If you’re looking to purchase a new car, but don’t have the upfront funds available, you may be wondering how to get car finance approved. Obtaining car finance may sound like a daunting process, but the team at Fido Finance make finance super simple by staying by your side every step of the finance process until you’re driving away!
Below we have put together some helpful tips to help you further understand how to get approved for a car loan.
Check Your Credit Score
Your credit score plays a crucial role in determining if you qualify for car finance. A higher credit score will likely make it easier to get approved, and secure a lower interest rate. Read our handy blog on Understanding Your Credit Rating for more information on your credit score and how to get car finance approved.
Determine Your Budget
Before applying for car finance, calculate out how much you can afford to pay each month. You’ll want to factor in not just the car payment, but also insurance, fuel, and maintenance costs. The easiest way to figure out how much you have to spend is to write a list of all your expenses and liabilities each month, and take this away from any income earnt. The amount you have left over should give you an idea of what monthly repayment you can comfortably afford.
Choice of Vehicle
Your choice of vehicle may impact your chance of getting finance approved, or limit the lenders that will consider your application. Some common restrictions that lenders may have include:
- Age of the car: finance may only be available for cars that are less than 10 years old, or cars that are under a certain milage;
- Value of the car: Some lenders may have a minimum or maximum value that they are willing to finance;
- Type of car: Certain vehicles such as luxury or exotic cars are not accepted by some lenders, or they may not finance vehicles that are used for commercial purposes. Some lenders may also restrict lending to applicants of a certain age for high performance vehicles;
- Condition of the car: lenders may have restrictions on the condition of the car. For example, they may not finance cars that have been in accidents or have significant damage.
It’s important to be flexible with your vehicle choice to ensure you are not at a disadvantage.
Consider Your Employment History
Lenders also look at your employment history when deciding to approve you for car finance. If you have a history of frequent job changes or gaps in employment, it may make you appear less stable and decrease your changes of approval. At a minimum, lenders will like to see 3 months of stable employment before considering lending to you.
Be Willing To Put Down A Down Payment
A down payment shows you are committed to the purchase and that you have a vested interest in the vehicle. When you put your own money down, it shows the lender that you are willing to take on some of the risk associated with the purchase. Additionally, a down payment can help reduce the amount you need to borrow. When you borrow less, you’re a lower credit risk, and this may lead to more favourable lending terms and interest rates. This may also mean that your monthly repayments are lower.
Prepare Your Documentation
To apply for car finance, you’ll need to provide documentation such as proof of income, employment details, and your driver’s license. Make sure to have these documents ready when the time comes to apply, to ensure the process is as smooth as possible with minimal delays.
Speak To An Experienced Broker
When it comes to getting finance approved, having a broker on your side puts you in the best position to gain approval. Here at Fido Finance, we have access to a panel of over 40 bank and non-bank lenders. These pre-established relationships mean we can help you find the best financing option for your specific needs and financial situation. Our brokers are experts in car finance and can provide you with valuable guidance throughout the finance process, all whilst handling the paperwork and negotiations with lenders on your behalf so you can sit back and relax.
“How to get finance approved” is a question we here often, so let us help you get behind the wheel of your dream car today.
