How To Apply For A Car Loan and Get The Most Bang For Your Buck!

A detailed guide on how to apply for a car loan, get it approved and save money.

Need a new car but not sure how to apply for a car loan?  Don’t worry – you are not alone.  Everyone has different individual circumstances and not all car loans are created equal.  The best car loan for you takes into consideration your credit history, salary and/or work situation, previous and current loans, asset type and cost as well as any deposit amount.  This article explains the process of how to apply for a car loan to ensure you not only get a new car, but also bang for your buck!

The process to apply for a car loan

1. Know what you want in your car loan

There are a lot of questions that you will need to think about before jumping straight in.

  • What type of car are you looking for? 
  • How old do want the car to be? 
    • The newer the car the lower the interest rate and often the more lenders to choose from.
  • Is it a private or dealer sale?
    • Private sales may require a vehicle inspection, however, you can usually get a better a deal when buying privately.
  • Do you want to put a deposit down?
    • You don’t need to.
  • How long do you want your loan for?
    • Loan terms range from 1 to 7 years with 5 years being the average.
  • How much do you want to borrow?
    • Make sure your loan repayments fit into your budget
  • Should you include a balloon payment?
    • It can reduce your loan repayments.

The AAA Finance car loan calculator can help answer some of these questions.  Simply input your loan amount, the term of the loan, an approximate interest rate and the calculator will determine your repayment.  You can choose fortnightly or monthly repayments.  We recommend your repayments be at the same frequency as your pay to help manage your day to day finances.  We also suggest having direct debit repayments come out a day or so after pay day.  This allows you to set and forget your car loan repayments and get on with life.


What is a balloon payment?

A balloon payment is a lump sum payment paid at the end of the term of the loan.  During the term of the loan your repayments will not pay off all the principle of the loan.  There will a lump sum payment at the end.  By including a balloon payment, you can reduce your car loan repayments throughout the term of the loan.  At the end of the term you can either pay off the full balloon amount, usually using the proceeds of the sale of the car.  Alternatively, the balloon amount can be refinanced if you choose to keep the car.  Use our car loan calculator with balloon payment option to see how it affects your repayments.


2. Choose a lender

How do you choose a lender?  There are 4 options to choose from.

  1. Your bank. 
  2. Apply directly to a lender.
  3. Car dealership finance.
  4. Get a finance broker to do all the work AND get the best deal. 

So, what are the pros and cons of each?

A. Your bank

This is a very comfortable choice for some people as they know their bank and have dealt with them for some time.  However, banks have limited and inflexible loan options - one lender, one loan choice.  You will end up paying more than you need to.  There is a reason why banks post multimillion dollar profits each year.

B. Apply directly to a lender

This option allows you to shop around and compare interest rates and loan terms online and it may get you a more competitive interest rate.  However not all lenders are available for individuals or consumers to contact directly.  Also, an advertised rate is usually not the rate that is ultimately offered to you.  And of course, there is the fine print and finance jargon to contend with.

C. Car dealership finance

Car dealers usually have only one or two lenders that they have access to.  This limits your options and again you will definitely be being paying too much for your loan.  Just say NO to car dealership finance and see what happens.  You will experience the worst of a hard sell.  You must ask yourself - why the hard sell?

D. Get a finance broker to do the work 

Finance brokers deal with lots of lenders.  At AAA Finance we have access to over 40 different lenders.  Our job is to match you with the right lender to get you the best deal.  We know how to structure a loan application to ensure a speedy approval at the best interest rate.  Brokers will get you a lower interest rate than if you applied directly to the lender.  As an individual you are only 1 loan, as a brokerage we send 1000’s of loans to our lenders so we automatically get lower interest rates for our clients.

Yes, there is a cost to have an expert organise your loan.  This cost is more than offset by the savings in both time and money.  You have a plumber to fix leaking pipes, a mechanic to fix your car and therefore you should use a finance broker to organise your loan.

3. Complete a car loan application form

Each lender has a different application process and different forms to complete.  At AAA we have our customers fill out a detailed loan application form that gives us all the information we need to make an informed choice of lenders on your behalf.  We then structure your application to suit the lender to ensure the best possible outcome.

Our loan application takes only 5 minutes to complete over the phone with one of our finance experts.  Alternatively, we can email you the application form for you to fill out in the comfort of your own home.

Can AAA Finance get me the best interest rate available?

Absolutely!  We have over 40 lenders from which to select from.  We present your loan application to those lenders that are best suited to your individual circumstances.  This ensures that you get the most competitive interest rate available.

Can I apply for a car loan if I am self-employed?

Yes.  Those who are self-employed or a small business owner with an ABN have a number of car loan options.  At AAA Finance we are very experienced in organising no doc and low doc car loans as well as business chattel mortgages.

4. Submit your loan documentation

What documents do I need to get a car loan?

The documentation required for a car loan differs for each individual applicant and each lender.  Therefore, once we receive your loan application, we can determine which lender/s are going to best suit your circumstances.  This will determine the exact documentation required.  Basically, you will need to prove who you are and where you live.  These documents can include your driver’s license, passport or birth certificate and rates notice or rental agreement.  You will also need to confirm your employment and salary via pay slips and/or bank statements.  These documents can simply be emailed to us.

5.  Your car loan is approved – what next?

Once your loan is approved, we will be in touch to discuss the loan details.  Interest rate, repayments, term, deposit, and any loan requirements the lender may have, such as, comprehensive car insurance and loan repayments via direct debit.  Once you have agreed to the loan terms, we produce and email your loan documents for signing.

How long will it take to get my car loan approved?

At AAA Finance we pride ourselves on providing our clients with quick and easy car loan approvals, with most car loans approved within 24 hours.

Can I get a pre-approved car loan?

Yes, you can get your car loan pre-approved. A pre-approval is a great way to determine your budget and future repayments. You can even have a pre-approval before you have decided on a vehicle.  A pre-approval can also help you negotiate a better deal!

6. Time to drive away

After we receive your signed car loan documents via email, we then arrange monies to be transferred to the seller.   This process is called settlement and funds are usually transferred overnight.  The next step is driving away in your new car!

Still have questions on how to apply for a car loan?

Each and every person’s situation is different.  If you still have questions or simply want to speak with a finance expert - please get in touch. One of our friendly and experienced AAA Finance brokers will be more than happy to discuss your car loan options with you.

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