cars, utes

Chris Reid Jul 3, 2023

If you’re ready to finance a new car, boat, commercial equipment or something else and you’ve been shopping around at a few different banks and lenders, chances are you’ve discovered that the rate of interest on offer can wildly vary depending on who you’re talking to.

Additionally, there may be one lender that will approve your finance request while others won’t even give you the time of day.

So what’s the score? Why is it that approvals and interest rates are seemingly all over the road like a dog’s breakfast? Here’s why some will give your finance application the thumbs up while others may not, plus a list of factors that lenders look at to determine your personalised interest rate.


Why some lenders approve while others don’t


It can be really disheartening being knocked back for financing. But when you’ve put through a couple of applications at different lending institutions and one approves while the other declines, you might be asking yourself why.

Basically, it all boils down to the lenders and their particular criteria for approving a loan. Each will differ - some slightly, others greatly - which means certain factors that some lenders look at very closely, others are more forgiving.


Top 5 factors that affect your interest rates


  1. Credit score

You’re bound to be aware of what a credit score is, but do you know how it’s calculated? Put simply, somewhere out there is what’s known as a ‘credit report’ about you which includes information such as how many applications for credit you’ve applied for (e.g. postpaid phone plans, credit cards, loans, etc.), as well as the total amount of money you’ve borrowed plus whether you make all your payments on time.

The score is based on all of the above information included in your credit report and will be between either 0 and 1,000 (Experian) or 0 and 1,200 (Equifax); the higher your score, the lower your interest rate will be. You can check your score free of charge at a few different places online such as Credit Savvy which won’t actually impact your score at all.

And if you find something in there that shouldn’t be, you can follow up with the credit reporting agency for them to fix it.


  1. Employment information

As you can imagine, it might be a bit tricky to get approval if you’ve been unemployed for say, a decade, and have zero income. This would place you at a very high risk to lenders, which means either a very high rate or being denied altogether.

Information such as type of employment (full-time, part-time, casual) as well as hours worked per week and more will change the rate of interest.


  1. Size of loan

You might think the more you’d like to borrow, the higher the interest rate and vice versa, but in fact the opposite is generally true. Check out mortgage rates for homes and you’ll see they’re a bit lower than when financing other assets. Though, don’t think we’re suggesting to borrow more than you need to - keep things within your budget and you’ll be absolutely fine.


  1. Length (term) of loan

When your loan term is shorter, you’re going to of course be paying it off faster which can certainly result in a lower interest rate offered to you. Remember, though, that should you opt for a shorter term your monthly repayments will increase, so ensure it’s an amount that you’re able to pay off every time.


  1. Not going with a broker

Okay, so we might be a little biased on this front. But think about it - if you’re shopping for a TV you’ll jump online and hit up every single shop to find the lowest price, right? Well, shopping for the best interest rate is really no different apart from one key thing; it’s very difficult to know every single lender out there (outside of the big 4) to visit and check their rates.


Which is where we come in.


With more than 20 years’ experience in the financing industry, we’ve amassed a pool of lenders bigger than Ben Hur and will throw out the trawler net and work tirelessly to find the absolute best interest rate to suit your individual needs. Use our online car finance calculator to learn how low your monthly repayments could be today.


Speak with us to lock in low interest rates today


Want to have someone going into bat for you that knows the game like the back of their hand? We’re ready and raring to get out there and secure you low interest rates - every single time.

We’re here to discuss your needs and will work to tailor a financing solution that aligns with your requirements to a T. Give the team at Stratton Finance a call now on 1300 787 288 or send us a message and you’ll hear back from us shortly.


Disclaimer: Nothing in this article should be assumed as personal advice. You should consider whether the information is appropriate to your needs, and where appropriate, seek advice from a professional financial adviser.

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