By financen | April 3, 2019 - 6:45 pm - Posted in Credit Score, Loan

Looking to finance your new home? Or buy that fancy new car you’ve been dreaming of? As tempting as it is to dive right in and sign your life away, best to take a minute and consider your options before making the commitment. The following tips will go a long way towards setting you up to make the right decisions on your next big purchase.

Check your credit score

Your credit score will give credit providers an indication as to the strength of your profile when considering an application for finance. Your score is calculated based on your overall credit behaviour within a set period of time. Factors such as payment history, credit limits and the amount of credit enquiries on your file will be used to calculate your score. It’s best to obtain this information before applying for finance as it may determine which lenders you approach and the type of finance arrangement you apply for. For a comprehensive guide on all things to do with your your Credit Score, see My Credit Score

Prepare a budget

There’s no point in applying for a loan if you can’t afford to make the repayments. Prepare a spreadsheet and list all of your expenses – rent, bills, food, lifestyle, savings contributions, think of everything! It’s best to overestimate a little with your expenses. Then compare against your income and see whether you have a sufficient surplus of funds to make the loan repayments. Conducting this exercise can also help bring your finances under control.

Compile the relevant paperwork

For most loan applications you will need to supply supporting documentation to confirm income, identity and other financial commitments. In order to be prepared, it’s best to compile the following documents in advance:

  • Copy of driver’s licence or Passport
  • Four recent payslips or tax returns (if self-employed)
  • 6 months of bank statements
  • Existing loan statements confirming good payment history

Do your research

Buying a house or a new car can be an emotional experience. It’s easy to get swept up in the excitement and lose focus on the detail. It’s really important to step back and assess your options. In the digital age we literally have hundreds of lending options at our fingertips. Shop around and read online reviews to get a snapshot of the user experiences of other customers. If you find the exercise daunting, using a broker can be helpful. Brokers know the industry and can determine which lenders best suit your credit profile, ultimately finding you the best deal.

Seek Financial Advice

If you’re unsure of a finance offering or need assistance conducting an assessment of your own finances, it’s always best to seek independent advice and speak to a professional. Your accountant or financial planner will be more than capable of assessing your budget and providing recommendations moving forward. They could also help decipher loan contracts and make sure you are getting the right deal.

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This entry was posted on Wednesday, April 3rd, 2019 at 6:45 pm and is filed under Credit Score, Loan. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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