Every situation is unique. So the only way to know for sure is to give it a shot by filling out this simple car loan application form. That way we can fully assess your financial profile and help you provide a deal that best suits your situation.
Finding a partner that is invested in giving you a deal that is ideal to your situation is very important. There are five keys to getting an approval and we can help get you there.
A good credit score certainly brings a higher chance of approval and better interest offers. While having a bad credit score will indeed be a challenge, it doesn’t necessarily mean that you won’t have any chance of getting an approved loan.
A credit history is a record of an individual’s capacity to repay debts which demonstrates his or her ability to repay those debts. It is then expressed as a credit score which embodies your debt-to-income ratio and payment history.
There are three credit reporting agencies (Equifax, Experian and TransUnion) that gives out your credit score. It ranges from 300 to 900 and depending on your score, the lender can somehow have an estimate of your creditworthiness. Individuals with 700 (or above) credit score will most likely encounter no problem with loan approval and might even be offered very low interest rate – as low as zero percent. Meanwhile credit scores in the 600s may have to pay a relatively higher interest subsequently those even lower will have a harder time with the approval process.
In the case of bankruptcy, it will immediately result into the lowest possible credit score and this record can stay up to seven years (for first-time bankruptcy). Despite that fact, you can still secure an auto loan following a bankruptcy.
If you were able to successfully recover from this financial trouble, then you have a fighting chance of getting approved. A repossession of vehicle is far more troublesome and a more challenging obstacle to overcome.
It’s not all about how much your income is, it’s about how stable and reliable your employment history is. Lenders like to see a potential borrower who has a stable job. A lender usually evaluates your most recent job history (at least 2 years with the same employer) and from there the lender makes an estimated prediction of your future income.
On the contrary, if you’re new to your job but have had a stable employment history then that won’t be a problem. What’s important is that there are no gaps in between jobs and that you don’t bounce around different jobs a lot.
Your current income influences the amount of money a lender will give you. If you’re new to your job, bringing a down payment may help lower the total amount that you will borrow from your lender. Another option is to pick a vehicle that is more affordable and wait until your dream car is within your reach budget wise.
It is recommended to limit your budget for a car investment to only 10 percent of your gross income.
Another factor that a lender considers before inking the contract is a borrower’s current debt and financial expenses. As mentioned, your credit score already provides your lender an idea of your debt-to-income ratio but a lender also considers your other monthly expenses like child support or alimony.
With regards to your monthly salary, there is no specific minimum amount set but monthly expenses will also be factored by your lender consequently affecting the terms of your loan. Take note that fewer monthly costs combined with less debt gives you a greater advantage.
More importantly, a lender wants to know if your income exceeds your monthly expenses. So it is important that you choose a vehicle that is within your budget. If not, cutting back some unnecessary expenses or paying previous debts first might help you with your car expenditure.
“Do I Need a Down Payment?”As mentioned in our previous article the answer is no. But is it more advantageous to do so? Yes it is.
Placing a down payment shows commitment on your part as buyer. This will also lessen the lender’s risk because he will only be loaning you a smaller amount of money. In your perspective, this would also lessen the total amount of debt and can even get you a better interest offer.
Experts recommend a 20% down payment since it also protects you from the initial loss as soon as you leave with your new vehicle. Even if you can’t reach that ideal amount, placing any amount as down payment is still better than placing none at all.
The main purpose of a down payment is to protect you from getting upside down. Making sure that you can afford that loan should be your main priority.
While some already have a vehicle in mind, others are still unsure about which vehicle to purchase. Those that have already decided, most likely have already prepared the requirements for an approval and cash to cover for a down payment. But for others, they are still working towards an approval especially if they have some credit issues in their history.
With that said, always be patient and remember to pick the right loan for the right vehicle. You must not give in to temptation. A macho SUV may look good on you but none of that matters if in the end you end up being buried in auto loan debt.
Always remember to pick the right loan for your budget.
When a lender loans you money he assumes a risk of whether he’ll be paid back or not. That is why to a lender it is crucial to do a financial background check on a prospective borrower. As a borrower it is also important to meet the requirements and show to your lender that you are worthy of the loan.
Here in New Car Canada we are interested in looking for ways to help you with your transportation needs. We believe that everyone deserves a shot at a new car. Click here to start filling out our quick and simple application form.