Deciding you want to purchase a new or used car is a big step. The next step is deciding
how you will fund the cost of the purchase. Paying for a car can involve a variety of
methods. The most likely – and most common – method is getting a car loan. The tricky part
here is then getting the best type of loan and interest rate. Here are some tips to help you
when you are looking for the best loan for your car purchase.
Research Your Own Budget
What can you spend? What type of loan can you afford? Repayments on loans usually
occur monthly or fortnightly. What is the most you can afford to pay without breaking your
budget and disrupting your lifestyle? Do you have bad credit? Some lending groups offer bad
credit car loans… you simply need to know what you are looking for. Help yourself by
understanding your current financial situation; when you do this, you can enter the car loan
arena fully prepared to talk numbers. Financial advisors can easily assist you in understanding
your daily costs of living and what type of payments will work the best for you.
Shop Around
Car loans can come in all different varieties and banks are not the only places that offer
loans. Lending groups are plentiful if you look in the right places. Research interest rates and
overall costs incurred during the life of the loan. How much are you able to borrow? Can you
make a down payment upfront? Are there any fees for making early repayments? What
about if you pay off the loan earlier than the intended period? Do setup fees apply? Put
together lists of every possible scenario. Compare and contrast. A loan is still borrowing
money, and at some point you will need to pay it back. Figure out which option will work the
best for you.
Ask the Dealer
Often, dealers will offer finance packages. In some cases, these packages can include
insurance as well. See what the dealer can offer you if you buy a car with finance and
insurance. Usually, the dealers are not making any money off the selling price of the car.
They are looking for customers to invest in their finance options and servicing packages. The
best option for them is for you to buy the car on finance. When shopping around, come with
a preapproved car loan from a bank or other lending group; this will force the dealer to offer
you a better rate and interest package. A preapproved bank loan is not a locked-in
contract; it is a negotiating tool to help you find the best loan for your car purchase. The best
buyers are the ones who come prepared.
Shopping for a new car most often means shopping for a loan as well. You need to
consider your options about how you will fund a new vehicle and how it will impact you for
the life of the loan. Get your finances in order first and then do your research and compare all options to find what will suit you
best.
