Buying your first car is a major life milestone. If you’re buying your first car, it’s more than likely you’ll have no credit history. You may be young and only working casually as a full-time student or part time. It may seem unfair, but lenders and financiers look at people in this position as higher risks when it comes to lending money. This all has to do with your credit never being “road-tested,” so banks and lenders eye you with caution. But there are ways of making sure you gain approval for your first car loan.
Look for a car within your means
Before looking for cars that catch your eye, first look at your income and finances. How much can you afford to in repayments each week, fortnight or month? How much have you saved already, and what is 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 that factored in. Read what to budget when buying a car.
Look for a car that is 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 will factor these ongoing costs into your calculations. Cars with high KMs on the odometer and a patchy service history may cost less to buy but may be dear to repair 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.
Compare, compare, compare
Before looking for car loan approval, you should compare as many car loan products as you can. Get as much information on car loans as you can. We have repayments calculators that you can use, plus we have financial professionals that can help you with the process. Read our car loan factsheet guide here for more information.
Limit Your Applications
You may feel tempted to apply for a number of 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, even in the short-term.