4 Factors That Increase Your Chances of Being Approved

If you’re looking for a great rate on finance with affordable repayments and flexible options, here are some helpful tips to help increase your chances of getting the best possible finance approval.

1. Employment and Income

One of the most important factors when it comes to getting the best possible finance approval is stability. Employment and income stability can help show a financier that you are capable of repaying the loan, thereby increasing your likelihood of being approved for finance. Consistency in employment and maintaining employment with minimal gaps in between can help to show a financier that you are not a high risk for them to take on and are not a major risk of finding yourself without a job.

Capacity is also very important for financiers. They want to see that you still have the capacity to repay the loan consistently after factoring in all of your current liabilities and debts, such as other loans, rent/mortgage repayments, credit cards, living expenses as well as any other recurring expenses.

2. Residential History

A financier will also investigate and assess your residential history. This is also one of the most critical factors in determining the overall strength of your application. A financier always likes to see stability in living arrangements, so they have peace of mind knowing that your expenses such as rent aren’t likely to change in the near future and leave you in a position where you’re unable to repay your loan.

3. Vehicle Type and Amount

Some vehicles are just easier to get finance for than others. This is generally because most financiers use what is called a loan to value ratio (LVR) to determine how much money they will lend for a specific vehicle and vehicle type. For example, often times classic cars that have started appreciating in value due to being a collectors item may not have the same perceived value to a financier. In this instance, a personal loan can sometimes be the most suitable finance option.

Additionally, if your application isn’t very strong in other areas or you have previous bad credit or defaults, a financier may only consider a lower priced vehicle as it mitigates their risk slightly.

4. Expenses and Spending Habits

As mentioned above, capacity is very important to financiers. In fact, it is the only ‘must’ in a finance application. Financiers may all have slightly different lending criteria and appetites for risk, however ASIC have imposed legal requirements for capacity within Australia for lending purposes. This is the one thing a financier can’t deviate from. You either have the capacity to repay the loan after considering all your other expenses and liabilities, or else you don’t.

In some cases, you may need to provide bank statements with your application to prove your capacity to repay the loan. A financier will look at your cost of living, expenses and spending habits to decide if you truly have the ability to repay the loan. Red flags for a financier can include overdraws on your account, dishonoured payments and direct debits as well as undisclosed debts that you haven’t told them about in your application.

Showing that you are responsible with your money can go a long way to securing a low-rate finance approval. If you’re looking at getting vehicle finance and have a budget in mind, it is a good idea to start putting those repayments into a savings account even before you apply for your loan so you can prove that you have the ability to save and are in fact able to handle the additional repayments on top of your current expenses.

Need More Information?

For more information on vehicle finance or if you have a specific question about finance, contact our friendly Finance Consultants today on 1800 538 287 for an obligation-free discussion.