If you’re looking for a cool new car to take you around town or already have your eyes set on a model but have trouble affording it, applying for a car loan can be very helpful. But of course, any application means struggling to understand a confusing list of documents and procedures. Read on for a simple guide to help introduce you to what you can expect when applying for a car loan in Australia and some tips to help you through the process.
And if you’re worried about your bad credit, don’t be! You can always apply for a bad credit car loan; even if your options may be limited, they’re certainly available.
Car Loan Eligibility
Let’s start with the basic questions: are you eligible to receive a car loan? The answer to that depends on a few factors like your income, your credit history, your savings history, the lender and loan you choose to apply for, the model of the car you’re planning to buy and whether it’s new or second-hand. And of course, you need to be an Australian citizen and above 18 years of age to apply.
Having all the documents you need on hand will make the loan application process a lot easier for you, saving you both time and the pain of scrambling to prepare the paperwork.
The documents you need include:
- Identification like your driver’s license, passport, and Medicare card (a minimum of 100 points)
- Recent bank statements
- Proof of your income
- Your credit availability
- A summary of your monthly expenses
- Your tax returns for two years
- Information about any liabilities
While these documents should be sufficient to ensure a smooth application process, it’s still a good idea to check with your lender regarding their specific requirements.
If you want to apply for a bad credit car loan, ensure that you have a steady income and save as much money as you can and show proof of this. This can increase your chances of securing a car loan.
Choosing a Good Car Loan
There are tons of lending options available in the Australian market, and it can be hard to choose one. But borrowing money is serious business, so you want to make sure you pick an option that works best for you. One thing to keep in mind is to never settle for the first option you come across. It’s essential to do your research about the options available – you might even discover lenders that offer benefits you never realised you needed!
Some factors that make a good car loan are low interest rates, longer loan repayment terms (so you can pay back your lender more comfortably), and low fees (like application and exit fees). It’s also generally advisable to choose a secured car loan – a loan where the lender can hold the car you buy as collateral – over an unsecured car loan. This is because secured car loans tend to be less risky for the lender and may have lower interest rates as a result.
Choosing a Reliable Lender
Australian law demands that financial services companies operating in Australia have an AFS (Australian Financial Services) license before offering their services to country residents. Be sure to check if the lender is licensed before working with them.
That’s it! Hopefully, applying for a car loan doesn’t seem as daunting as it was before.