Getting ready to apply for finance
When applying for finance, it's a good idea to ensure you have all the relevant information and documents on hand, scanned copies will make the process as simple as possible.
By having the necessary information with your application should avoid any unnecessary delays.
Credit rating
If you have ever applied or a load, or credit card, even mobile phone accounts, you probably have a credit file.
To have a look at your credit file, one of the main providers in Australia is Veda Advantage - Personal.
Reviewing your credit file before applying for finance make it easier to remember what goes on your Assets and Liabilities plus a chance to fix any unseen errors that may be on your credit file.
The financier will consider your debt repayment history as well as your credit history overall.
What information is usually needed?
These items do vary depending on the financier, but in general the required information would be:
Proof of identity
If you have current finance or recently closed finance with the financier, proof of identity should not be required.
However if you are a new applicant to the financier, you will be required to provide 100 points of identification.
- at least one form of photo ID
- documents with your current address and/or signature
- Medicare card or other banks credit cards
The financier will be able to provide you with a list of accepted identification, along with the total points allocated to each.
- Proof of income and employment details
- 2 or 3 recent payslips, or
- An employment letter/contract;
- Employment history
- How long you have been in your current employment
- Less than 3 years - Current employment, and
- Previous employment for the prior 5 years
- Residential details
- How long you have been in your current residence
- Less than 3 years - Current residence, and
- Previous residences for the prior 5 years
- Mortgage or landlord detials
- Amount per month
Assets and Liabilities
- Assets
- bank accounts;
- Superannuation;
- details of shares held;
- property, motor vehicles and other personal effects owned.
Confirmation may be required for certain assets such as a rates notice for property owned.
- Liabilities
- credit cards;
- mortgage or rent details;
- investment properties or companies;
- verification of other loans held.
What the financier does then
Once supplied with the information, the financier will determine the amount of money you will be able to borrow.
Their decision will be determined by your ability to make additional repayments for the new loan by taking into account both your existing debts and your total income.
They may also consider your 'debt potential' which makes allowances for any available credit you may have which is currently underutilised.
An example of this is your credit card. Although you may only have a credit card debt of $1,000, if your credit limit is $5,000, the financier will have to take this possible extra 'debt ability' of $4,000 into account.