Before you apply for a car loan: a pre-application checklist

1. Work out a realistic budget

Start with what you can comfortably repay each month, not the most a lender might approve. Allow for the running costs that come with the car too:

• Fuel or charging
• Insurance, which lenders usually require to be comprehensive on a financed car
• Registration and servicing
• Tyres and repairs
• A buffer for rate changes on any other variable debts and unexpected bills

2. Check your credit report

You can get a free copy of your credit report from the credit reporting bodies. Check it for errors, such as debts you don't recognise or repayments recorded as late when they weren't, and ask for corrections before you apply. Knowing what's on your file means no surprises during assessment.

3. Gather your documents

Requirements vary between lenders, but it helps to have these ready:

• Photo identification, such as your driver licence
• Recent payslips or other proof of income
• Bank statements
• Details of your existing debts, including credit card limits
• A summary of your regular living expenses
• If you're self-employed, your business details and financial records, or ask about low doc options

4. Decide on your deposit or trade-in

A deposit or trade-in reduces how much you borrow, which lowers your repayments and the total interest. It can also strengthen your application. Get a realistic idea of what your current car is worth before you factor it in.

5. Think about the car you'll buy

The vehicle affects the loan. Lenders consider its age, type and value, and some have limits on older vehicles or particular sellers. Knowing roughly what you're looking for, and whether you're buying from a dealer or privately, helps match you to the right lender.

6. Know the questions to ask

• What is the comparison rate, and what will the loan cost in total?
• What fees apply, including if I pay the loan out early?
• Can I make extra repayments?
• Is there a balloon payment at the end?
• How long is a pre-approval valid, and what conditions apply?

7. Avoid multiple applications

Each formal credit application can be recorded on your credit file. Rather than applying with several lenders yourself, consider using a broker, who can compare options across a panel before an application is lodged.

General information only

This article is general information only. It does not take your personal circumstances into account and is not personal credit, legal, tax or financial advice. Lender requirements vary, and all finance is subject to lender assessment and approval.

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