June 21, 2018 by Shirley Xia
Car loan finance – what you absolutely need to know
Buying a new car can be pretty exciting. Finding the right car loan to match? Not so much. If you need to get a car loan for your purchase, there are a few things that you need to keep in mind.
Dealer finance – know exactly what you’re signing up for
If you’re wandering around dealerships looking for your brand new car, chances are at some stage you’ll be offered finance by a car dealer. They often have really low rates which can sound really tempting.
Before you think about taking up an offer of finance from a dealer, make sure you ask lots of questions. A very low rate can come with serious strings attached. Typically you have less room to negotiate which could mean you are paying thousands of dollars extra for your car. Dealer finance can be very restrictive and not as flexible as other car finance options out there.
Just as importantly, dealer finance can come with a whole host of additional costs which can bump up the cost of car finance. Be sure to ask if there is residual value, which is a lump sum due at the end of the contract term, which can be expressed in dollars or a percentage of the car’s initial sale price. Make sure you clearly read the paperwork and fine print before you buy your car, and don’t sign the paperwork on the same day.
0% p.a. interest car finance
Another common carl loan offer from car dealers is the offer of 0% p.a. interest car loan from your dealer. While there’s no denying that is sounds like great deal, there are some things you need to know before signing up.
While the loan is being advertised as 0% p.a. interest car finance deal, the price of the car you’re look at may have been raised to compensate for the low rate and a negotiated price with a dealer may be out of the question. These offer are usually only valid for certain car models, so if you have your heart set on a particular model, you may have to compromise to take up the 0% interest offer.
It’s also important to look out for additional clauses in the contract, like needing to get the car serviced at the dealer, which might mean you paying higher service prices than your local mechanic. You should also check any warranties and insurances included in the contract and make sure you are only paying for what you need.
Get pre-approval for your car loan
In most cases, the safest way to finance a car is to have a car loan pre-approval before searching for the car. It’s not the most exciting part of buying a new car, but it can save you thousands in the long run.
Having your pre-approved loan and budget in mind before starting your car search will allow you to focus on finding the right car and the best deal, and room to negotiate with the seller knowing exactly how much you can spend.
Your local car finance broker will be able to help you get pre-approved finance for your car. Often, they have a huge range of car loan lenders they can source your loan from, some of which specialise in different cars and wholesalers. The interest rate might seem higher than the car loan deal you can get at your local dealership, but car loan brokers will know the fine print inside and out, and there’s a significantly less chance of a nasty surprise with your car loan later on.
Do your homework
The key when finding the right car finance for your new car is homework. Make sure you read the fine print and shop around for the deal that’s right for you. And definitely don’t choose on rate alone – often a low rate can hid other surprises, so make sure you know what you’re paying for in the long run.
Mortgage Choice can help you with your new car
Many people think that Mortgage Choice can only help with mortgages. It’s in the name right?! Mortgage Choice has a great car finance & buying service ready to help you find the right car finance and the car to go with it.
We have over 20 car loan lenders on our panel all competing for your car loan, with some great rates and features. We can find out what you need from your car loan, then search through hundreds of car loans to find you the right one, at a great rate.
Our car buying service – at no cost to you
Our team can also help you find the right car. Just let us know the make and model you’re interested in and we’ll do the rest. Instead of negotiating with one car dealer at a time, we have hundreds of dealers from all over Australia. And we can leverage our national buying power to make sure you get a great deal – all at no cost to you. We’ll even help you trade in your old car.
And the best part? You don’t have to spend your weekends walking through dealerships, or hours searching online. Let us do all the hard work for you.
Call Mortgage Choice in Underwood on 0437 347 601 to chat.
