But it can be quite a challenge too, especially if you’re a young applicant applying for credit for the first time, or someone who is self-employed, has a bad credit history, or is only in casual employment.
While applying for a car loan can be tricky, it’s still possible to get your first car loan approved with these six tips.
1. Be reasonable with your budget
There are many expenses involved in owning a car apart from the maintenance and petrol. You will need to pay for things like stamp duty, car insurance and registration, which all add up. If you don’t budget well, this will be a burden. And your lender might reject your application. You can use our car loan calculator so you know how much your repayments will likely be and if you can actually afford it.
2. Know the car loan requirements
Even if you can afford to buy a new car, if you can’t meet the lender's requirements you’ll likely be rejected. You should review the requirements so you know if you qualify for the car loan. Keep in mind that different lenders have different requirements.
3. Save up for the down payment
If you have a big deposit, there’s a higher chance your car loan will be approved. It shows the lender that you’re financially responsible as a borrower. Also, a bigger deposit means lower monthly repayments because the size of your loan is reduced.
4. Improve your credit score
A bad credit history is a major red flag to many car loan providers in Australia. You should be able to improve your credit score by clearing any debts against your name, and paying off your loans on time. Your goal is to have as little debt as possible, so you can show your lender you can make the car loan repayments.
5. Consider opening a bank account
This car loan tip is for people with no credit history. Opening a bank account is the first step into the world of credit, and lenders will examine your bank account balance and transaction history when deciding whether to give you a loan.
6. Do your research and compare
With the many car loan products out there, it pays to do your research so you know you’re getting the best possible deal that’s suitable to your needs and financial circumstances. You can compare loans by using a car loan calculator.
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