Used Car Loan: Top 5 tips to get approval

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!

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.

#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 lenders 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.

 

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