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How Much Car Loan Can I Get Approved For?
- Oxcel Finance
- January 4, 2024
If you are on the market looking to get a brand-new car, you must ask yourself, how many car loans can I get approved for? Well, there is no hard rule for the amount of loan you are eligible for. What you may get will depend on your lender.
That being said, some factors might increase your likelihood of getting a bigger car loan approved. So let us check them out for more insight.
Factors That Can Impact the Amount of Loan You Are Eligible For
Many potential automobile buyers are hesitant to apply for car financing if they believe they could be turned down.
No one is willing to waste their time on time-consuming documentation if there is no guarantee that it will be approved because that would only lead to frustration. Thankfully, it's easier than ever to obtain auto financing in Australia.
Having A Good Credit Score:
Creditors examine your credit report to determine your ability to repay loans and how you've historically handled doing so.
Your lender will almost certainly authorise your loan request if you hold a credit rating of 750 or higher since they will believe you are serious about returning your loans on time.
However, the amount of car loan you can get may increase as your credit score increases. The rate of interest you may get, as well as the highest amount of money you can borrow, depend on where you're placed with your credit profile, along with a few other factors.
Car Type:
This may be a big surprise to many, but your loan eligibility can heavily depend upon the type of car you are planning to purchase. The characteristics and specs of each car class will determine the particular reselling value of the vehicle.
Therefore, if the reselling value of the vehicle you are looking to buy is substantial, your eligibility for obtaining a car loan will likely be high. Moreover, you will get a bigger loan for a car with a higher resell value.
Your Employment Status:
The next factor determining how much loan you will get will depend on your employment status. You need to work for the same company for at least a minimum of 1 year to get a good car loan with low-interest rates.
As for self-employed people, you must be in the same business for the last two years. That means the higher the stability of your income is, the bigger the loan you may be eligible for.
Your Annual Income:
This one is a no-brainer.
Your lender will look at your income levels whenever you seek a car loan. This is done to determine whether you can make the EMI payments on time. The creditor will believe you can return the loan without problems if you earn a good salary each year.
However, if your salary is a bit low, your creditor might question whether you can make timely payments on all of your vehicle loan EMIs. As a result, the creditor might provide you with a smaller loan than you requested.
The Reputation of Your Employer:
Unless you are self-employed, your employer’s reputation is critical in determining how much ca loan you can get approved.
If you work in a big brand in Australia like Woolworths, it will drastically improve your eligibility for a higher car loan. As long as you work in any of the fortune 500 companies, you are good to go. This will help you achieve a higher loan much more quickly.
However, if you are not working on a big brand like this, you must earn a substantial salary to get a higher loan approved.
Relationship With the Lender:
A small relationship can go a long way when getting a car loan. For instance, if you already have an account at the bank where you are applying for the loan and have been doing business for quite some years, you are more likely to get a higher car loan.
You can also negotiate a lower interest rate on your loan.
Final Thoughts
There is no way to answer how much car loan I can get approved without a creditor looking at my credit history, salary, and expenses. The perfect way to get a ballpark about how much car loan you can approve is by reaching out to your potential creditors.
But make sure never to bite off more than you chew. If you only need a 20,000 AUD loan, do not get a loan for 30,000 AUD even if you are eligible.
Also, contact several banks and lenders to get loan estimates and determine which deal resonates with your financial situation the most.
Stay tuned for more updates.
