Car Loan Applications: Tips and Tricks

By Hanna

Posted on Jan 04, 2019

loan application

It's the new year again! It's time for the old to be replaced with the new. You list down all of the things you need to sort out before the new year start, after some tinkering, you figure, maybe it's time for some kind of upgrade in your life. You consult a friend, a financial analyst for the matter if you’re feasible for a car loan. After a year of hard work and perseverance, you're on your way towards climbing the ladder of success, ain't a car suitable for you to symbolize it all? If you're decided towards applying for a car loan, here are the tips and tricks you need to know before submitting your application to the bank.

Save!

Before filling in informant details and being persuaded with the salesperson convincing you with the flashy car of your choice, make sure you have sufficient amount of downpayment, to begin with. It's good enough to start with 20% as payment, but, the more you have to offer, the easier it'll get along the way. So before deciding on what color you'd choose, make sure you saved up a relatively hefty amount of money to pay upfront.

Analyze your financial capability

Take time to compute or analyze how much of your monthly income will go for your car loan payments. Also, before submitting yourself to a car dealer, make sure you have comprehensively looked into the following aspects of your financial status: credit history, income, and debt-to-service ratio. Talk or set up an appointment with a financial advisor to see if you're capable of taking a car loan.

Pay off existing debts and credit

It wouldn’t be attractive to bring on a financial portfolio with unpaid debts and existing loans when applying for a car loan. These lenders would do a “credit investigation” as a part of the application process. It's best to pay off your overdue debts and loans. If you have loans that you cannot pay as of this moment, bring documents that pertain or assures your ability to pay off the existing debt along with a potential loan you'll obtain.

loan application process

Getting pre-approved

This is an ideal process to undergo through before car shopping. It gives you a real situation you'll have to undertake before choosing a car. After all, cars come with a cost and this process will keep you from sticking way above your limits. The process includes information on how much you’ll have to spend every month to pay off the loan, how much you'll need to pay upfront for a downpayment and the interest rate you'll be getting.

Be mindful of the loan's requirements

Initially, you'll need to be aware of what the lender would require from you. You need to take note of these as these documents are vital towards a successful application.

Exercise honesty upon presenting your financial situation

There’s a reason why most lenders would require a credit investigation first before approving your application. It double-checks and verifies all the information you have put on your application. It is important to know that you need to be honest regarding your financial capability. Do not overstate your income and understate your expenses. Chances are, your application will be deemed as denied and you'll hurt your chances for future borrowing. At the same time, criminal charges can be pressed for your misconduct.