It’s no secret there are a lot of car finance products on the market these days. We live in a country where most households have two or more cars, usually purchased on finance.
So when you start shopping around for a new or second hand car, you also have to start the hunt for a car loan. As with your new car you want to get the best deal possible for the least money, but how do you find the best car loan for you?
One way to do this is to find a loan broker to source the best interest rate, repayments and conditions to suit your budget. If you’re going to shop around yourself though, you need to consider the following;
Shopping for the Best Car Finance
Avoid Dealership Finance
There are plenty of reasons to avoid dealership finance – it’s usually not competitive, you lose your bargaining power and there can be extra fees hidden behind the lure of “0% finance”.
Interest Rates Vs Loan Term
Shop around for low interest rates and compare them with the term of the loan. If you’re planning on making the minimum repayments, a low interest rate over a longer period can still cost you more, sometimes thousands more. When you use loan calculators to find your monthly payments, make sure you work out what the total cost is by the end of the term. You’d be surprised at the difference even a year can make.
Penalties & Extra Fees
Low interest rates are great, but sometimes they’re used to hide other penalties or extra fees and charges. When you work out the end cost, as mentioned above, include any loan service fees, extra payment charges or early payout penalties. Sometimes these charges can add up to more than what you save on the lower interest rate.
Credit History & Applications
Consider how your credit history currently stands, not just for the sake of this loan, but also the next one. When you make multiple loan applications it lowers your credit score, even if you’re just shopping around and not taking up the loan. It’s best to make sure you do your research to know which loan will work best for you and just make the one application. Otherwise the next time you apply for finance you could be facing a rude awakening.
All this can be a lot to add to your plate while you’re trying to find the right car for you. At Aussie Car Loans we do all this through our panel of trusted lenders, so we can get you a great rate that suits your budget, without placing the stress on you.
Feature image by Dious on Flickr.