8 Tips When Getting a Car Loan
Buying a car is an exciting time, however, there are a few things you need to be aware of.
1. Get your car loan approved before you start looking for your next car
It’s always a good idea to get approved first, otherwise, you might find yourself being rushed into making a decision on the finance which could end up costing you more. Take the time to get approved first, it’ll often allow you to get the best car loan you can.
2. Setting a budget
So that you can apply for the right loan amount, create a monthly budget, and see how much you can comfortably afford. Lenders will meticulously go through your income and expenses to ensure you can afford the repayments.
3. Choosing the right loan term
With car loans, generally, you can get a car loan from 1-7 years, most commonly it’s 5 years. The longer your loan term is, the lower the repayments will be, but the more interest you will pay.
4. Application and Lender Fees
There is a lot of competition for customers and you should use this to your advantage. Try to find a car loan product that has no fees
5. Know your car loan options
There are really only two ways to finance a car with a loan. Either secured, or unsecured.
Secured car loans are just that, the car your purchase is used as security so in the event of non-payment, the lender can repossess the car. Because of this, you’ll generally be offered a lower interest rate.
Unsecured car loans are essentially just a personal loan. You can use the money to buy your car and any other purpose as well. These will generally have a higher interest rate.
6. Know your credit score
All lenders will check your credit score, the higher your score, generally the better interest rate you will get. It also allows you to see if there is anything untoward on there which you may be able to rectify before getting approved.
7. Applying with multiple lenders at once
When you apply with multiple lenders at once, it can adversely affect your credit score, making it worse. Do all your research with each lender and chat with them before applying.
8. Money Smart
MoneySmart.gov.au also recommends “Shopping around for the best car loan can save you thousands in interest and fees.”
So there you go, 8 expert tips to help you get the right car loan. Of course, like all financial products, if you have any questions or concerns, speak to a Financial Advisor before committing to a loan.
