For a time, applications for the loan was not as though or as complicated as it is today. Besides housing loans, car loans are essential to almost every individual who is going through the process of purchasing cars. In this article, we will be looking into the factors that could contribute towards the success or failure of one’s auto/car loan.
#1: Weak Debt Repayment Capability
For any loan applications, the question that often came through when applying would be Credit Score. However, different banks have their respective versions of risk factors to consider for credit approval. The rule of thumb is always keeping your Debt Service Ratio (DSR) as low as possible - that means, ensuring that your documented proof of income must always show a figure that are much higher compare to the debt servicing commitments reflected in the Bank Negara Malaysia's CCRIS report that enlists all the loans and financing facilities that you have undertaken with banks and licensed financial institutions under the purview of the Central Bank.
#2: Submitting Invalid or Incomplete Documents.
When it comes to submission of documents for consideration of financing, do not try to "wing-it". In most cases, your sales advisors or bankers will advise you to compile documents that are required in a checklist. If you provide a fabricated document to prove claim of income but different from what is reflected in the regulators' systems (LHDN, EPF, banks, etc.), you will be queried and worse, you will be flagged as high risk due to risky actions.
Trust us, banks will always have a way to cross check what you have submitted against what's on record with the regulators and authorities relevant to the details provided. If documents that are vital are not there, retrieve them. If it's not up to par, take your time to build towards the criteria deem fit by the financial institutions. Don't rush and tarnish the reputation and prospect of getting another loan in the future.
#3: Job instability
Before any lender or bank approve a loan, they will check up on your job employment. This is to give the banks/lender the affirmation that the borrower has the means to repay back. If you frequently change jobs with no stable income, high chances are, you will be deem risky by the banks and financial institutions to extend financing for.
To improve the prospect of getting the financing you wish for, try to stay in a company for more than 6 months and back your income proof with documents, even for gigs like Grab, FoodPanda, or any other non-employment related income.
#4: Too many insecure loans
Nothing wrong with having too many loans if your income shows that you are able to service them but do you know there is a reason that loans are categorised into secure and insecure loans? Credit card, personal loans, and PTPTN loan are examples of insecure loans and if your portion of insecure loans are higher than your secure loans like housing mortgage, other car loan, the bankers or lenders may also consider you a risky borrower?
Pay off your personal loans or keep the outstanding amount of your credit cards as low as possible to get a higher chance of car loan approval, especially during the credit consideration period.
#5: Irregular Repayment of Other Bank Loans
If you have a habit of paying off your credit card and other loans later than stipulated period, it will come and bite you hard when you are applying for car loan. Lenders or banks will deem you as delinquent when it comes to repayment of loan and risky to extend loan for.
Generally CCRIS enlists your repayment behaviour in the form of "0" for payment on time and "1" if you miss or late for 1 repayment period, "2" for 2 repayment periods, and subsequently. And the record will be kept for at least 12 months. So if you'll be applying for your car loan, be very sure that you haven't been missing or late for any repayment of your other loan commitments for the past 12 months.
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