When you need to purchase a car, your typical first option is getting it through a car loan. However, because of circumstances out of your control, you may not qualify for one. If that is the case, then the next best option is car finance.
So, what are required when you’re applying for car finance?
What you need to apply for car finance
To successfully apply for car finance, you need to arm yourself with knowledge. Knowing what to have with you can help ease the process. That includes some paperwork among others.
Generally speaking, here are some of the things you will need when you apply for car finance:
1. Stable income and proof
For lenders to consider you, you need to have a steady source of income. If you’re new to your job, wait for a few months before sending in an application. That way, you can have the time to get a feel for your job. Additionally, it lets lenders know that you have the means to pay for the car.
2. Proper identification
You need to provide proof of your identity to the lender. This often consists of valid identification cards and current utility bills. It’s important to know, however, that some lenders will look for specific means of identification. They usually look for particular IDs, and sometimes titles for some of your properties.
3. Proof of residence
In line with your identification, you also need to provide lenders with proof of your residency. For example, let’s say that you’re currently living in Melbourne, Australia. To get consideration for car finance in Australia, you need to be a resident for at least two years. There are certain exemptions to the rule, like work visas, that allow you to meet the requirements without being a resident.
4. Check your credit rating
Lenders favour those with an excellent credit rating. However, even with bad credit, you will still have a chance for approval. However, before that, you need first to pay back all your outstanding debts. There are ways for you to pay back debt, and once your credit score improves, you can then apply for car finance with confidence.
5. Initial payment
Once you have everything in order, save up for the initial payment. In car finance, your initial deposit varies depending on the vehicle. This is a good time to decide what kind of car you want to finance.
When choosing, make sure to consider various aspects. That includes what you will use the vehicle for, the size, and how much you can afford in repayments. It’s important to go over everything to ensure that you can pay for it comfortably and get the most use out of it.
Mistakes to avoid
The journey to get approval for car finance is a long one. There are mistakes you can make along the way. Here are some of the ones you should avoid making:
1. Not doing research beforehand
When it comes to big purchases like vehicles, skipping out on the research is a big mistake. You need to know the car you plan to purchase and the lender you are looking to work with. There are plenty of reputable car finance companies in Australia that you can talk to about the issue on hand.
Rushing your purchase. As much as possible, avoid rushing your purchase. You need to be comfortable with everything on the contract before signing anything. Ask yourself these questions:
- Am I satisfied with the payments and how often I need to make them?
- Is this car something my family needs?
Taking the time to reflect on your purchase will help save you from headaches in the long run.
2. Not making payments
Once you get approval for car finance, make it your priority to make the payments on time every time. If you find yourself in a situation where you can’t make the payment on time, reach out to your lender, and they will be more than happy to help with any adjustments.
These are some of the basic requirements for car finance application. However, some companies have specific requirements. So, it’s best to ask them directly for any additional paperwork you need to get.