Buying your own car is a very good investment. However, it is a pricey investment too, because purchasing a car is like purchasing a property. If you don’t have enough cash at the moment, a lot of ways exist in order to get that auto.
An auto loan is one of the easiest ways to get your dream car whether used or brand new. However, it is important that you know the consequences of your actions. Remember this before you hastily make a decision. And when it comes to car loans, the key is to educate yourself so that you can reduce the chances of getting your application disapproved.
Here’s a guide on how you can get your loan approved fast.
1. Get ready with your savings
One of the most important things you should do in order to increase your chances of getting your auto loan approved is by investing a larger amount for the down payment; more or less 20 percent of the total amount will be acceptable. So if you are planning to apply for an auto loan, it would be best if you double the effort in your savings so that you can at least afford to pay for the down payment of the car model you desire.
2. Asses your financial status
Before you even have the lender evaluate your financial status, it will be better if you do it yourself first. Think about your income, take a look at your credit history and the percentage of your income that will have to go to the monthly payments of your loan. This way, you can already check if you are indeed financially ready to take out this loan. If you need help, you can also seek the advice of a financial advisor.
3. Fix your credit standing
While it is not really impossible to get an auto loan approved even with a bad or low credit score, it will still be a lot better if you get your credit standing fixed as early as possible. If you have plans of applying for a car loan a year ago or several months ago, you should have already started working on fixing your credit history. Do this by ensuring bills are all paid on time and clear your balances with your credit cards. Settle those pending or unpaid loans and settle them.
You can also secure a certificate of payment from your lender so that you have a documentation or proof that you have completed your payment. The reason why this is very important is because you need to prove your lender that you fully capable of paying your car loan.
4. Get a pre-approval prior to car shopping
In the car buying process, it is better if you get pre approved first. This way, you can more or less get the details on how much you can afford and the interest rate that’s added on your loan, so that you can set aside the exact amount needed to get your desired vehicle.
5. Choose the car that’s just within your budget
To make sure that the lender approves your application, you have to select the car that fits your budget because they will be looking at your ability to pay the total cost of the vehicle based on your income. So take time to do the math. And you can also utilize some tools online to help you compare prices of your selected cars.
6. Submit all the documents required
The lender usually requires documents that show your proof of income, your proof of residence, age and identity. If you have incomplete documents, your application is less likely going to be approved. They will also require your valid IDs so make sure that you have with you the original and photocopies.
7. Avoid incurring new debt
When your loan application gets approved, it is highly recommended that you stay away from acquiring new debts. That is because during the car loan process, the lender may still do some reviews and go back to checking back your credit report. And you don’t want it to show any change that could hamper your already approved loan. So might as well just refrain from getting new debts or credits to make sure that you can lay your hands on to that car you have always wanted.
8. Be honest with your financial details
No matter how much you wanted to get your car loan approved, make sure that you do not lie about your financial information. If the lender finds out that you’re dishonest, they disapprove your application. And worse, it might affect your chances of getting any kind of loan approved in the future.
