Cars are expensive items and many people may choose to apply for a loan instead of buying with a lump-sum cash payment.
These tips can assist with the application process, and help you find the right loan for your circumstances.
1. Figure out a comfortable loan term
Before applying for a car loan, consider how the repayments could affect you financially over time, and whether or not servicing the loan could become a burden. Take into account your other outgoing expenses, such as insurance or other loans you’re paying off, before working out a repayment amount you can afford. This can help you narrow down the ideal borrowing term.
The longer the term, the lower the repayments, but it also means you’ll pay more interest in the long run.
2. Understand insurance options
When purchasing a vehicle, you’ll also need to obtain the right insurance cover for your needs. Understanding how much you’ll need to set aside for insurance payments could affect what you end up borrowing. Insurance can also help to provide peace of mind for anyone taking out a loan.
Comprehensive car insurance will cover the replacement cost of a vehicle if it’s stolen or written off or if you crash or damage it. You may also be given the option to insure your vehicle for its market value or another nominated amount.
GAP insurance is the difference between an insurance payout of a vehicle and the balance still owed on the financing. If you are financing a car, for example, GAP insurance may save you thousands of dollars if your car is written off and you still owe money on it.
Consumer credit insurance, or CCI, is an insurance that protects you if you are suddenly unable to make loan repayments, such as in the case of unemployment, illness, injury due to an accident, or death.
All new cars come with a manufacturer’s warranty that guarantees that mechanical faults to your car occurring within a certain period will be repaired. However, once the manufacturer’s warranty period is over, you will be responsible for paying for any repairs to the vehicle.
Purchasing an extended warranty allows you to extend the coverage on your original manufacturer’s warranty for an additional time, and could help you save thousands of dollars in large, unexpected repair bills later on.
3. Get different quotes before deciding
You have a number of options when looking to finance a vehicle. You could go to your dealer, enquire at your bank or search for lenders online. Make sure you do the research to see which one suits you best. Take the time to evaluate a few car loan quotes and you could save enough money to spend on upgrades or accessories for your new ride.
Buying a car is always exciting, so if you do your homework, understand your options and are comfortable with the loan you’re taking, you’ll be in the best position to enjoy the experience.
For more information about how you can find a loan that’s right for you, contact one of our Lending Specialists. Alternatively, feel free to explore your car loan options by commenting here!