Fincar December 12, 2019 No Comments

If you have already commenced your car loan application, you will likely have a pretty familiar understanding of the process. However, if you’ve yet to lodge your application, perhaps hold back for just a moment, at least until you’ve had time to review your supporting documentation. Why, you might ask? Well, your bank statements could just be the difference between a successful loan outcome and a rejected application. Here we discuss why.


Why are bank statements required?

In order to assess your suitability for a loan, lenders will ask for a copy of your recent bank statements. Typically the last 3 months of records will be sufficient to evaluate your finances.

Bank statements are requested since they will detail all transactions that relate to your accounts, namely deposits, withdrawals, transfers and purchases.

Apart from ancillary matters like fees and interest, a financier will get visibility into your balance at any given time. It can paint a pretty decisive picture as to your cash flow position and financial stability.

Key areas of assessment

As detailed above, lenders will closely scrutinise some key areas in your bank statements to determine whether you are a suitable loan candidate. This includes:

  • Deposits – the sight of regular deposits will suggest to a financier that you have a regular stream of income from steady employment. From their point of view it is more likely you will be able to meet your repayment obligations as they fall due. On the other hand, if your deposits are ‘lumpy’, or vary by size, this could raise concerns with the lender as to whether you have a sustainable source of income. Avoid making any large, irregular deposits into your account before you submit an application, as this could set off a red flag with the lender, who may well question the source of these funds.
  • Withdrawals – lenders will be on the lookout for any signs that you make regular withdrawals of a consistent size. They will query whether this is going towards other debt or ongoing commitments, which does little to enhance your prospects of having capacity to repay a new loan. Where possible, maintain a healthy cash balance at all times, avoid any last minute irregular withdrawals before submitting your application, and replace withdrawn funds as soon as possible with a deposit.
  • Cash balance and overdrafts – quite simply, proof that you are able to maintain a positive cash balance will help your application as it shows your financial management capabilities. It is generally recommended that you maintain an average daily balance above $10,000, stretching this higher if you intend to apply for a larger loan. Any signs of an overdraft will be detrimental to your hopes of securing a loan. It may lead a financier to believe that you are having a difficult time staying on top of your finances and unable to manage your situation. It is almost certain that you would be questioned as to the nature of any overdraft, plus you would face a strong burden to prove your circumstances.


The Fincar team is here to help you with all your financing needs. Contact us today to help arrange your next car or equipment loan.