As with all lending, there’s a bit of paperwork needed to complete a car loan application. If you’re shopping for your next set of wheels and getting ready to find the vehicle finance you need, check out our quick guide to the kind of information lenders generally request.
Whichever finance provider you choose is likely to ask for the same set of documentation, so getting it ready in advance will make the process much easier to manage.
Application form
To access finance in order to buy your car you will need to complete an application form. Sometimes this can be a quick application online, and is followed by a more comprehensive conversation to gather the information needed to progress your vehicle finance request.
In order to understand your ability to manage a debt effectively, car loan providers usually ask you to provide the following information along with evidence.
Your current financial status and commitments
This basically means getting an understanding of money coming in and money going out. Some providers will ask for copies of your bank statement and/or pay slips so that they can get a comprehensive picture of your financial status.
The main thing that finance providers want to understand from this information is what your debt-to-income ratio is. That means, how much money you have left over to pay your debts after all your existing expenses have been taken off your income. If you don’t have enough money left over, then you may be at risk of failing to keep up with your repayment plan – which of course would not be a good outcome for your personal finances.
Your address and driver’s licence
Part of the process of applying for a car loan is giving the provider confidence that you are who you say you are. Providing your address, along with proof of it in the form of a bill or statement of some kind, is part of that process. Your driver’s licence will give a photographic identification. This is one of the most reliable ways of establishing that you are who you say you are.
Details of the car you want to buy
If you want to start the process of applying for a car loan early then that’s fine. But to complete the loan documentation, your provider will need to know the details about the car you are buying. In the early stages it will help if you can give them an idea about the general make, model, age and value of the car that you are looking for.
Once you’ve chosen the car that you want to buy, you should be able to complete the application process. That means that if you want to you could have your loan pre-approved. Having a pre-approved loan can often help you with the negotiation process and give you the confidence to get the best deal from the seller.
What size and term of loan you want
Have a think about whether you want to repay more of your loan sooner, or take longer to pay it off in smaller installments. Being able to give this direction to the home loan provider will help them to work out the best structure of the loan to meet both your needs and your budget.
Getting your documentation together can make the car loan application process much easier. Some advance planning is a great idea in order to ensure that the information that you provide is accurate and represents your details accurately. Especially if you expect to have to move fast to get the car that you’re looking for.
