11 Tips on How To Get Approved for a Car Loan
Have you tried applying for car loans at banks or from a lender and you’ve been outrightly rejected?You’ve done all you think you can and you’re not just getting that car loan you need. I know how frustrating that can be and so, I’m here to give you tips on how you can get that car loan the next time you apply for it and if you’re just about to apply for a car loan, these tips are for you too so you get it on your first try. Let’s get to it!
- Apply within your budget:
You have to figure out what weekly budget you are able to afford. Make sure to ask your finance broker to do an income capacity check for you because this is something the lender will definitely look out for. If you pass the check with your broker, then you can go ahead and apply for your car loan.
- Don’t apply for too many car loans:
For every time you apply for a car loan, a credit inquiry is entered into your credit file. The more inquiries you make for a car loan in a short span of time, the lesser your chances of being approved for a car loan. So, make sure you are aware of the risk of being turned down when you apply too many times.
- Avoid Pay-Day loans:
Pay-day loans are usually portrayed as smart small loans but the banks do not agree to this knowledge. If you have applied for a pay-day loan in the last three months or if you’re currently on a pay-day loan, some lendersmight not approve your application because they’ll assume that you’re spending more than you are earning each week.
- Know Your Credit Score:
Being aware of your monthly credit score is a great advantage to getting your application approved. This will let you know if you’re qualified to get the car loan application approved or not. You can sign up for credit score check alerts so you’ll get credit score notifications every month to enable you know where you stand.
- Save Up:
Saving up a huge amount of money for upfront payment is very important. When you pay a huge percentage of the loan as upfront payment, you’re telling the lenders that you are serious with the deal and they can invest in you. Having about 20% of the loan is a good place to start. It’ll increase your chance of being approved.
- Get pre-approved:
Getting pre-approved gives you information on how much you’ll have to pay for a car loan and the interest required. It’s proven to be a decent way to start the process. With a pre-approval, you get to know how much you need to save up and also how to have your eyes on cars that you can afford and not those that are way above your pay grade.
- Stay in your job at least for two years:
It takes a lot of work to have all the conditions required for a car loan. You need to have a minimum of two working years with your current employer to increase your chances of getting the car loan as fast as possible. This sort of signifies your ability to commit. If you’ve had a change of employer within two years, do not fear as far as you have a tangible explanation for why you changed to work with someone else.
- Avoid new debt:
The car lender might decide to have a review of your credit before closing the deal and if they see that there’s an unwanted change in your credit history, it can increase the chance of you not being a proud car owner. Also, for your peace of mind, it’s important to avoid adding another debt. At least, until you finish paying for this loan.
- Know your car loan requirements:
Before you go ahead to apply for a loan, make sure you carry out your research on the requirements needed by the lender and the loan process. All lenders have different requirements for their car loan approval process. You might think you’re all set to get approved and then you get to the lender and find out that you aren’t even close to it. Plus it shows the lender that you’re responsible and you know what you’re doing.
- Be truthful with your financial details:
Sometimes you might feel the need to inflate your income or lie about details in your loan application so you can get the car you want and not the car you can afford. Lenders always double check the info you give them and if they find out that you lied in some type of way, it may not only hurt your chances of getting the loan you’re applying for now but also affect it in the future.
- Get expert help:
It always helps when you talk to a car loan broker. These experts have collections to a lot of lenders and through them, you can get to discover the right lender for the car loan you want to apply for. Plus knowing them might even give you the ticket of getting the process approved faster through their start to finish guide on the loan process. You can also get to find the best loan provider with the best services and the best rate with their expertise.