What is conditional approval?
Conditional approval is given when you're initially approved for a pre-approved car loan. Based on the details you provided during the pre-approval process, the lender says you can borrow up to a certain amount. Unconditional approval is when the lender approves you for the loan to buy a specific vehicle. Lenders have restrictions with the types of vehicles they will finance, so need to be sure that the car fits within these restrictions before giving the final green light.
Pre-approved car loans you could apply for
- Beyond Bank Low Rate Car Loan "Special Offer": 6.76% p.a. comparison rate. A limited time offer - get a car loan with a 6.39% p.a. variable rate.
- RACQ Bank Car Loan Special: 8.27% p.a. comparison rate. A car loan suitable for new vehicle purchases with no monthly administration fees.
- IMB New Car Loan: 6.34% p.a. comparison rate. A new car loan with no monthly service fees and no early repayment.
- bcu Car Loan: 6.77% p.a. comparison rate. A flexible car loan with redraw facility and fee-free early payout.
The ins and outs of pre-approved car finance
When you apply for pre-approval, your financial circumstances will be evaluated and the lender will determine how much you can afford to borrow. During the process you'll need to provide the same details as you would provide a normal loan. It's important to note that pre-approvals are only valid for a short space of time.
A huge benefit to a pre-approved car loan is it gives you an advantage when you need to negotiate the price of a vehicle. You know how much you can spend, so you can make an offer there and then. However, this means you also means you know your budget limitations, so if the salesperson can't meet your negotiations you'll have to walk away. You also have committed to the loan in a way, as it's not listed on your credit file, so if you want to take advantage of a competitive dealer finance offering you may not be able to.
While pre-approved car loans are not as widely available as other standard car loans, there are still a small number of lenders you can consider.
How to get pre-approved for a car loan
- Get a copy of your credit score
- Ensure you have all your documents and pay slips
- Compare a range of loans that you can apply for
- Contact your bank or financial provider you wish to apply with
- Shop around for your next car
What types of car sales can I use with a pre-approved car loan?
Pre-approved car loans can be used to purchase cars bought through a dealership, at private sales and at auction. These are all the types of situations you can expect to use a regular car loan for. So in that regard, pre-approved car loans serve the same purposes as regular car loans.
Have you weighed up the benefits and drawbacks of pre-approval?
- Buyer confidence. Pre-approved car loans give buyers confidence that they have a good chance of getting finance for their chosen car.
- Understanding of your financial situation. The lender has already assessed your financials and has confirmed that you can afford the loan and therefore the car purchase, before you go out and buy it.
- Bargaining power. Pre-approval can give you the upper-hand when negotiating your price at the car dealership.
- Shorter periods of time. Conditional approval on some loans is only available for short periods of time.
- Limited choice. There aren't as wid ae a variety of lenders who offer pre-approval as who offer car loans, so you have limited choice.
Pre-approved car loan features
Like the best features on the market? You can get some of the best features and interest rates on the market with pre-approved car loans.
- Secure against your vehicle. Interest rates are lower on car loans that are secured, saving you money and keeping your repayments manageable.
- Choice of fixed or variable interest rates. Keep your repayments the same each months or take advantage of the flexibility of a variable rate loan.
- Up to seven-year loan terms. Longer loan terms can help make the regular payments more affordable. Fixed rate loans may only come with maximum loan terms of up to five years.
- Weekly, fortnightly and monthly payment options. This differs among lenders, but you'll usually have the choice of weekly, fortnightly or monthly repayments.
- Extra repayments & redraw. Variable pre-approved car loans can allow borrowers to make fee-free additional repayments and redraw to suit ever changing finance needs.
Things to consider before applying for pre-approval
There's probably a few things you should do before buying a car, and these will vary from person to person. Here's a few things to keep in mind.
- Research your car. The make. The model. The year. The colour. You'll also need to take into consideration the fuel consumption.
- Check your financial standing. Car loans are an extensive financial commitment. Ensure that you have the required funds and/or pre-approval.
- Test-drive your car. Taking the car for a test-drive will let you find out if there is any issues with it.
- Shop around. Your next car may be at several dealers — it could be a good idea to not to buy the first car you see.
How do I apply for a pre-approved car loan?
Apply online to see if you qualify for a pre-approved car loan. You can compare your options using the table on this page and click 'apply' once you've found the right loan for you. Keep information handy such as your income, employment details, other income, assets, liabilities and 100 points of ID. Applying has never been easier, with some lenders granting pre-approval within 60 seconds.
Frequently asked questions about pre-approved car loans?
You asked and we listened. Here are the top questions you've had about getting pre-approval on your next car loan
Should I get a new or used car?
Are there any extra costs I should be worried about?
Who can actually get pre-approval?
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