How To Get A Car Loan

You’re probably already aware that a car loan is a secured loan that you’re able to use to purchase a vehicle. By secured, this means that the car you purchase with the loan serves as collateral.

You’re also able to purchase cars using an unsecured personal loan, providing no security or collateral, but generally these types of loans will come with a higher interest rate than a secured loan.

Pretty straightforward so far?

If you’re in need of new wheels, and you’ve begun researching cars and car loans, you’ve probably still got some car loan questions, though, right? After all, you’re not expected to know how to get a car loan if you’ve never done it before.

Some of the maths can quickly get a bit intimidating, but don’t pump the breaks just yet. Applying for a car loan is pretty easy, and as long as you do your research (most of which can be done online), the actual application process can be fairly quick.

Once you have an idea of the type of car you want to buy, and a price range, you’re ready to think about choosing a lender. From here, once you know your credit score, it’s all about organising your personal and financial documentation to make the application process as smooth as possible.

Here’s how to apply for a car loan, and much more.

What You Need For A Car Loan

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When the time comes to apply, it helps to have done some ground work so that you can provide your potential lender with an accurate picture of your personal and financial circumstances.

The following details may be asked for as part of the car loan application process:

• Your current and previous employment details, including name, address and phone number.
• What you currently earn, backed up by things like pay-slips or employment contracts.
• Details of any current loan repayments you’re making, as well as any other regular repayments you make.
• Your credit and store card details.
• The overall value of your assets, ideally demonstrating your ability to save money.
• Your average monthly general living expenses.
• A few differing forms of personal identification, such as driver’s license, passport or Medicare card.
• The value (or price range) of the vehicle you’re looking to buy.

Keep in mind that if you are applying for a joint car loan (with somebody else), your lender will ask for these details for both loan applicants!

Apply on your own Apply with someone else

Comparing Car Loans

When looking around for the right car loan for you, there are a number of important factors to consider.

• A good interest rate – the lower the rate, the more money you can potentially save over the life of the loan.
• Fees – take a look at the comparison rates for loans advertised for the whole cost of the loan, and compare loan products side by side.
• Features and benefits – you’re looking for the best loan to suit you, right? Does the loan you want offer things like online redraw, pre-approval, and the option to make additional repayments?
• Secured vs Unsecured – Most Australian car loans will be secured, but make sure to explore what’s available.

How to Apply For A Car Loan

The journey to buying a car runs differently for everyone. Sometimes you need to upgrade your wheels in a hurry, after your last ride kicks the bucket, or you may have just stumbled upon the car of your dreams and need it now. We get it.

Budgeting for a Car Loan

Failing to prepare is preparing to fail.

By demonstrating that you are capable of managing your personal budget, and relationship with saving, spending and credit, you are able to indicate to a potential lender that you’re a favourable candidate for a car loan.

Greater Bank

If your budget is in disarray, try to steady the ship, and start to build up a steady savings balance, in effect showing that you’ll be capable of making the repayments on your future loan.

Check your Credit Rating

Before you even think about finance, you need to know your credit rating, or credit score.

Your credit score is a number that represents how trustworthy your reputation as a borrower is. 

The main reason for checking your score first is that any rejection leaves a negative impact on your credit rating. Knowing what your credit rating is in advance will give you an indication of how likely you are to get your loan approved – if your score needs improvement, maybe reconsider the timing of your car loan application. If your score is OK, you’re good to go.

Prepare your Car Loan paperwork

As we outlined above, having all your personal and financial details ready to go will help your lender review and provide an outcome of your loan application in the shortest possible time. If time is of the essence, look for a lender with a decent turnaround time for approval – at Greater Bank, our New Car Loans can be approved in as little as 24 hours.

Consider Car Loan Pre-approval

Just like with a home loan, many lenders offer the option to be pre-approved for a certain amount.

This is particularly useful when looking to purchase a vehicle at auction, or you are still shopping for cars without having decided on one.

Having been pre-approved for your loan lets you make an offer with confidence, and can be attractive to sellers. Just be aware that pre-approval is usually only valid for a limited time-frame.

Car Loan Frequently Asked Questions

How much can I borrow?

A New Car Loan from Greater Bank allows you to borrow anywhere between $5,000 and $100,000 for new vehicles. This range is fairly indicative of what most lenders will be willing to offer for vehicle purchases. At Greater Bank, our New Car Loan allows you to borrow up to 120% of the value of your new car.

Can I get a car-loan if I’m self-employed?

Absolutely – all Greater Bank Personal Loans are available to self-employed borrowers.

Just be sure to include this information as part of the application process. It’s important to check before applying whether any lender you’re considering will lend to you if self-employed, as this could help to save you any needless credit applications, which may affect your credit rating.

Can I pay out my car loan early?

This depends on your lender, but yes – many lenders will allow you to pay out your car loan early. If this is an important feature to you, be sure to double check whether or not the loan you’re considering allows additional repayments and early loan payout without penalty, as well as whether any balloon payment applies at the end of the loan. At Greater Bank, all our Personal Loans can be repaid ahead of time, without incurring any penalty.

Does making several loan applications improve my chances of getting a loan?

While in some ways, this might seem to make sense, the answer is probably no. Making many needless credit applications will have a negative effect on your credit score, which may then impact your future ability to access any sort of finance. The better option may be to find a lender who offers a loan product that suits you, to pay close attention during the application process, and focus on getting the right car loan to fit your needs.