Car Loan Application
Who Can Apply for a Car Loan
Anyone who is over 18 and an Australian resident can apply for a car loan from either a car finance company or any of the major banks, credit unions and building societies in Australia. This means that nearly anyone can apply for a car loan, but in reality you have the best chance of your application being successful if you have a stable job and an ok credit history.
It is also possible to have a finance broker apply for a car loan on your behalf. All you have to do is give them your personal and financial details and then sign a contract authorizing them to do so.
Important Car Loan Information
Every car loan is slightly different and so is the criteria that each lender applies to the loan. So before you submit your car loan application there are some important things that you should research more about, such as :
- Credit providers prefer borrowers in stable employment. You will stand a better chance of obtaining approval if you are able to demonstrate that you have had uninterrupted employment over a long period of time.
- Research whether particular lenders require you to have a certain level of insurance for your car.
- Most lenders consider new cars or cars that are only a few years old a much safer prospect for loans. This is because the vehicle itself provides better security for the loan. Therefore you will find it much harder to get a car loan for an older car. If you want a loan for an older car you should check what the lender's policy is towards old cars before wasting time and effort applying.
- One of the most important things to do is to check your own credit rating before you apply for a car loan. If there are any bad marks on it then you should try to get them corrected before submitting your car loan application. If this is not possible then you should have a detailed explaination as to why these bad marks appear on your credit rating.
- If you are a first time borrower then perhaps you should consider using a guarantor in order to increase you chances of getting the loan. You can use a relative who has a good credit history for this, and they will underwrite the car loan by agreeing to pay the lender if you are unable to meet the repayments.
- Be careful about just looking at the interest rate quoted by the lender, because lots of banks and financiers will offer a low rate but fail to mention all of the ongoing fees and charges.
- Also be careful if you are getting a car loan from the car dealership where you are buying the car. They tend to be more expensive than if you did your own research, and remember they cannot insist that you use their finance when buying a car so don't be pressured.
Questions About Car Loan Applications
Before submitting a car loan application for either a new or used car you should make sure that you get detailed answers to all of the following questions.
- What is the effective interest rate for the car loan (including all ongoing fees and monthly charges)?
- How can I qualify for a lower rate on the car loan?
- What are the ongoing, monthly, extra or hidden fees?
- How many years is the loan term and can you make extra repayments in order to pay it off sooner?
- Will you be charged a fee for making extra repayments of paying off the car loan sooner?
- Is the car loan interest rate fixed or variable?
- If it is a variable interest rate then how many months notice is given before it changes?
- If it is a fixed interest rate, when does the fixed period end and what will the rate be when it is over?
- What documents are required in order for the car loan to be approved?
- What will happen if I have an accident in the car?
- Is there a minimum amount that you have to borrow?
- Can I get the finance approved before purchasing and how long does it last for?
- What's the maximum amount that you can borrow and what happens if you buy a car for less than this amount?
- Can I buy the car from a private seller?
- Can I buy the car from any car dealer?
- When will I have to make my first payment?
- How long will my application take to get approved?
- Is the loan daily reducible, which means that the interest is calculated on the unpaid balance daily?
Required Documents for a Car Loan
When applying for car finance you will be required to submit a lot of personal and financial information so that the lender can process the application. The more detailed the information that you provide the greater your chances of a successful car loan application. You will also need to be prepared to produce the following required documents if and when requested by the lender, in order to prove that the information that you provided is correct :
- Details of your recent savings history. This normally entails a copy of your last 3-6 months bank statements in order to prove that you have a good savings record.
- Rental statements or mortgage statements outlining your accommodation expenses.
- Documents detailing any other allowances or expenses that you have to pay regularly, such as child care, insurances, rates, living expenses, child maintenance, etc.
- Details of any assets that you own, ie: house, furniture, land, etc.
- Employment history outlining how much your earn (ie: payslips, group certificate) and how long you have been working there.
- Documents on any other loans that you have, including Home Loan statements, Credit cards and Overdraft account statements.
- After your car loan application is approved, you may be asked for a 100 point ID check, which involves showing your Driver's Licence, Medicare Card, Debit or Credit Card, etc.
- Finally once you have bought the car you will need to provide the lender with a Dealer invoice, Registration papers and details of the Insurance cover.
If you are unsure about the meaning of some of the terms or abbreviations used by lenders then you can check out the car loan terminology page, which has a detailed explaination about some of the more confusing aspects of getting a car loan.
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