Whether you’re eyeing an upgrade for your family vehicle or gearing up to purchase your very first set of wheels, the idea of applying for a car loan can be both exciting and overwhelming. That’s where Rapid Loans comes in – we offer car loans on new and used vehicles up to $55,000, so we’ve got a finance solution to suit a range of budgets. The burning question on your mind now is likely about how much you can borrow.
The amount you can borrow for a car loan is influenced by various factors, including your current salary and the lender’s criteria, which is why we’ve put together this comprehensive guide on all things related to taking out a car loan.
Calculate how much you could borrow now
The first step in your car loan journey is determining your borrowing capacity by looking at your credit history, financial situation and the lender’s policies. Aside from the cost of the vehicle itself, calculating your borrowing power also involves assessing other expenses associated with car ownership, such as insurance, registration, fuel, roadside assistance and more.
Knowing this information will give you a clear understanding of your financial boundaries and allow you to understand the type of car loan you can afford. By choosing Rapid Loans you could access a secured vehicle loan ranging from $5,000 to $55,000 with flexible repayment terms spanning from 24 to 60 months.
What you’ll need to prepare for a car loan application?
Before diving headfirst into your car loan application with Rapid Loans, we recommend streamlining your process by preparing the following:
- Checking your credit history as it plays an important role in determining your borrowing power. This is also your chance to change any errors or question discrepancies in your credit report so you’ve got a favourable financial profile.
- Establishing a budget to assess your financial capabilities as well as determine the loan amount and repayment term that best aligns with your finances.
- Gather necessary documents like recent payslips to verify your income and a passport or driving license to prove your identity. Hey, you’ll thank us later when you don’t have to get up from the couch so many times!
What is creditworthiness? Is it tied to my credit score?
Your creditworthiness is closely tied to your credit score and significantly influences the loan amount and interest rate you qualify for. Basically, a higher credit score translates to better loan terms which could potentially save you a substantial amount in interest payments over the duration of the loan.
If you’re not sure what your credit score is, you can contact these credit reporting agencies for your free credit report:
- Experian
- Illion
- Equifax
If you have a less than desirable credit score, here are our tips for applying for a car loan with bad credit.
How does a lender figure out my borrowing power?
Lenders determine your borrowing power by conducting a credit check to help assess whether you’re eligible for a loan. They’ll also look at your income and expenses to see what’s left over to pay back a loan. Factors such as your income, employment status, savings, expenses and credit score collectively shape your decision-making process.
Before making a formal credit inquiry with a credit reporting agency, you may need to provide payslips, bills in your name and other financial statements to show you can afford to pay back a loan. This allows the lender to do their due diligence and ensure you have capacity to manage your financial obligations. It’s important to note that this process will be recorded on your credit file however is a responsible lending practice that helps make informed borrowing decisions.
Looking at repayments over interest rates
While low interest rates may seem enticing, it’s important to focus on monthly repayments to get a comprehensive understanding of how much the loan costs each month and how much you’ll be able to budget for. You’ll be able to factor this consistent repayment into your budget month by month alongside the other costs of running a vehicle such as rego, insurance, petrol and other on-road costs.
Rapid Loans can assist with car loans
At Rapid Loans, we understand the significance of simplifying the car loan process for our customers. Whether you’re eyeing a brand-new vehicle or a reliable second-hand car, our pre-approval process ensures you’ll have a seamless experience that’s tailored to your financial situation.
If you need a loan quickly, look no further than Rapid Loans. We pride ourselves on delivering fast and simple car loans, which means once approved, the funds could be disbursed the same day!