

Applying for Car Finance can be a stressful experience. To reduce your stress and increase the chances of approval, buyers need to research and prepare. Doing the 5 things mentioned above will significantly increase the chance of receiving approval and a cheap lending rate.

We hope you enjoyed reading this article. To read more articles like this visit the Shop for Cars latest news page here.

Where Shop for Cars Can Help?

Shop for Cars is Australia’s first dealership only car classified offering car buyers’ access to over 12,000 new and used cars for sale from Motor Dealerships only.

Shop for Cars offers car buyers the unique opportunity of applying for finance directly on the car listing that they are interested in. What makes this so exciting is car buyers can scroll through different finance options from over 60 lenders and choose the cheapest and best option that is right for them – removing the need to shop around or use a broker.

To learn more about Finance in Shop for Cars click here.

We hope you enjoyed reading this article. To read more articles like this, please visit the Shop for Cars latest news page here.

About Shop for Cars,

Shop for Cars is Australia’s first car dealership-only online classified. Shop for Cars brings you the best quality new and used vehicles from trusted motor dealers Australia wide. Shop for Cars currently has over 12,500 cars listed for sale all from licensed Motor Vehicle Dealers ONLY.

Click here to begin your search.

DISCLAIMER: This is all based on opinion please research and consult with all relevant parties to make the best buying decision.