Getting a car loan can be tough in the current economic climate, but there are some things that many people do when applying for a car loan that reduces their chances of getting approved. This article will discuss 5 mistakes people make when trying to get approved for a car loan and what you can do to avoid them.
Not having a good credit score
A good credit score can be pretty important if you want to get approved for a car loan. The actual number that constitutes a good credit score varies based on the lender, but the higher the better (and the lower interest rates you’ll have access to).
You can check your credit score for free with online sites which will not only give you a good idea of what a good credit score is, but also how you can improve upon it. Having a poor credit score can drastically reduce your chances of getting approved for a car loan.
Applying with multiple lenders at the same time
Some people think that by applying to multiple companies they will have more chance of getting approved, but this is not the case. Applying with several loans can actually have a negative impact on your credit score and will often result in you not getting approved for any.
Always apply to only one loan at a time and then wait until that loan has been either declined or approved before applying to another lender. This reduces the number of enquiries on your credit report, which is good for your credit score (and it also means you can focus on one company at a time).
Not shopping around for the best deal
If you want to get approved for a car loan, then it is a good idea to shop around and find out what your options are. Some lenders offer much lower interest rates than others, so by shopping around you can sometimes find a great deal.
Many people fail to do this and end up applying with their local car dealer, which can mean they are paying much more for their car loan than is necessary. For example, if you’re looking for the best Mitsubishi finance rate check out Driva to compare multiple options online. In addition to chatting with your local Mitsubishi dealer, it’s worth checking out second hand options as well as other car dealerships to get the best deal on the car.
Failing to provide as much information as you can
When applying for a car loan, it is always best to provide as much information as you can. Failing to do so might result in your application being declined or could mean that the lender won’t offer you the lowest interest rates possible.
You should aim to provide:
- Personal details such as your name, age and where you currently live.
- Financial information such as your current income and any debts.
- Information about the vehicle being purchased such as its make, model and mileage along with a copy of the invoice/receipt if available.
The more information you provide, then the easier it will be for the lender to approve your application.
Not reading the small print
One final mistake many people make when applying for a car loan is not properly understanding the small print. There are several important conditions which will often be included in any loan agreement such as repaying all interest and any fees if you repay the debt early, along with paying off the debt on time each month.
It is important to make sure you fully understand the conditions of your loan before signing for it, as if you don’t stick to these conditions then you might end up being charged with extra fees or even your loan being called in early resulting in all interest on the money already lent having to be paid back immediately.