Easy Credit Tips to Get a Car Loan Approved
Posted Friday, Jul 28, 2023
Buying a car is equal parts exciting and terrifying. It’s a bit of a troublesome experience for people because not first-time car buyers know the inner workings of car loans. They come across a nice-looking car, and they want to acquire it right away.
Getting into the fray without doing sufficient research and homework often ends in disappointment and heartbreak, especially when people are rejected for car loans.
In the following paragraphs, we will look at some easy credit tips to secure approval on your car loan.
7 Tips to Get an Auto Loan Approved
Tip #1: Know Your Financial Status
Before you approach a lender for your car loan, you must be aware of your financial status. Here are three things that you want to know before applying for a car loan.
- Your income
- Credit history
- Debt-to-service ratio/the monthly income percentage that goes into monthly payments.
If you aren’t well-versed in matters related to the above three things, speak to a financial advisor.
Tip #2: Start Saving
Before applying for a car loan, you should start thinking about the down payment. A significant down payment can bring down your monthly payments, thus putting you under less financial burden.
Therefore, it is important to start saving earlier on. Having money on your hands helps you get approved faster.
Furthermore, some of the best lenders in the market aren’t likely to take your case seriously unless you can offer a decent down payment.
A 20% down payment is a good place to start. The more money you can offer upfront, the easier it will be to seal the deal on your car purchase.
Tip #3: Work on Your Credit History
Having unsettled credit is one of the biggest red flags for loan providers. A lender would never want to invest in a risky borrower. This is part of the reason people with unhealthy payment behaviors are less likely to secure a car loan.
As a responsible borrower, your job is to showcase good payment habits to your lender, and it really isn’t rocket science. All you must do is pay your bills on time, make timely payments on your credit cards, and pay off any unpaid loans while obtaining a payment certificate from the lender.
Furthermore, if you have any existing credit that you cannot pay immediately, obtain documents to prove you will make your payments in the future. The goal is to make the lender realize your ability to repay the car loan.
Tip #4: Get Pre-Approval on Your Loan
Getting pre-approved is the smartest way to start your car-buying journey. The pre-approval provides you with a vivid picture of how much you can pay and the interest rate you will end up paying.
On the one hand, the pre-approval will tell you the amount of money to set aside, while on the other hand, it will keep you from falling in love with a car that is way out of your budget.
Tip #5: Don’t Develop Any New Debt
Your worries don’t end when you get approved for a car loan. The trick is to prioritize your peace of mind, and the easiest way to do so is to avoid taking on more debt.
Before closing the deal, an intelligent lender will review your credit history again, and if they come across any sudden changes that weren’t there before, they might have a hard time sealing the deal.
As a result, the dealership might stop the car-buying process in its tracks.
Tip #6: Retain Your Job for Two Years
Having a two-year work history with a single employer increases your chances of getting approved for a car loan. If you haven’t spent two years with an employer, you can still get approved, but you will have to provide a solid enough reason for leaving your previous job or why you’ve been unemployed.
Tip #7: Know the Car Loan Requirements
It is worth noting that each lender is different, and therefore, they all have different requirements. Make sure to do your research before applying for a car loan.
You might think you are in a good place to get a car loan, but after looking into your finances, you might think otherwise. You may have to put in some more work.
For example, you need to ask yourself if you have a copy of your tax return for the past few years, as some lenders might need that. Before applying for a car loan, make sure to get a firm understanding of what is needed, and then start from there.
Final Word
Are you shopping around for a new car? Unfortunately, the automotive market is filled with scams, and some car dealerships are looking for new ways to rip you off. Luckily for you, G7 Motor Sales isn't one of those dealerships.
We pride ourselves on our ability to solve problems and be as transparent as possible. At our dealership, you get exactly what you pay for. To benefit from our services, feel free to visit our website or contact us today.
