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Car loan pre-approval can give you a serious leg-up in the buying process, and can also lead to some serious savings.
Car loan pre-approval can give you a better idea of what cars you can afford, so finding a car loan that offers online pre-approval can make the process of buying a car much easier.
By getting car loan pre-approval through an online lender, you can save yourself the hassle of having to speak to a lending specialist over the phone. You can simply fill out your details online and receiving an answer in a matter of hours, if not minutes.
You don’t need to get pre-approved for a car loan, but it can be very beneficial when buying a car. Pre-approval can simplify the car buying process if you aren’t buying the car outright, as it provides two purposes:
If a lender pre-approves you for a car loan of $30,000, you then know you can have an upper limit of $30,000 when searching for your new set of wheels. Of course, this might limit you from getting your dream car, but it can stop you from wasting your time applying for a loan only to be rejected at the eleventh hour.
Car loan pre-approval can simply give you a clearer picture as to what you can and can't afford to borrow.
Getting approved for a car loan online sounds tricky, but it can actually be a pretty easy and streamlined process, as most lenders have some pretty sophisticated pre-approval systems on their websites nowadays. It does take a bit of preparation on your behalf though, and to increase your chances of receiving pre-approval quickly you should come prepared.
Make sure you do the following before applying for online car loan pre-approval:
Getting car loan pre-approval online now doesn’t take much time at all. Although it can differ based on the lender, a fast turnaround time for pre-approval is one that’s completed on the same day, sometimes giving you an answer within minutes of completing the application. A more standard time for car loan pre-approval is to get final approval within one or two days, but if you find a lender with a more up-to-date online approval system, it’ll often be much less than this.
The usual car loan application time from start to finish can often take several days, so by getting pre-approved car finance, you can shave a significant amount of time off the overall process.
In the majority of cases, pre-approvals don’t last forever. Although this can differ between lenders, they’re usually valid for a limited period of time. The industry-standard length for a car loan pre-approval is between one and three months. Three is more common, but there are plenty of lenders out there who will only offer pre-approval for one-month.
Once the pre-approval expires, you’ll have to speak to the lender about being re-approved again, which will often give you another 30 days to complete your purchase. But if you’re serious about buying a car, one to three months should be plenty of time to find the right model.
Once you’ve been pre-approved, you now need to go out and actually purchase the car. You can buy a car either through a dealership, auction or a private seller - the lender will just need to know this information because once the purchase of the car has been approved, your lender will then contact the seller to get an invoice for the vehicle.
They will then do a final assessment of the purchase, and give you final approval, at which point you will need to sign and return a copy of the loan contract. Once this is done, the lender will pay the funds to the dealership or seller directly. But be aware: this only works if the purchase is within the pre-approved limit set by the lender. If you buy a car that’s outside the pre-approved limit, you may need to complete an entirely new application.
A pre-approval isn’t a guarantee of being given a loan by a lender, as there are a number of reasons why they might reject you after the fact. Some of the more common reasons include:
The important thing to know is you shouldn’t immediately re-apply for a loan without first speaking to the lender to ask why you were rejected. This is because a rejected loan application can negatively impact your credit history, so you don’t want to apply again only to be rejected again. Make sure you contact the lender to find out why your loan was rejected. If it’s for a minor reason like a change of loan terms, then you might be able to reapply. But if it’s for a different reason, like a change in your income or higher interest rates, then you might need to consider applying for a loan with a different lender.
The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:
Some providers' products may not be available in all states.
In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.
*The Comparison rate is based on a $30,000 loan over 5 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.