| When applying for a car
loan, or any other type of finance, it's essential
to ensure you have all the relevant information on
hand. By providing the necessary information when
requested, your car loan application will be processed
promptly and smoothly, avoiding unnecessary delays
and problems. For joint borrowers this information
will generally be required for both (or all) signatories
at the time of application.
This does vary depending on the specific lender and
the chosen loan product. However, in general the required
information includes:
• Proof of income and employment details
• Proof of identity
• Assets
• Debts
• Details of vehicle
Once supplied with the relevant information, the
lender assesses the decision regarding the amount
of money you will be able to borrow. The decision
is determined by your ability to make additional repayments
for the new loan by taking into account both your
existing debt and your total income.
Lenders also consider your 'debt potential' which
makes allowances for any available credit you may
have which is currently unutilized. An example of
this is your credit card credit limit. Although you
may only have a credit card debt of $2000, if your
credit limit is $10,000 your lender will have to take
this extra 'debt potential' of $8000 into account.
Some lenders may require applicants to take out loan
insurance. This covers the applicant (and, consequently,
the lender) for times of financial hardship which
affect your ability to repay the loan. In general
this includes unemployment, times of sickness or injury
requiring time off work or death. Premiums are added
to the total amount of the loan.
Casual workers, the self employed and people with
an imperfect credit history may be required to take
out this insurance. The lender informs you if this
is necessary.
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