Comparing car loans: Should you be filling out multiple applications?
When applying for a car loan, it might seem like a good idea to fill out multiple applications to see what the best offer is for you.
The truth is that in by doing so you could be ruining your opportunity to be approved at all. Credit inquiries are tracked and multiple ones in a short period of time will not make a good impression on your credit history.
Generally, one credit application every 3 to 6 months is considered favourable by lenders. Applying more frequently than that can have a negative impact on your credit history.
Each time you submit an application to a lender, you are also giving them permission to run a credit check for your name. This report will show them the types of debts you have, what your repayment history looks like and if you have had any defaults or bankruptcies. Before you allow a lender to run this report, you should have already investigated and made the decision that this is the lender whom you want to finance your new car with.
What happens to my credit history if there are too many inquiries on it?
The number of institutions who have been given permission to run it on your behalf is tracked on your credit report. A lender seeing a multiple number of inquiries in a short amount of time will deem the borrower too risky and deny the application.
Before you give this information to the lender and risk another inquiry, know which loan you want to apply for, and if you meet the eligibility criteria. You don’t need to apply for the loan to find out the rates and fees that are associated with. You can easily find that information online and compare it between different lenders before you make a final choice. This will avoid the negative mark on your credit history from too many inquiries.
CUA Fixed Rate Car Loan
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- Interest Rate From: 6.79% p.a.
- Comparison Rate: 6.92% p.a.
- Interest Rate Type: Fixed
- Application Fee: $0
- Minimum Loan Term: 1 year
- Maximum Loan Term: 7 year
- Minimum Loan Amount: $15,000
- Maximum Loan Amount: $100,000
Comparing car loans before applying
Applying for a car loan can be one of life's big decisions. You'll be paying off a depreciating asset for a period of time, so it is always important to compare your options. Use the comparison table below to get an idea of the interest rates, fees and charges, and loan terms before applying.
Can I apply for a car loan if I have a bad credit history?
Even if you already have a poor credit rating, you can still apply for a car loan by first making comparisons between lenders. There are dozens of lenders in Australia who will work with an individual to ensure that they are approved for a car loan, despite marks on their credit report.
It is also recommended that you get in touch with the lender to discuss your options and eligibility.
Before you begin your search, build up a small savings to use as a down payment and examine your budget to decide how much of a monthly repayment you can afford. Then begin to research and compare the different lenders who specialise in high risk car loans before making your final decision.
Don’t make further negative marks on your credit report by applying to more than one. Most of these types of lenders will analyse your credit rating without it showing up on your report to ensure that you will qualify before they process your application.
What are my options if I have bad credit?
A bad report does not have to end your ability to acquire credit if you work at amending it. You can go through a specialist loan company that will offer you a consolidation loan for your debts, making them easier to manage. You can also purchase a new car using a car loan and make your repayments regularly. If you are able to show financial responsibility for at least 12 months, other lenders will lower their risk assessment of you.
Take caution when shopping for a car loan and use tools such as comparison charts and calculators before filling out any applications. This will direct you to the right loan for you without doing any further damage to your credit history.