We doubled his car loan approval (and dropped his rate)
The amount of care and attention that a broker puts into each individual application can vary a lot across the industry, and will lead to vastly different outcomes for the customer.
Today we have a case study where our team secured a loan offer that was double the amount a previous broker was able to source, and at a lower interest rate.
That can be the difference between buying a $20,000 vehicle and a $40,000 vehicle.
Time and time again, our team proves that not all brokers are created equal.
Scenario
This customer came to us all the way from Yanchep, on the northern fringe of Perth. He was looking to buy a 2007 VZ Clubsport Commodore for $54,000.
He had some cash to contribute to the purchase but wanted to cover as much as he could with finance.
While his income was strong, there were a number of factors that were limiting his borrowing capacity.
In fact, he had already been to another broker who told him the absolute best he could get was a $20,000 loan with an interest rate sitting well over 20%.
Not happy with this outcome, he continued his search and stumbled across the Gusto Finance blog, which has a ton of great information on how to get a better deal.
He reached out, and the team got to work.
The Roadblocks
His credit score was exactly 500, which will lead to most lenders conducting a thorough analysis of your bank statements. This is where most of the challenges were found:
- (Alleged) Payday Lenders: He had an active line of credit with Cash Converters. Even though it technically isn’t a payday loan, some lenders treat it like one.
- High Number of Loans: He already had four other active loans. This meant his capacity to afford another monthly repayment was tougher.
- Asset Age: A 2007 vehicle is nearly two decades old. Most lenders will refuse to use a car that old as security for a large loan.
The Gusto Strategy
We had to leverage the strengths in his application to help offset some of these potential negatives and advocate on the customer’s behalf to the right lender.
A combination of consistent earnings and strong budget management (despite the multiple loans) demonstrated he was a better credit risk than he may have initially appeared.
But not all lenders will agree to apply a level of flexibility in their policy.
Luckily, we knew one who would be willing to do so and also had a higher age threshold for the secured vehicle.
The Result
Our broker successfully negotiated a $40,000 approval with an interest rate in the high teens.
While it wasn’t the full $54,000 he initially wanted, it was exactly double what the previous broker could achieve.
Better yet, we secured the loan on a 5-year term with an interest rate of 17.95%. A massive improvement over the 20%+ rate he was originally quoted.
The customer was able to kick in the difference and secure the desired vehicle.
The Takeaway
If you have a long list of existing cash loans, you will get very different responses from lender to lender.
A competent broker knows what lender to approach, and how to present an application in a way that best aligns with their credit policy and gives you the best chance of securing the target loan amount.