Buying a car is not something that comes very easy for everyone. After the house, it is the next expensive investment anyone can make.
More often than not, those who want to purchase their own vehicle explore their other options, especially when paying with cash seems a bit impossible, and one of these options is a car loan. If you want to avail of a loan to purchase your dream car and would like to know the things required by most lenders;
Here are the things that you need to secure when buying your own car
1. Proof of income
One of the most important things that lenders will look at is your proof of income because they need to make sure that you have a steady source of income that will help you pay your monthly dues. Bank statements are also generally being accepted but there are also times when lenders make phone calls to your employer so that they can verify. You can also cite some assets to serve as an added collateral and to further secure the loan. It will also be helpful if you have additional loans, mortgages, and credit cards under your name.
2. Proof of insurance
Before you are able to take out a loan for your new vehicle, you will have to have a proof of insurance. You can purchase your insurance when you are almost ready to buy your own car or you can buy it ahead of time.
3. Proof of identity
Just like any other applications, you need to be able to provide your proof of identity including IDs with your picture and signature. You may also be required to submit billing statements under your name and registered to your current address.
4. Credit rating
If you need to get your loan approved as soon as possible, it would be best if you have a good credit rating. If your credit standing is not currently good at the moment, you may want to wait a little longer and fix it first before applying for a loan. Clean up your credit and settle debts if you have existing ones. While it is true that you can still apply for a car loan even if you have a bad credit, the thing is that it will be a lot easier if you have maintained good credit standing.
5. Down payment
If this is your first time to purchase a car, you can expect that you will be required to pay for the down payment. There are many dealers which fool buyers with “no down payment” schemes and you have to be careful with them. So before you even decide to purchase a car, take your time to save as much as you can. If you can pay a reasonable amount for the down payment, chances are you can possibly obtain a lower interest rate. And this means that your monthly dues for your car loan will also be lower.
6. Signing for a surety
For first time buyers, obtaining credit from the bank may be necessary and it can be done by having any blood relative stand surety on the financial transaction. If your parents can do it for you, it will be much better. The person who signs the surety will be the one that will be held responsible for your debt in cases when you fail to make your payments.
After understanding the criteria for your car loan, it is still important that you shop around before you make your final decision. When you set your budget, always leave a buffer to give room for possible changes or increase in the interest rates. Also consider other costs aside from the insurance including fuel costs, security, maintenance, and repair. As much as possible, make sure that your credit standing is good so that you have a good chance of getting lower interest rates. This will help reduce your monthly payments and help you save a significant amount of money. When buying your car, it is important to note that they must come with a warranty, although there is nothing much you need to worry about it because most car dealers are careful when it comes to vehicle defects as they are also taking good care of their reputation and their relationship with the institutions they partner with.