Tips for choosing a car loan
Whether you’re eyeing off a shiny new Mazda 3 or a sporty Audi, finding the right car loan for your needs could be one of the most important decisions you make before you get your hands on those keys.
The team at Credit Savvy have compiled a list of tips and things to consider when you’re ready to compare car loans – just remember you should consider your own needs and financial situation when doing your research.
Set a clear budget
Work out how much you can afford to borrow and be realistic about how much you can really pay back each month. It doesn’t hurt to include a buffer. You may find our loan calculator handy for working out repayments.
Make sure your credit reputation is in order
Use a free service like Credit Savvy to get your free credit score so that you can see where you stand. It’s worth noting that lenders such as MoneyPlace and RateSetter offer competitive interest rates for people with higher credit scores.
Decide on the type of car loan
Car loan interest rates can vary significantly between secured and unsecured car loans. A secured loan is one where an asset, like the car you’re buying, is used as security for the loan. That means if you default, the credit provider can repossess your car to reclaim this money.
Fixed rate or variable rate?
Another choice you have is between a variable rate loan and a fixed rate loan. With a fixed rate, your interest rate is locked in for the term of the loan. However, if you think you’ll be making extra repayments, be sure to check if there are early termination fees for paying off your car loan early.
Look out for extra costs
Speaking of fees, make sure you take into account any upfront establishment fees, monthly fees and any other costs associated with the car loan.
Use free online resources to learn and compare
You can use our free comparison tool to compare car loans from over 20 lenders. It can be a good idea to have your finance organised beforehand so you don’t rush into a car finance offer from the dealership. Always read the terms and conditions before making any decisions though!
~Comparison rate is calculated as indicated. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different fees, terms, or a different loan amount might result in a different comparison rate.
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