Car loan is an important way for many car owners to realize their dream of buying a car. However, application for a car loan is not a simple matter, especially for first-time loan applicants, as the approval standards of banks or financial institutions are usually strict. So, how can we improve the approval rate of car loan?
Credit score is one of the most important factors in the loan approval process. Banks and financial institutions use applicants’ credit scores to assess their repayment ability. If the credit score is low, the loan application is likely to be rejected. Therefore, improving your credit score is the first step to increase your car loan approval rate.
Tips to improve your credit score
Pay on time: Keep a good repayment record, not only for credit card, but also for other loans (such as mortgages, personal loans, etc.).
Reduce credit card debt: If your credit card debt is high, to pay off part of it and keep the credit card usage limit at a low level.
Avoid frequent credit card or loan applications: Frequent credit card or loan applications in a short period of time will affect your credit score and make it difficult to a loan approved.
Check your credit report regularly: Make sure there are no errors or fraudulent activities, and correct inaccurate information in a timely manner.
The amount of down payment also plays an important role in the approval of auto loans. Generally, the higher the down payment ratio, the stronger the bank or financial institution believes your repayment ability is and the lower the loan risk is, thus increasing the probability of loan approval. Generally speaking, if the down payment ratio reaches than 20%, the approval rate of loan approval will increase significantly.
Lenders usually ask applicants to provide proof of income to assess their repayment ability. If you have a stable source of income, lenders will be inclined to approve your loan application. The stability and amount of income is one of the key factors in loan approval.