Top 5 tips to get approved for a used car loan

used car loan approv

So, you have got your eyes set on a sweet pre-loved car, but your bank is giving you a side-eye when you reach out for some financial help. That’s a pretty sad situation and we understand your plight fully. And here we are to help!

KEY TAKEAWAYS

  • What happens if a borrower defaults on his used car loan?

    Defaulting on a used car loan has serious consequences, for instance, damage to the borrower’s credit score, repossession of the car by the lender, and legal action against the borrower to recover outstanding debt.
  • Are there any fees associated with a used car loan?

    Yes, a borrower needs to pay several fees to acquire a used car loan. The list includes application fees, processing fees, and possibly insurance fees.
  • Can someone with bad credit get a used car loan?

    While it may be challenging to get approved for a used car loan with bad credit, it's not impossible. Such individuals might get a loan at a higher interest rate or may be required to pay a large sum as a downpayment.
  • How long does it take to get a used car loan approved?

    The time it takes to get approved for a used car loan can vary depending on factors such as the lender's processing times, the completeness of your application, and any additional documentation required.
  • How much amount can a borrower get for a used car loan?

    The amount one can borrow for a used car loan depends on various factors including your income, creditworthiness, the value of the car, and the lender's policies.
  • Getting your used car loan approved in the Philippines doesn't have to be a task. With just a few pointers in mind, you’ll be able to navigate through the used car financial lanes quite-easily. Now without wasting any time, let’s rev up those engines and get into the details.

    Tips to get your used car loan approved -

    #1 Have a good look in the financial mirror

    The first and foremost step towards getting your used car loan approved is making sure your (borrower’s) financial health is good. How? You ask. Well, the credit score acts as the perfect mirror that portrays an individual’s financial health. Lenders look at the borrowers' credit scores to determine their creditworthiness.

    Remember a good credit score not only fetches you a loan on your used car but may even help you secure a better interest rate. In case, you have a bad credit score then before applying for a loan make sure to improve it by paying bills on time, avoiding new debt, and reducing credit card balances.

    Another key aspect of judging one’s financial health is the credit report. Before applying for a used car loan in the Philippines, do remember to obtain a copy of your credit report. Several institutions like Credit Information Corporation and TransUnion Philippines provide detailed credit reports that provide valuable insights to the lender about the borrowers’ credit history.
    Therefore obtaining the credit report beforehand gives you a chance to thoroughly check for any errors or discrepancies that later can negatively influence your credit score.

    In case you find inadequacies in the report, get them corrected by the credit bureau at the earliest.

     used car loan approval

    #2 Fill out an honest application form

    Borrowers must always be honest about their financial situation in the loan application form. Lying or omitting information could result in the application being denied or the loan being revoked later on. Remember, lenders appreciate transparency, so lay it all out, and hide nothing.

    #3 Gather all the required documents beforehand

    Documentation is one of the biggest troublemakers in any legal process and a used car loan is no different. Lenders typically require several documents when applying for a car loan, including proof of identity (such as a government-issued ID), proof of income (such as pay stubs or tax returns), and proof of residence (such as utility bills or a lease agreement). A borrower must make sure to have all necessary documents ready before applying for a loan to streamline the process.

    #4 Shop around for lenders

    Remember borrowers, don’t settle for the first loan offer you receive. It is always good to look around for lending options and compare the loan terms before finalizing the lender. Try and settle for leaders who offer competitive interest rates, flexible repayment terms, and excellent customer service.

    #5 Opt for a reliable car

    When it comes to choosing a used car, reliability should be the key focus area. We’d say, skip the flashy sports cars and go for a tried-and-tested option from a reputed manufacturer. Our suggestion would be a car that has been around the block a few times and still has plenty of miles left. Why do we say so? Well, lenders may be more willing to approve a loan for a used car that is reliable and has a good resale value.

    So, get to work and find a used car with a history of reliability and safety to improve your chances of loan approval.

    With this, we come to the end of our five top tips to get your used car loan approved episode. However, here are a few additional tips from Carmudi to further make your loan application forward at the earliest.

    USED CAR LOAN APPROVAL

     

    Get a co-signer

    If you have a limited credit history or poor credit score, consider asking a family member or friend with good credit to co-sign the loan on your behalf. It’ll boost your chance of loan approval, as the co-signer essentially guarantees the loan; his shining credit history/score will help improve your chances of used car loan approval.

    Review loan terms carefully

    Before signing any loan documents, review the terms and conditions very carefully. Pay attention to the interest rate, loan term, monthly payment amount, and any fees or penalties associated with the loan. Make sure you fully understand what you're agreeing to before proceeding.

    Summing up

    Dear prospective used car buyer, by following these tips and managing your finances well, you can easily improve your chances of getting approved for a used car loan in the Philippines. Best of luck.

    Also Read: Beginner's guide to financing a used car in the Philippines

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