When you are ready to buy a vehicle or asset, the last thing you want is for your finance application to sit in limbo.
While some delays are outside your control, there are several common mistakes that can make the finance process take longer than necessary. Missing documents, incorrect information or applying without understanding your financial position can all create unnecessary back and forth.
The good news is that many of these issues can be avoided with a little preparation.
Here are seven common mistakes that can slow down your finance approval and what you can do to help keep the process moving.
One of the most common causes of delays is simply not having the required documentation available.
Depending on your circumstances and the type of finance you are applying for, a lender may request documents such as:
If documents are missing, outdated or difficult to verify, the lender may need to come back with additional requests before they can complete their assessment.
How to avoid it: Have your key financial documents ready before submitting your application. If you are unsure what is required, your broker can help you understand what to prepare.
A finance application needs to provide an accurate picture of your financial position.
Small inconsistencies between the information provided on an application and the supporting documents can result in questions from the lender and additional verification.
This could include differences in:
Even if the difference is accidental, the lender may need to clarify the information before proceeding.
How to avoid it: Take the time to check your application carefully before submitting it and make sure the information matches your supporting documentation.
Before assessing a new application, lenders need to understand what financial commitments you already have.
This can include car loans, personal loans, credit cards, buy now, pay later accounts and other debts.
If existing commitments have not been disclosed or information is incomplete, the lender may need to request further details.
Your existing commitments can also influence how much you can borrow and which finance options may be suitable.
How to avoid it: Make sure you have a clear picture of your existing debts and regular financial commitments before applying.
It can be tempting to submit applications to several lenders at the same time in the hope that one will approve you quickly.
However, multiple applications can create unnecessary complications and may result in multiple credit enquiries appearing on your credit file.
It can also make it harder to determine which finance option is actually suitable for your circumstances.
How to avoid it: Rather than applying everywhere, consider speaking with a finance broker first. A broker can assess your circumstances and help identify lenders that may be suitable before submitting an application.
Once you have submitted a finance application, significant changes to your financial position can affect the assessment.
For example, taking on new debt, changing employment or making a large purchase could change the information the lender is assessing.
This does not necessarily mean your application will be declined, but it may result in additional questions or documentation.
How to avoid it: Where possible, avoid making unnecessary changes to your financial position while your application is being assessed. If something does change, be upfront with your broker or lender.
Not every borrower has a straightforward income structure.
You might be self-employed, recently started a new job, earn commission, receive overtime or operate a seasonal business.
If there is something unusual about your income or financial position, failing to provide context can create additional questions during the assessment.
A lender may see an unusual transaction or income pattern and need more information before making a decision.
How to avoid it: Provide context upfront. Supporting information that explains your circumstances can help the lender understand the full picture rather than having to request clarification later.
Not every lender is suited to every borrower.
Different lenders have different policies around employment history, ABN age, credit history, asset types, industries and income structures.
For example, a lender that is comfortable with established businesses may not have the same appetite for a newly established business. Another lender may have stronger policies around a particular type of vehicle or equipment.
Applying to a lender that does not fit your circumstances can lead to delays, additional questions or an unsuccessful application.
How to avoid it: Understand your financial position before applying and consider which lenders are more likely to suit your circumstances.
There is no guaranteed way to make a lender approve an application instantly. Every application needs to go through the lender's assessment process.
However, you can help minimise unnecessary delays by:
The more complete and accurate the application is from the beginning, the less likely you are to experience delays caused by missing information.
Finance approval times vary depending on the lender, type of finance and complexity of the application. Straightforward applications with complete documentation can generally be assessed more efficiently than applications requiring additional information.
Requirements vary depending on the lender and your circumstances. You may need identification, proof of income, bank statements, tax documents or business financials.
Multiple credit applications can result in multiple credit enquiries on your credit file. This is one reason it can be helpful to understand your options before submitting applications to multiple lenders.
A broker cannot guarantee approval or control a lender's assessment timeframe. However, they can help identify suitable lenders, prepare your application and ensure the required information is provided.
Additional document requests are a normal part of some finance applications. Providing the requested information promptly can help keep the assessment moving.
Finance approval is not always instant, but there are steps you can take to avoid unnecessary delays.
Having your documents ready, providing accurate information, understanding your existing commitments and applying with a suitable lender can all help create a smoother application process.
If you are unsure where to start, a finance broker can help you understand what information is required, assess your options and match your application with suitable lenders.
The better prepared you are before applying, the easier it can be to move from application to approval and get on with purchasing the asset you need. For further support, contact us.
