Arrange your Car Finance
How to arrange your car finance ? In this section, we will focus on Key elements to be considered by you, when you arrange your car finance. We will also learn about, document requirements, loan-approval process, possible outcomes, Standard Bank approval Criteria and steps post approval.
Firstly, remember to arrange finance, by directly interacting with bank(s). That is to say, you do it without involving the suppliers or dealers. This is highly recommended, to avoid any biased decisions or influence, on your car choice. Preferably, your bank loan approval, should be done prior to negotiating price with the dealers.
Secondly, avoid long term loans. Banks usually prefer a longer finance tenure, as it involves higher interests, thereby more revenue for them. However, you need to take a balanced decision, which is more suited to your overall requirements. For instance, have a look at how Dubai Islamic Bank and Emirates Islamic Bank calculate monthly instalments. As you increase the term of payment, note how monthly instalments get more comfortable.
Focus on the entire purchase price of the vehicle and not just the smaller, more attractive, monthly payments (EMI). You’ll get more insights, on how to avoid dealers traps, by being aware of Four Square Technique.
Set a realistic budget, anticipate how many years you’ll likely keep the car, compare costs, negotiate, and shop around for the best financing deal.
Gather details on banks providing Auto finance. To begin with you may start with your own bank. Compare with other offers on rate of interest (profit Rate charged), Down payment and flexible tenure.
Documents required to arrange your Car finance
Usually the documents necessary for getting bank approvals include but not limited to the following:
A) Your identity proof like Passport / ID copy / Trade License / POA / MOA
B) Salary letter / Salary Slip
C) Bank Statement (last 3 – 6 months) / Financials / P & L Statement / Revenue St.
D) Credit report (Etihad Credit Bureau)
E) Budgetary quote from supplier
Initiate the loan approval process
Apply for bank loan, with all necessary documents.
You may opt to apply in 2 – 3 banks simultaneously, to save on time. Moreover, you get an opportunity to compare the various offers. As a result you may benefit, if there is any ongoing promotion, with some banks.
To have a total control on your deal, approach banks directly, without involving the suppliers. So that you get freedom to negotiate your deal at better terms. Moreover, it keeps a check on any possibility of miscommunication or misinterpretation, by mediators.
You should arrange for a budgetary quote for bank, roughly based on your budget figure.
Outcome of the loan approval process
The process of your loan approval, usually takes a day or two. However, the outcome will depend , on the strength of your deal from the banks perspective.
Standard Bank Finance Criteria :
Based on above criteria, bank will decide on approving your proposed deal. Oftentimes, bank may request you to improve some of the aspects, to grant approval. In very rare cases, the deal may get rejected, due to non-qualification on basic criteria. For instance, your credit report reflects a low score. Yes, your chances of getting auto finance are reduced drastically if you have a history of bad repayments. However, if your credit score has been increasing recently your chances may increase as well.Under such situation, bank usually share reason(s) of declining the deal, and also suggest alternatives.
After your bank deal is approved, you may proceed with the other formalities to complete the bank process.
This involves signing bank contract documents, binding you to honor payments on due dates. This facilitates bank to issue their LPO (Local Purchase Order), in favor of the supplier. Finally, this authorizes you to go ahead with the registration process, and take delivery of your long awaited dream car.