Apart from a home, a car is one of the single biggest purchases you are likely to make. You should always shop around for finance before you go shopping for a car so that you can find a loan that suits your circumstances. This also means that you can have peace of mind that you have the most competitive deal and are not at the mercy of the dealer’s finance department. Most financiers will give you a pre-approval for a loan, so you know exactly how much you can borrow and keep to your budget.
Comparing car loans
Interest rates on car loans tend to be a couple of percentage points higher than home loans and loan terms vary between 1-7 years. Keep in mind when comparing car loan offers from multiple lenders, given all other factors are the same (loan amount, loan term) it is always best to compare repayments per month rather than just interest rates, as various fees and charges can be included in the loan. Checking on early repayment fees and charges is also important.
Setting a residual amount
You also have the option to nominate a balloon or residual amount which basically sets a lump sum payment owed to the financier at the end of the loan term. This in turn reduces the periodic repayment amount during the regular term of the loan, but means you need to have the lump sum ready at the end, or be willing to refinance this amount if necessary.
Setup and ongoing costs
There are usually minimal set up and ongoing costs but most lenders charge an early break fee should you wish to repay the full amount of your debt prior to the term ending. This break fee could be quite substantial depending on the remaining loan term.
Finance from dealers
In many instances, a dealer might offer to arrange finance for you if you buy from a car dealership. While it may seem convenient for you to obtain finance directly from the dealer, banks, credit unions and specialist lending companies all offer asset finance, so it is always best to check what else is on offer before committing to a certain financier.
Your home may be the biggest item on your wish list, but a competitive home loan is not the only kind of finance Accru can help you with. Our finance and insurance specialists can help you find the right loan product for a whole range of lifestyle improvements, from a new car to that speed boat your family has always wanted.
Whatever’s on your wish list, ask us about financing it!