Things You Should Consider Before Opting for A Car Finance
A car is undoubtedly one of the most expensive assets that everyone wills to purchase after their dream home. Therefore, when it comes to opt for a car loan, you should figure out every prospective and details of it.
If you’re new to the car financing market and have very little knowledge over it, here are some important things you should take into consideration before getting a car finance Melbourne.
Here Are Six Smart Tips To Finance Your Next Car:
- Check Your Credit Score Beforehand
Your credit score can put a grave impact on the type of car loan you wish to get. Having a good credit score can help you make eligible for a higher loan amount.
Paying off the instalments or re-payments on time can improve your credit score over the time and this can help lower the amount of interest you’ll need to pay for your car loan.
- Keep The Loan Term As Short As Possible
Usually, a shorter loan term indicates higher repayment instalments. But in general, the longer it takes you to repay the car loan, the more interest will need to pay. Although, it seems tempting to stretch out your loan repayments over a longer period of time, making your monthly instalments cheaper, but it will end up you paying way more in interest for the original asset value.
Put The Biggest Deposit Down If You Can Afford
Avoid owing more than what the car is worth by putting down the biggest car loan deposit you can afford – particularly if it’s a new car as it will depreciate quicker than a used vehicle.
Typically, an initial payment of 20% or more of the purchase price is a good place to start. So, if you’re buying a $30,000 car, a 20% deposit is $6,000.
- Pay Taxes & Fees’ in Cash
There are many miscellaneous costs that come with a car purchase, like registration fees, sales tax, documentation fees, and any extras you want like extended warranties.
If you roll these fees into your financing, you’re increasing your loan amount but not the value of the car securing the loan.
Not sure whether to pay for your car with a loan or cash? Read our guide on financing a car vs paying for cash.
- Compare Dealer Finance Against Lender Rates
In the excitement of buying a new car, some people forget one small (but very important!) detail: how exactly to pay for that set of new wheels.
Unless you have a spare $20k sitting in your back pocket, there are two options: dealer finance or a car loan from a lender.
Dealer finance is when the dealer contacts their bank or lender of choice and helps to arrange a loan for the car. They make all the arrangements while you do very little.
The other option is when you (the car buyer) applies for a car loan from a lender like loans.com.au. You arrange the details of the loan yourself, and use the money to purchase the car from the dealer.
Dealer finance may seem like a no-brainer because it’s more convenient, but dealers may markup the monthly repayment to pocket a profit. Some dealers offer their own interest rates which can be a markup on the bank’s rates.
See how much your monthly car loan repayments with us could be by using our car loan repayment calculator.
- Speak To A Car Finance Broker Before You Walk Into A Deal
By speaking to a car loan broker, your assets, liabilities and credit rating would be assessed to find out if you’re qualified to get a car loan for a specified amount. Walking into a dealership with pre-approval can speed up the buying process as both parties know you have a fixed limit, so there’s less chance of getting a dodgy deal.
Ready to get started? Feel free to contact HH Finance today and explore your options.