Why are certain documents required for a car loan application?
When you apply for finance, the paperwork can seem daunting. It might help if you understand why each document that your car loan broker requests is important, and how it will help your car loan get approved faster.
What loan application documents do I need?
The documents you need to provide fall into three key categories:
- Driver's licence
- Evidence of residential address and residential status
- Financial information
- Bank statements
- Assets and liabilities
- Evidence of Income
- Information about the car
- Registration number and VIN
- Purchase price
- Comprehensive car insurance policy
Why loan application documents are important
When you apply for a car loan, your car loan broker will want to know:
- WHO you are
- WHAT you need the finance for
- HOW you will repay the loan.
The loan application documents are needed to protect you from unethical practices by lenders, as well as to prevent fraud. This is part of the loan application requirements because it ensures that the holder of the credit license assessing your finance application meets their legal obligations when assessing your finance application.
Learn more about the laws that apply to Australian car loans.
Let's drill down into the exact documents you'll need to provide to meet the loan application requirements to the lender's satisfaction, and why each one is essential to get a fast approval on your car loan.
1. Identification - who are you?
All companies operating under an Australian Credit Licence are bound by anti-fraud legislation. This means that to provide you with financial assistance, we need to identify you as part of your loan application requirements.
This is usually by 100 points of ID, including a drivers licence. You also need to provide your residential information and citizenship status information.
2. Financial information - how will you repay the loan?
To be approved for a loan, a lender needs to verify that you can afford to make the repayments. To do this, they'll want to see:
- Evidence of employment income - this can be payslips if you are a PAYG employee, Tax Returns, or BAS statements if you are a business owner.
- Bank statements - these allow the lender to confirm your income and expenses.
Find out how you can securely provide your bank statement information to your Positive Lending Solutions car loan broker.
- Assets and liabilities - any other loans, mortgage accounts, credit cards, superannuation and investments that you have. Your mortgage and other bank accounts can be supplied through the secure bank statement portal.
- Your current living expenses, including bills, transport costs, rent or mortgage and so on.
This information allows the lender to make an assessment of your incoming and outgoing cashflow, and work out whether you can comfortably afford the loan you've requested, under responsible lending guidelines.
3. Your new car - what is the loan for?
If your loan is secured, you'll need to provide identification for the vehicle being purchased, so the lender can register their interest in the asset on the PPSR.
Note that to form security for a loan, a vehicle must be less than seven years old.
If you're purchasing the car, you'll need to supply the dealer invoice or contract of sale. For a private sale, your car loan broker can help by generating an invoice. This document needs to show:
- VIN or chassis number
- Engine number
- Year, make and model
- ABN and dealer contact information, or seller's name
- Registration information
- Evidence of comprehensive car insurance
Comprehensive car insurance is one of the loan application requirements to protect the asset taken as security for the loan. It means that if the asset is written off or stolen, you can claim the insurance to pay out the remaining loan balance.
The other vehicle information identifies the asset, allows checks to be done to ensure it is accurately represented, and allows a security to be registered by the lender.
How is my information protected?
Before we collect your personal information, you'll be asked to sign a Privacy Consent form that explains how we store and use this information. This way you can be confident that your information is kept in a secure way and only used for the purposes disclosed, in this case, to assess your car loan application.
Why does a broker need so much information?
All this information answers the three key questions the lender wants to know before they extend you credit - WHO you are, WHAT you need the funds for and HOW you will repay the loan.
It seems like a lot of information to provide, but remember that your car loan broker has your best interests as their number one priority, and they need this information to fully assess your loan application.
Starting a car loan application
If you're ready to start a loan application, you can get started by getting a quote to find out which loan option will best meet your needs.