How long does it take for car finance to be approved?

For some people, sorting the finance for their car purchase can be more stressful than choosing the vehicle itself. Will they be approved for the loan? How long will it take? Will everything fall into place in time? While some finance applications can be approved very quickly, others may take a little longer, depending on the lender and the borrower’s circumstances.

But if you know what to expect through the approval process, it may help you prepare your application more easily and potentially avoid some of the delays.

How long does car finance approval usually take in New Zealand?

How long it might take to get your car loan approved can vary a lot depending on the lender you apply to and what’s in your application. Some applicants hear back within the same day, while others might have to wait while further checks and assessments are carried out.

Usually, it’s the case that applications that provide complete information from the outset can be processed more quickly than those for which the lender has to go back and request more information.

As for when you’ll get the money, funds are usually transferred once all approval conditions are met, and the signed loan documents have been returned to the lender. Sometimes the funds go to the borrower, but often they’ll go directly to the seller of the car, if the car is being used as security for the loan.

What happens during the car finance approval process?

Application submission  

When you’re submitting your application, you’ll provide the lender with information about your personal circumstances, your employment and income and your financial life more generally. The lender may also request details about the vehicle if you’ve already chosen a car you want to buy. At this point, the lender conducts an initial review of your application.

Credit and affordability checks  

From there, the lender will look into whether the loan you want is actually affordable for you. The lender might look at your credit history as part of that process to determine how creditworthy you are and how likely you are to repay the loan. The lender will usually also consider your other debts and living expenses as part of this process.

Approval and settlement  

When the loan is approved, you’ll be sent loan documents to review and sign. You might have conditions to meet, such as providing details about the car you’ve settled on. When the lender is satisfied and you have returned the signed loan documents, the funds will be released.

What factors affect car finance approval times?

While lenders generally deal with applications as promptly as they can, there are a few things that can affect how long it might take to get an answer on your application.

Your credit history  

If you have a clean credit record and a positive repayment history, you may find lenders are more comfortable about your application. Any defaults or missed payments that show up on your credit history are likely to encourage the lender to delve a little deeper to get a clearer sense of your financial life.

Employment and income  

If you can show evidence of stable, reliable income, that will often be looked on favourably by lenders. People who are self-employed or have fluctuating income may need to provide more information and documentation.

Approval and settlement  

When the loan is approved, you’ll be sent loan documents to review and sign. You might have conditions to meet, such as providing details about the car you’ve settled on. When the lender is satisfied and you have returned the signed loan documents, the funds will be released.

Supporting documents  

You’ll need to provide things like your ID, proof of income and proof of address. If you don’t have these ready to go, it may slow down the process. If you can get this paperwork together before you start your application, it may reduce the likelihood of delays.

Vehicle information  

Your lender may want information about the vehicle you think you might purchase. Lenders may have different considerations for new compared to used vehicles. We can help you understand how this may apply in your situation.

What documents do you need for car finance?

The documents you’ll need for your car finance application are similar to those of any other loan you might apply for. You’ll need some photo identification, such as your driver’s licence or passport, proof of income, including payslips or bank statements, vehicle details where possible and proof of address if it’s requested by your lender. In some cases, lenders may ask for other documents for your application, particularly if you’re self-employed.

Can you get same-day car finance approval?

You may be able to get an answer on your loan application more quickly than you expect. Some lenders do offer same-day approval for applicants who meet their criteria. To give yourself the best chance of this, it helps to put together the most complete application possible from the outset. We can help with any questions you have about this.

Approval will still be subject to lender criteria and affordability checks, however, and timeframes can vary depending on lenders’ workloads and general approach to the applications.

How to speed up your car finance application?

If you just want to get on the road as quickly as possible, there are a few things you could do to try to speed up the process.

• Get your documents together before applying: As we’ve said, having the necessary paperwork together before you begin may smooth the process.
• Provide complete and accurate information: In the same way, making sure you provide everything you need in your application, and it’s all correct, can also help a lot.
• Know your budget and borrowing requirements: Applications for a loan that is affordable and reasonable for a borrower’s financial circumstances may be dealt with more quickly than a loan that is more of a stretch.
• Respond promptly to requests for more information: Sometimes, lenders might come back to you with questions. If you can respond to these quickly, it should help keep things moving.
• Consider pre-approval: If you can get a pre-approval before you start looking for a vehicle, it may make the process of applying for the loan a lot easier when you have decided what you want to buy.

Why might a car finance application take longer?

A few things could put the brakes on your application for car finance. These include missing or incomplete documentation, the lender needing more information to verify aspects of your application, or wanting more details about the vehicle you want to buy. Sometimes borrowers with complex financial circumstances or who are self-employed, or with irregular income, can also face a bit of a delay while the lender fully assesses their situation.

Is car loan pre-approval worth it?

Applying for pre-approval can give you reassurance about how much you can afford to spend on a vehicle. When you apply for pre-approval, the lender issues a conditional agreement to give you a loan, subject to you finding a suitable vehicle to buy.

This can streamline the car buying process a lot, because the lender has already conducted its checks on your application and only needs to determine whether the vehicle you’re buying is appropriate. Pre-approval isn’t a guarantee that you’ll get a loan, and it’ll still be subject to the lender’s criteria about the type of vehicle you purchase, but it can make the process a bit simpler.

Conclusion

How long you might wait to hear back about your car finance application varies depending on the lender, your own financial situation and the information you’ve provided with your loan application. If you can get your application in good shape from the outset, it may speed up the process. Our team of experienced personal lending advisers can help you do this and assist you in finding the most appropriate solution for your needs.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion, and seek independent guidance.