How to get a loan for an imported car

Buying an imported car comes with more work than purchasing a brand new from a local dealership. But you shouldn’t let this stop you from driving away with the imported car of your dreams. Like most big purchases, it’s possible to get a loan for an imported car and once you know what to prepare, the process is far easier. In this article, you will learn about the types of loans you can get for an imported vehicle, requirements and how getting pre-approved may be more beneficial.

Types of Loans

Unsecured Personal Loan

There is no collateral required for this type of loan. Lenders assess the borrower’s creditworthiness by checking his/her credit history, job stability and ability to pay. Those eligible receive a smaller interest rate but many don’t qualify due to its strict standards.

Secured Car Loan

This type of loan uses the car as collateral for the loan in the event that you can’t make your repayments. There aren’t many lending institutions that will lend for an imported vehicle or they will implement stricter rules for those applying for it. For example, borrowers have to pay a deposit that’s equivalent to 10 – 30% of the car’s purchase price.

Financial institutions that offer loans for imported cars

Banks
Credit Unions
Building Societies

Requirements

Choose a car that is not older than seven years

Five years is the longest loan term lenders allow borrowers to have whether it is for a brand new or a used car. They also have a regulation about not financing a car that is older than 12 years by the time the loan is settled. This means, your loan will not be approved if you choose a car that is older than seven years. The car will exceed 12 years by the end of your loan term and lenders will tend to avoid this due to the potential difficulty of resale in the event you default on payments.

Don’t use repairable write-offs as a collateral

Lenders can repossess the car and sell it if the borrower stops paying. They protect themselves by not accepting repairable write-offs because these are harder to sell and are likely to not get a good price.

Don’t use Motorsport vehicles as a collateral

From a lender’s perspective, they should finance vehicles that they can sell at a good price if they have to repossess it. Motorsport vehicles are likely to be involved in accidents so it creates a larger risk if they finance it.

Finance Brokers

You can search for loans on your own or talk to a finance broker. Getting their assistance allows you to see more offers from different lenders and they can help you negotiate a good deal. But don’t forget to ask them for a credit guide and quote and clarify if you have to pay an origination fee.

Loan Pre-approval

When you get pre-approved for a loan, that means the bank thinks you will likely get the amount you’re asking to borrow. The car you choose to finance will be scrutinised and may have to provide additional documents for it but all in all, things are looking good.

Benefits of getting pre-approved

Power of choice – When your loan is pre-approved, you don’t have to worry about not being able to afford the car you chose. In fact, you know exactly how much you can afford.

Negotiate the price – You can be confident enough to make an offer to a car dealership because you know your loan has been pre-approved.

Not going beyond your budget – Getting pre-approved means you’ve discussed your financial situation with the lender. They know what payment terms you’d be comfortable with and how much you can give based on their assessment.