Finance

3 Tips before applying for a car loan

One of the biggest dreams for anyone is finally being able to own and drive their own car. However, one of the most significant obstacles that you have to get around is the fact that cars can be expensive.

Now, if you’ve had your eye on a particular car for a while, and your savings aren’t enough to make a full payment, you can suck it up and continue saving, or you can get car financing.

Before you even consider a loan for your vehicle, you need to know the responsibility that comes with it. That means being able to pay back the loan and following through with the agreements that you made with the lender.

To arm you better, here are a few tips you should know before applying for a car loan:

Check your credit rating

What is a credit rating? A credit rating is a rough estimate of a person’s ability to pay back money that he owes. It usually involves loans and credit you’ve taken out over the years.

That is why it is crucial for everyone taking out loans to remember that when they ask someone for money, that it is not free. You need to pay that money back, otherwise, if you don’t, or you’re always making late payments, the potential lender will see that, and they will look at your record as a high-risk borrower.

When you’re marked as such, there is a higher chance for your application to be rejected. That is why it is also important to rebuild your bad credit by paying off your more significant loans before taking out a new one.

Prepare your paperwork

Aside from your credit rating, you need to have all your paperwork in order. Get it all in a folder, and if you can, get soft copies of everything, so you don’t have to worry about losing it.

Lenders will typically ask for the following when you apply for a loan:

  • Proof of income (payslip or tax return)
  • Proof of current ongoing expenses (rent, bills)
  • Copies of your current bank statement
  • Personal identification

When you have all of your ducks in a row, it will make the application process a lot faster, saving you and the lender a lot of time and getting you in a car more quickly.

Pre-approval

Nothing is worse than jumping through all the hoops and climbing impossible slopes only to find that you are not eligible for the loan. This is enough to make anyone feel disappointed in themselves especially after they wasted all that time and energy.

Getting pre-approved for a loan not only saves you time, it can also help you get the loan faster. Pre-approval is essentially applying for a loan, getting approved, and not getting the money… yet. It will show lenders that you are trustworthy and will be able to make the payments. There are a lot of places you can try to visit that can give you pre-approval for the loan you need for your car. You just need to find the one that you trust the most.

Fair warning, however; Pre-approval is valid for a limited time. Usually for one to three months. So, make use of it fast.

Now that you have a better idea on what to know and prepare, check out some notable car loan companies in your area. Better yet, you can apply for a car loan online so you can find out if you are qualified for a loan even before heading down to the dealership.

If all goes well, you can be driving down the street in your own set of wheels in just a matter of days.

 

 

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