The difference between Pre-Approval and Approval
Australian lenders and brokers have a legal obligation to ensure the loans provided to their customers are both affordable and suitable, which has a lot to do with why there is both a pre-approval and approval process.
Chances are you will have thought the two terms are used interchangeably but in fact, they each serve a very specific purpose. So how are they different and how do they affect today’s potential borrowers?
More Than a Three-Letter difference
Put simply, when an applicant is pre-approved for a loan it just means they’ll be able to shop for a product — be it a car, motorbike, piece of equipment, etc. — like a cash buyer with a spending limit. This limit may not be more than what you’ve asked to borrow and may in fact, may be less.
The approval process is the same, however it allows prospective borrowers to receive financing on the condition that the loan is used to purchase a suitable vehicle at a suitable price and that it is not so old the lender will have reservations.
In both cases, a positive outcome is achieved if the customer’s loan application is able to establish their affordability. This includes, but is not limited to stability in occupation and income, stability in place of residency and whether you have any other commitments, loans or credit cards, etc.
How Do You Make Sure the Loan is Suitable?
There are many reasons a loan may not be suitable for the customer, such as when the loan is for a vehicle that’s too old for a lender to finance. To overcome this, our brokers may consider: Applying for an unsecured personal loan (PL type loan document) as opposed to a secured car loan, or applying to our in-house credit lender who has an empathic outlook towards clients with current and previous credit file issues.*
*Both options will require you to satisfy credit lending approval criteria.
We’re also able to conduct a credit check as part of our risk assessment process for our clients when they’re applying for a loan. To do this, all we’d need is your full name, D.O.B., driver license no. and residential or business address.
In addition, the interest rates offered by our panel of lenders are always fixed but additional payments can be made, meaning the amount of interest you pay reduces based upon how much money you pay on top of your normal fortnightly or monthly repayment.
Applying for Pre-Approval
To get in touch, please call 1300 883 983 and speak to one of our experienced brokers. Alternatively, you can apply for a loan by heading to our website and filling out our online application form.