The car-buying process is one of the most exciting journeys. One of the most critical stages in this process involves car finance approval. The question that comes to most of the people’s minds is how long it may take to get the car finance approved. This article will help you understand how the car finance approval process works and will give a clear idea of the length of time it usually takes.
Understanding Car Finance Approval
Car finance approval is basically an assurance from the lender to offer you a loan for purchasing a car. The loan is given, considering your ability to repay it within a certain period. There are several factors which lenders look for in a person before they approve his/her application for car finance. These basically include your credit score, income, employment record, and debt-to-income ratio.
Steps of the Car Finance Approval Process
How long does it take to get approved for car finance? Well, there are many stages to it, and each stage may take variable lengths of time. Let us break down the steps with their associated timelines.
Step 1: Preparing Your Application
Before making an application, you’ll need to have all the documents in order. Documents usually required are proof of income, employment, and identity. You may need to give details about your current debts and expenses. Gathering and preparing such documents may take a few hours or even a couple of days, depending on how organized you are.
Step 2: Submitting Your Application
Once you have all your documents ready, you can submit your application for car finance. You can do this online or in a bank/dealership in person. Just submitting an application takes only a few minutes. You may need to wait for some time to meet with the lender if you do it in person, though.
Step 3: Preliminary Review by the Lender
Upon submitting an application, it will undergo review by the lender. Typically, a preliminary review takes one to two business days. In that time, they will check your credit score, verify your income, and assess your employment history. Provided everything is okay, your application then moves onto the next stage.
Step 4: Detailed Assessment
At this stage of detailed assessment, the lender will take a closer look over your financial status. They may ask for more documents or clarifications regarding one or more points. It may range from some hours up to days but depending on how fast you will give the additional information and on the workload of the lender.
Step 5: Final Decision
Finally, after gathering all the necessary information, the lender processes your car finance application. This normally takes one to two working days. If your application is approved, the lender will provide you with an offer to peruse through their loan terms and conditions.
Step 6: Signing the Loan Agreement
Upon acceptance of the loan terms, there will be a need to sign a loan agreement. This may only take a few minutes or even mere hours, depending on how fast you can go through and understand the terms. Once you have signed the agreement, the lender will then process your loan and afterwards the funds will be ready for use.
Factors That Affect Approval Time
A variety of factors can influence how long it takes to get approved for car finance. Knowing what they are can help you in preparing and probably help speed up your process.
Your Credit Score
A high credit score may expedite the process. High credit scores indicate to the lender that you are responsible about your finances. If you have a poor credit rating, the lender may take more time to analyze an application and ascertain the risk involved.
Your Income and Employment History
Stable income and employment history speed up the process. The main factor that lenders look for in a borrower is stable employment and income. If you have recently changed jobs or your income comes in rather irregularly, then the lender may need more time to decide on your application.
Lender’s Workload
The lender’s workload at the time may also impact the period of approval. If the lender is bombarded with applications to be vetted, approval may take longer than usual. Application at the most awkward times, say at the end of the month or during a special promotion, results in delays in approval.
The Completeness of Your Application
The chances of speeding up the process are there if you can provide all documents and information at one go. In case the lender has to request further information or clarification, your approval gets delayed. So, double-checking and making sure you include everything is going to help in your application.
Type of Lender
The approval time varies depending on the kind of lender. Traditional banks will take a little more time in approving car finance compared to an online lender or credit union. Dealerships with in-house financing facilities will also have faster procedures.
Tips to Speed Up the Approval Process
There are several ways through which you can get your car finance approved quickly. Some of them are discussed as follows:
Checking Your Credit Score
Know your credit score before applying. Improve it if the score is bad. Repaying debts and paying on time helps to improve the credit score.
Keep Ready All Documents
Keep all the documents ready that you are going to need while applying. This shall include your proof of income, employment, your identity proof, and other documents as required by the lender.
Choose the Right Lender
Research various lenders and choose the one with the best approval time. Online lenders and credit unions have a faster approval time than regular banks.
Be Honest and Accurate
Give honest and accurate information in your application. It may cost your application if you give inaccurate information by delaying or even rejecting it.
Apply During Off-Peak Times
Avoid times when it’s busy. A lender may be less busy at the beginning of the month or at non-promotional times.
Conclusion
How long does it take to get car finance approval? Well, it may differ in different cases. If all goes well, then from start to finish, it’s about a week. However, several factors could make the process faster or slower. Knowing the process and being prepared will help you ensure it goes as smoothly and quickly as possible. Always remember to check on your credit score, get all documents in order, and pick the right lender for quicker approval. Happy car shopping!
