Buying your first car is a major milestone in anyone’s life; most of us will have to do it at some point for one reason or another. Because many cars will set you back tens of thousands of dollars, though, you might find yourself in a position where you’re short on funds. This is where a loan for your first car can come in handy.
At Savvy, we’ll help you find the ideal loan for your first car no matter who or where you are. Thanks to our extensive panel of lenders, one of our diligent consultants will guide you through the application process to help you find a loan for your ideal car.
When approaching your first car loan application, there are several key strategies you should look to which can maximise your chances of finance approval. Consider these before you submit your first enquiry and you can enjoy a higher chance of having your loan signed off faster.
Look for a car within your means
Before looking for cars that catch your eye, you should first look at your income and finances. How much can you afford to repay each week, fortnight or month? How much have you saved already and what’s the gap between what you’ll need for a loan and what you already have? Look around online and in trade papers for cars within your price range with all of these factors in mind.
Look for a car that’s economical to run and insure
The next step is to determine how much your car will cost to run each month and how much it might cost to insure. You’ll need to factor these ongoing costs into your calculations. Cars with high kilometrage on the odometer and a patchy service history may cost less to buy, but they could end up leaving you more out of pocket in the long run.
If you have debts, clear them off
You may not think you have any debts to your name, but you should always make sure before applying for any kind of loan. Sometimes, telcos and utility companies will record defaults against you even if you’ve paid them back. To be on the safe side, you should check your credit history. Lenders use your credit score to assess whether applicants are considered reliable when it comes to repaying their debts, so it’s in your best interest to do what you can (including paying off debts) to increase it.
Compare, compare, compare
Before looking for car loan approval, you should compare as many car loan products as you can. Fortunately, your Savvy consultant will do the heavy lifting for you and compare offers from our range of lenders to find you the best possible deal for your situation, ensuring their repayments are affordable for you. You can also use our repayment calculator to give an idea of what different loans might cost per instalment and overall.
Limit your applications
You may feel tempted to apply for several loans to see if you gain approval, but it’s a bad idea. Rejections are black strokes against an otherwise clean credit history. This can follow you around for years and make finding finance difficult for you, especially in the short term.
There are several key points you’ll need to consider as part of your first car loan to ensure the process runs as smoothly as possible. Some of these include:
Am I eligible?
There’s little point in applying for a car loan if you don’t know for certain whether you’re eligible to do so. The criteria you’ll be required to meet for your car loan include:
Should I buy new or used?
There are distinct benefits to both new and used vehicles, so you should think about these before your application. When buying a new car, you can guarantee its lack of repairs history and that no one has driven it before, with factory warranties still firmly in place. However, because cars depreciate in value so sharply, you’re likely to save a significant amount by choosing a used vehicle instead. Demo models are also an option if you’re looking to get a near-new vehicle at a cheaper cost.
Should I get pre-approval?
Pre-approval can be a significant benefit to you in the negotiation process. By entering a dealership or private sale with pre-approval for a set amount, it lets your seller know you won’t be able to go far beyond a set upper limit, giving you a stronger hand. This can last for between one and three months and can be arranged with your Savvy consultant. However, it isn’t a guarantee of approval in the future.
Should I make a deposit?
Deposits aren’t mandatory for car loans, given that you can access up to 100% financing (and in some cases beyond that figure). However, making a deposit can significantly reduce the interest you’re required to repay over throughout your loan. This essentially serves as an interest-free contribution which lessens your lender’s level of overall risk.
You can start the process by completing a quick quote with Savvy today. This tells us a bit about you and your situation, as well as the sort of car and car loan you’re after. This will only take a few minutes to fill out.