What Do I Need To Apply For a Car Loan?

Applying for car loans is a relatively straightforward procedure and most lenders follow the same procedures

. Provided you have a good credit history, steady employment and a good income you should find it easier to qualify for any number of car loans. The hardest part will be choosing the best one you can find.

Without going into the details of the various types of car loans on the market, we are going to concentrate on the things you need before you apply for a car loan and what you should expect from any prospective lender. The trick is to start your application as early as possible so that you have your finance application locked away before you start looking for a car. When you have your car loan preapproved, you are less likely to be tempted by an offer of finance from the car dealership you are visiting.

Most car dealers offer in-house finance but there can be a sting in the tail if you accept a loan on the spot. Dealers generally add in something for themselves and you end up paying the price. By doing your homework far enough in advance, you won't have to worry about paying too much for your car loan.

Here are the things you will need to apply to your car loan.

* First of all you need to be 18 years or older to apply for a loan in Australia. You will also need to be a permanent Australian resident and have a minimum net income of around $25,000 a year. Although these conditions will not apply to each and every lender, this is a general rule and if you do not satisfy any of these requirements you can expect to have to answer many more questions.

* In Australia, lenders are required to investigate your capacity to repay a loan. This means you have to be able to prove you have sufficient income to be able to make the loan repayments without suffering any undue hardship. Every applicant is considered on a case-by-case basis and your capacity to repay the loan will be determined by your personal circumstances, especially by how many existing liabilities you have. For example, if you have another personal loan, a lender might judge your capacity to pay more than repayments as being unreasonable and decline your application.

* Apart from your income, lenders will also look at your assets and liabilities to get a better picture of your financial position. Naturally, the stronger your position, the more likely it is to have your loan approved.

* You will have to provide evidence of your income by way of payslips and possibly the last years PAYG summary. This allows the lender to judge whether your income is sufficient to make the loan repayment.

Every car finance application is considered on its merits and just because you satisfy one of the criteria it does not automatically mean your loan will be approved. Lenders take an overall view of your situation but in most cases, secured personal loans for motor vehicles are easier to obtain than other types of personal loans.

What Do I Need To Apply For a Car Loan?

By: Craig O'Shannessy

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