If you are in the market for a car, whether it is brand new or used, applying for a loan can be a great way for you to gather enough money to afford the car you desire. The word loan tends to have negative connotations as many people imagine a loan as being something that financially cripples you for the rest of your life as you are forced to pay it back.
These loan assumptions couldn’t be further from the truth, as most loan providers will allow you to select a loan that suits your circumstances so you can pay at a rate that you are comfortable with. This blog will look to dispel the most common myths and misconceptions that surround the loan process.
Myths and Misconceptions About Applying for a Loan
Bad Credit Means I Won’t Be Approved for a Loan
While it is always a positive to have a good credit score, having bad credit is not the end of the world. One of the biggest loan assumptions is that having bad credit means no one will give you a loan, and this is far from the truth. Many lenders have options solely designed for those with bad credit and they may just charge a higher interest rate to mitigate the potential risk. Showcasing that you are currently working and financially stable can also go a long way to helping your claim.
The Lower the Monthly Repayments, the Better the Deal
When applying for a loan, the key point is how much you will have to pay back monthly until your loan is settled. A lower monthly repayment amount might seem better initially, but it is important to research the finer points of the loan that is being offered. Lower repayments may mean the loan stretches on for longer, potentially even for extra years, meaning you may end up paying more overall even though you are paying smaller sums at a time. Sometimes paying a bigger monthly fee for a shorter amount of time is the better option.
Being Rejected Once Means You Will Be Rejected Every Time
Getting rejected for the loan you need can be disheartening, but it is not the end of the world. It is a common loan assumption that if one lender rejects you then they will all reject you, but this is false. Every lender has their own unique criteria for who they grant a loan and just because you don’t meet one company’s selection criteria doesn’t mean you won’t meet another’s. Some lenders even specialise at granting loans to people who may have bad credit scores, so do not let initial rejection discourage you.
Casual Workers Won’t Be Approved for Car Loans
It is a common misconception that you need to be working at least part-time to secure a car loan, but this is untrue. While it is easier to receive a loan when you have reliable employment, casual workers can still have success applying for a loan if they meet certain criteria. Usually, you must have been working at the same place for 12 months to prove your employment is reliable and you may need to exceed a set annual income. Do not let casual employment deter you from applying for a loan, or initial rejection stopping you from applying elsewhere.
In the Market for a Car Loan?
At Fido Finance we pride ourselves on being market leaders in supplying car loans, we have helped countless Australians secure the car of their dreams through our lending service. If you are seeking help with your vehicle finance, have a browse of our how it works page to see how simple the loan process is. If you would like to speak to us directly, give us a call on 13 FIDO or apply online today.