When it comes to applying for a car loan, regardless of whether it’s through a bank, dealer finance or other institution, the criteria are designed to ensure you’re a risk worth taking. Ideally, you will have a solid track record, but even if you’ve never had a loan before, have a bad credit history or limited funds in your account, here are four tips for getting finance.
Show you can save
A bit of saving goes a long way to illustrate you have the capacity to put money side for a purpose. If your bank records show a savings history where your finances are being added to each week or month, your chances of getting approval for a loan are considerably more favourable. The sooner you start saving and show an increasing bank account, the better, but a minimum of six months savings is preferred. If you can show that even in the hardest of financial situations you can put money aside, a lender will take this into account.
Credit history
Having a good credit history is one of the key indicators that if an institution lends you money, they’re going to get it back, so try to keep your credit history clean. That means make at least minimum monthly repayments on debts and if you do encounter financial trouble while paying back a loan or credit card debt, talk to your lender to make payment arrangements.
Also ensure your record is accurate. You can apply to see notes on your credit file to ascertain what sort of information has been stored about you. If the results aren’t favourable, work to remedy the situation. If the mark on your record is there to stay, there are financiers like Zoom Car Loans who may be able to provide a loan despite a poor credit history. After all, your past need not define your entire future, particularly if you have just started a new job or need a set of wheels to get work.
Think laterally
While the banks are generally the first option for loans, they’re not the be all and end all. Look to dealer finance, seek a trade-in to reduce the cost or consider more flexible lending options. It’s also a good idea to even seek a car with a lower retail price where the repayments are easier and the loan is smaller. Honour this and you’re a lot closer to the ultimate car and loan of your dreams.
Get a guarantor
When push comes to shove, you can call on someone else to guarantee your loan. Asking someone else to guarantee you will repay money is no small matter so think about this carefully before you make the request and don’t be offended if they say no. After all, they are putting their financial faith in you.
Your financial record is a document that stays with you for life, but it’s also a reflection that life can throw a curve ball every now and then. Do your best to keep your record clean, but if life gets hard, seek other options available to get back on track.