At Rapid Finance, we are very familiar with the loan approval process and do a substantial amount of loan pre-approvals for customers every single week. Pre-approval is one of the most important steps you’ll take when buying a home, a car or even a boat – so knowing the basics ahead of time will help you make the right decision for your circumstances.
So, what is loan pre-approval?
Loan pre-approval means that a lender, such as a bank, has agreed in principle to lend you a certain amount of money. This can let you know what your maximum available loan amount could be in your current financial situation.
Pre-approvals are referred to differently by different lenders: conditional approval, indicative approval or approval in principle - but they all mean the same thing. Loan pre-approval generally takes into account your financial situation and usually determines a suitable amount that you could afford to pay back.
Pre-approval doesn’t mean that you’re obligated to take out a loan, and the lender doesn’t have any obligation to lend you the amount either. It isn’t a guarantee of funds; it’s an indication that, as long as your financial situation remains the same and you meet any conditions, that you’re likely to have that loan amount approved.
The benefits of loan pre-approval
Loan pre-approval lets you begin browsing with a more accurate idea of your budget. It also tells sellers that you’re serious about buying. When you put in an offer on a house, for example, but don’t have loan pre-approval, your offer might not be taken as seriously as someone who has undertaken the loan pre-approval process.
If you’re hoping to buy a home at auction, pre-approved finance is especially important. It can help you bid confidently and give you a clear limit of what you can afford.
Another benefit of pre-approved loans is that they speed up the process of borrowing money. Whether you’re after a car, a townhome or a jetski, getting pre-approved means that, once you’ve found your dream purchase, you can proceed more swiftly because the lender has already investigated your situation and made an assessment.
Things you should know about loan pre-approval
Loan pre-approvals do expire
Whether you choose Rapid Finance or another broker for your loan pre-approval, it will usually be valid for between 21 days to three months. This is because both your circumstances / situation or overall profile is likely to change after that time. As an example, a car loan pre-approval could last up to a maximum of 21 days, whereas a mortgage pre-approval could last as long as 3 months. Every lender is different, so it’s important to be aware of this information from your broker when applying
Why you might not get final (formal) approval
Just because you have finance pre-approval, it doesn’t guarantee that you’ll get final (formal) approval. At Rapid Finance, we see customers get declined for full approval when their circumstances have changed. Examples include:
You’ve changed employment.
You’ve taken out a new credit card or loan.
You didn’t disclose loans or credit cards at pre-approval stage.
You’ve had children since applying for pre-approval.
There has been a change in the conditions of a house you’re interested in.
Interest rates have risen and the market has changed significantly.
You have changed your relationship status.
You have not been making payment on current facilities on time.
You entered into Bankruptcy or a part 9 Debt agreement .
You’ve moved address.
There has been substantial change in your financial circumstances.
New payday loans, afterpay, Zip pay have been taken up.
Large ATM withdrawals or gambling has emerged.
These changes don’t necessarily mean that you won’t get final approval, so it’s worth chatting with us to discuss your options. You might be surprised to learn that you may still be able to go ahead with your purchase and the lender is still happy to lend to you!
What happens if I can’t get loan pre-approval?
In an ideal world, purchasing a car or a new home would be easy. The reality is that there are certain rules and restrictions that could stand in your way.
Did you know that, even if you have bad credit, Rapid Finance could help you strengthen your application by highlighting your financial strengths and matching you with the right lender? You might have bad credit and need a mortgage, be in a Part 9 debt agreement, or only have short term employment – but don’t worry, Rapid Finance may be able to help you.
On a side note, don’t forget about our wholesale cars. We offer a one stop shop to help you source a vehicle through our extensive wholesale network.
Through our network, we will do some extra checks on your behalf as well as inspecting the vehicle to ensure it’s a great vehicle.
We will also check :
There is no money owing on the vehicle
The vehicle has not been a repairable write-off
The vehicle has not in any serious accidents
We will check everything works on the vehicle
We will get the roadworthy for the vehicle
We will do a detailed inspection on the vehicle
Find out more info about our wholesale network vehicles https://gorapid.com.au/resources/wholesale-cars.
Pre-approval with Rapid Finance
Whether you’re after a home loan, a personal loan or a car loan, we created the Rapid Finance process to make it simple and stress free for every customer. Just call our expert team today for a no obligation chat on 1300 467 274.