Getting a car loan.
Tips for getting the right finance
If you’re shopping for a new car, you might also be reviewing your finance options. Most vehicle purchases are high ticket items and that often means that finance is needed to complete the purchase.
So how do you find the right finance for your needs? Whether you’re buying a car, a boat or a camper van, it’s important to find a way of paying for it that works for you.
Here are six things to consider and tips to get you started.
Tips when borrowing for a Car Loan
1. Consider your budget in detail
Buying your new car needs to work with your budget, which means getting a handle on the funds you have available to make repayments on a loan. Take a close look at your finances and be aware of what you have available so you’re able to enjoy your purchase as well as pay it off.
2. Find vehicle finance that suits your needs
When you’ve decided how much money you have available for your deposit and for ongoing repayments, it’s time to focus on getting finance that suits your needs. You might want to pay your car off quickly, or perhaps you’d prefer to manage your debt in the longer term and keep more cash available for other things. Weigh up your options and ensure that you’re comfortable with how much your car will cost.
3. Checking your credit report
A credit report scores an individual’s credit history based on their ability to follow a lender’s conditions. It also contains information about your recent borrowing history including details of any defaults; your current borrowing position; and how often you apply for finance. Important: applying for quotes/loans with multiple lenders will effect your credit score.
4. Don’t assume dealership finance is the best
While you may be drawn to a certain car or brand because you saw an ad for a low interest rate. You need to consider the total cost, including the purchase price, fees, repayments and what’s included such as service plans and roadside. Often over the duration you can end up paying a much higher rate. You may be better off taking an independent finance and getting a pre-approval in place – which allows your better negotiating power.
Case study: We saved Peter time and $3,345 by comparing loans from the major providers, then we found the same make/model for a lower price – saving time & money.
5. Avoid financing with your credit card or mortgage
Many believe using their home equity to purchase a new car is a great solution because they don’t have to apply for a car loan and their mortgage repayments often stay the same. It’s easy to think with a mortgage top up it is cheaper as loan interest rates are the lowest we’ve seen in years. However the length of the loan means you will pay a lot more in the end for the car.
Another mistake people make is adding using your credit card to buy a car which is fast and easy – but a lot more expensive once you consider the high interest rates and fees. And it won’t effect your credit score.
6. Find the best car loan provider
Many places offer car secure loans, including banks, financial institutions, dealers and manufacturers. Generally car loans are available for new and used. It’s important you don’t just go for the product with the lowest interest rate or greatest convenience. You need a provider that’s with you all the way as sometimes things change, you may want advice, need to lower your repayments.
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