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What Do I Need To Do To Get A Car Loan?

With the help of an experienced, qualified finance broker, getting a car loan does not need to be too difficult, as your finance broker can advise exactly what is required and guide you through the processes and maze of paperwork. 

After your initial enquiry, a conversation over the telephone with your finance broker would give some indication as to how you could be assisted with your vehicle purchase. Your finance broker would ask you some brief qualifying questions about your own circumstances, the vehicle and loan term you wish. As there are some age and other restrictions on the type of vehicle that could be used as security, this would be discussed in the telephone conversation alongside your employment status to ensure it is worthwhile to take a full application.

When your finance broker either takes your application over the phone, or receives this from you, via online or manually, your finance broker will “preliminary assess” your application to establish that they can recommend a loan product that is not unsuitable to your objectives and requirements. They will also make sure that they will not put you into any loan product that could put you in any financial hardship, now or in the future.

Your broker may request some documentation to be able to verify the information provided and may include documents such as pay slips, identification or bank statements, etc. This will enable your broker to be certain that they are able to recommend the right loan product.

Your broker will then go through their panel of lender’s requirements and guidelines to shortlist which lenders they have available which would approve your loan based on your application, then recommend from that shortlist the most suited lender matched to your objectives and requirements. 

Your broker will then offer you a recommendation, which you can review and if you are satisfied you can accept the recommendation, then your broker can proceed to obtain finance approval from the lender.

Once you have finance approval in place, your broker would request some information from the seller. This will enable your broker to draw loan contracts and send them out to you for review and to sign. You may require some additional documentation for loan settlement, which may include proof of comprehensive insurance and certified ID if your broker did not meet you face-to-face. There also may be additional documentation required as an approval condition, which your broker would go through this with you.

When you have returned correctly executed loan contracts and all supporting documentation as per approval conditions, your broker will present the executed contracts for settlement to the lender. Once the lender has settled the contracts, they will forward the agreed funds to the seller’s bank account directly and you will then be able to pick up your new car once the seller has available cleared funds.

In regards to a time frame from start to finish, it can happen as fast as within 24 hours on extreme cases, but without rushing can easily be done within 3 days from loan approval to the time the seller gets paid, dependent on the punctuality of all parties involved.
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Private Car Sale Loan – What Do I Need To Know?

Not all lenders will allow you to purchase your vehicle from a private seller when you have a secured car loan approved. The lenders that will accept purchases from private sellers require some additional information to prevent fraudulent activity as opposed to a purchase through a licenced motor dealer, where the lender has some safeguard as to the seller they are dealing with.

The reasons for this are that licenced motor dealers have conditions they have to adhere to in order to have a licence, which allows them to stay in business, and due to them being a business, if something is not right, the lender will have an easier time contacting a dealer than a private seller.

Unlike unsecured personal loans, where the lender advances you the funds to use them the way you wish, with a secured car loan, the lender has to ensure they are getting the funds to the rightful owner of the vehicle you are purchasing, and they want to make sure that the vehicle is the correct vehicle as per the registration certificate, as they are using that vehicle as the security over the loan.

Due to this, the lenders that allow private sales to be used as security under a car loan require additional information from the seller of the vehicle. They will request the following items:-

• Seller’s Driver’s Licence
• Registration Certificate 
• Proof of Seller’s Bank Account Details
• Independent Vehicle Inspection
• Some lenders require photos of the car
• A signed Private Sale Invoice as an agreed price between seller and buyer
• A Payout letter from the financier if there is current finance owing on the vehicle

The Driver’s Licence, Registration Certificate and Bank Account details will all have to be in the same name. This gives comfort to the lender that the seller is the rightful owner and that the funds for the car get forwarded to the correct person’s account. The signature on the Driver’s Licence and Private Sale Invoice should also match.

The Independent Inspection can be done by a number of different companies, such as Marshalls Batteries, RACV, RACQ, RAA, or the equivalent in your state, or if your broker is local to the car being purchased, they may have the ability to do so. Some lenders will allow Roadworthy Certificates if your State requires them for registration.

A comprehensive report is also done, usually by your broker or lender, and this will show if the car has been reported as a stolen vehicle, or has been classed as a write-off. This report will also display all the correct identifiers, such as Vin/Chassis Number, Engine Number and Registration State and Plate details and will also show if there are any encumbrances (outstanding money owing) to any other financiers.

These conditions not only protect the lender, but also protect you as a buyer. It does sound like a lot more work, but it is not really that much more difficult, especially as your broker should take care of this directly with the seller for you. It does allow you more flexibility and choice though when you are purchasing your new car and can often save you substantially than buying through a dealership.

The approval process is generally the same, but if the seller is known to the lender for any negative reason, they may not allow you to purchase the vehicle from that particular seller, but this is a very rare case that this happens.
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What Determines What Interest Rate I Will Get With My Car Loan?

Each and every lender will use a different formula for how they determine what interest rate you can obtain on your proposed car purchase, so it is always advisable to speak to a finance broker with a range of lenders and products to ensure you obtain the best overall deal for your own circumstances.

One of the most important things which you need to protect is your credit file. Each and every time you apply for credit, whether it is a loan, a utility or telephone account, etc. an enquiry is usually made on your credit file so that the creditor can view this and is a key point in how much risk the lender may deem you as.

Your credit file will be reviewed in regards to how many enquiries you have made in a certain amount of time, and if there is any adverse information on your file, such as paid or unpaid defaults, court judgments or bankruptcies. Your credit file has a huge impact on which lenders will approve your loan and how some lenders that credit score assess your own personal credit worthiness.

There are also a lot of other considerations taken into account with an applicant in regards to how a lender may determine the interest rate you will receive. They will look at your application and review how long you have been in your employment and residence, or how many different employers and residences you have had in a certain period of time. 

They will also look at your net worth, which is your overall assets versus your liabilities, and property with equity is a big scorer when determining your interest rate. A good savings history with some cash in the bank also will help assist obtaining a better interest rate. What also will be reviewed is your overall income versus expenses and how much surplus would be left after your proposed car loan repayment. 

Past checkable car loans as a reference will also assist in achieving a better interest rate, as an experienced borrower with good past history will be deemed less risky than a first time borrower, or a borrower that has had an average previous loan history. This is why it is always crucial to conduct your loans perfectly, as the more history you have, the better chance of obtaining yourself a better deal the next time you borrow, essentially saving you money.

Of course the vehicle you are proposing to purchase will have a big effect on what interest rate you will achieve. A brand new car purchased through a dealership is a less risky lend, than for example a 9 year old car being purchased through a private seller. The amount you are borrowing against the vehicle will also come into account, as if you have a deposit or a trade in which reduces the borrow, this reduces the risk for the lender, than if you were to borrow the whole amount, or borrow other costs such as on road costs or finance shortfall from the previous finance of your trade in.

What it basically comes down to is how much risk the lender perceives to be taking on, with both the vehicle and the applicant. Not all lenders work on a “rate for risk” environment, but their lending criteria will determine as to whether you would be approved for what interest rates they have available. 

This is why a good finance broker can guide you through this maze to ensure they can achieve what is best for your own individual proposal. They will understand each and every lender’s policies and guidelines and apply for the best loan for you first time, without making too many enquiries on your credit file, which could make your interest rate higher.
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beep - Car Loans | New Cars | As Featured On 7's Today Tonight
beep provides car loans from a range of Australian financiers. We have access to a huge range of products and are able to help you finance pretty much anything!

We also act as a buyers advocacy for those customers who are purchasing a new car as we are able to attract large discounts on all new cars throughout Australia due to our volume buying power.