Financial Blog

Getting approved for an auto loan isn’t just about choosing your dream car and filling out a form. Banks evaluate several important factors before saying “yes” to your application. Whether you’re buying your first car or upgrading to a new model, understanding what goes into the approval process can help you better prepare, and improve your chances of getting that green light.

1. Credit Score

Your credit score plays a big role in your auto loan approval. It gives lenders a snapshot of how well you manage debt. A high credit score shows you’re financially responsible and likely to make your payments on time.

Higher score = higher approval chances and better rates.

• Lower score? You may still be eligible, but interest rates could be higher or you might need a bigger down payment.       
• Tip: Pay bills on time, reduce credit card balances, and avoid new debts before applying.

2. Monthly Income

Your monthly income helps banks gauge your capacity to repay the loan. It doesn’t have to be huge—but it should be stable and enough to cover your car loan along with your existing obligations.

More consistent income = more reliable applicant.

• Lenders often ask for payslips, bank statements, or employment certificates to verify this. 

Tip: Make sure you have updated documents showing your current income source.

3. Debt-to-Income Ratio (DTI)

Even if your income is good, lenders also look at how much of it goes to paying existing debts. This is your debt-to-income ratio. It’s calculated by dividing your monthly debt payments by your monthly income.

Tip: Pay down credit card debt or loans before applying to reduce your DTI.

4. Down Payment

The amount you’re willing to pay upfront significantly affects your approval. A larger down payment means a smaller loan amount, which reduces the bank’s risk.

Security Bank Auto Loan Example:

• For a brand-new car, you can finance up to 80% of the vehicle price.
• For a secondhand car, up to 70% of the appraised value is covered.
• That means a 20% or 30% down payment is required, depending on the car’s condition.

Tip: Saving more for a down payment can also help lower your monthly payments.

5. Vehicle Type and Condition

Banks also consider what kind of car you’re buying. Newer models, especially from reputable brands, often have higher approval rates. Used cars are still eligible (up to 6 years old), but they may require stricter appraisal and documentation.

Tip: Choose vehicles that retain value well and are within the age limits set by your bank.

Now that you’ve learned more about the factors that impact your approval for an Auto Loan, it’s time to reward yourself with one. Security Bank is here to make it easier for you with flexible financing options and competitive rates!

Apply now!