The Standard

4 tips to ensure car finance success

Make the process of financing a car seamless with these four tips for finance success.

This is branded content for DRIVA

While the prospect of buying a new car is really exciting, the shopping and financing process can end up being pretty overwhelming. From trying to find your dream car at a price you can afford, to navigating the world of finance to ensure you're not getting ripped off, buying a car can start to feel like more trouble than it's worth.

However, car finance doesn't have to be such an ordeal! Armed with these four tips, you'll be informed, prepared and ready to approach the car buying and financing experience with confidence.

Know your credit score

The first step to improving your chances of car finance success is understanding your credit score. Your credit score is a number between either 0 and 1000 or between 0 and 1200, depending on the credit reporting body, and lenders will use this number to assess and price your loan. The higher your score, the better your chances are of getting approved (and the better your rate will be!).

Before you start shopping around for car finance, it's a good idea to check your credit report to ensure your score is healthy and review your credit history for any errors. Even if you don't have the best credit score, this doesn't automatically mean you're not eligible for a loan. Also, your credit score isn't fixed forever, and you can always work to improve it.

Know your budget

When you're comparing your car finance options, it's really important to understand exactly how much room you have in your budget for loan repayments.

A good rule of thumb is to keep your car repayments below 10-20% of your monthly take-home pay. Getting a car loan with manageable repayments will decrease the risk that you'll default on your loan, and if you choose to make extra repayments along the way you'll have the option to do that too.

Don't forget that the car ownership costs don't end at the monthly repayments; in addition to paying for the car itself, you'll need to factor a range of ongoing costs into your budget including petrol, insurance, registration and maintenance.

Get pre-approved

Getting pre-approved finance can give you the confidence to slog it out at the dealership as well as put you in a stronger negotiating position since you'll have a set budget in mind.

So, what exactly does pre-approval entail? It's essentially an in-principal agreement by your financier to lend you a certain amount of money to buy a vehicle. The agreement will be subject to an invoice from your car dealership as well as obtaining comprehensive car insurance.

The approval process can take anywhere from a few hours to a few days depending on your lender and your circumstances, and once you've been pre-approved you'll have 90 days to find your perfect vehicle and settle your loan.

Compare multiple lenders to get your best rate

It's always a good idea to compare rates from multiple lenders to ensure that you're getting the best rate on a loan that works for you. With a platform like Driva, you're able to compare loan options from more than 30 lenders and get personalised pre-approved rates in just one minute. This process also won't have any impact on your credit score.

Buying a car is a major financial decision, so it's crucial that you're equipped with all the important information before you take out a car loan. If you'd like to start your car finance journey by finding your perfect loan match in minutes, head to www.driva.com.au.

This is branded content for DRIVA