Financing your next car may seem like a daunting task, only second to buying a house. To successfully meet your vehicle financing goals, you need to consider what options are available, the requirements and how much it’s going to cost. In saying this, keep reading to find the different ways of financing your next car!
Review Your Credit History
One of the important steps before entering a dealership is to make sure that you’re able to meet repayments. Lenders will be examining your credit history to determine if you’re able to successfully finance your car. That’s why paying off your debts and making on-time payments can improve your credit score, which can reduce the interest payable on your car loan. A good credit score can also make you eligible for some upper-tier car loans and higher loan amounts.
On the other hand, if you have a poor credit history (such as irregular payments, defaulted payments or even a repossession), then this will adversely impact your chances. However, it’s still possible to re-establish your credit rating if you pay on-time for 12 months and get lower interest rates.
Loan Terms & Repayment
It is highly recommended that you keep the loan term as short as you can afford. This is because a shorter loan term means higher repayments – which may sound bad, but is actually beneficial in the long run. Generally, the longer it takes you to repay a car loan, the more interest you’ll pay over time, which is not ideal since you’re already paying for a depreciating asset. While it may seem tempting to stretch out your loan repayments over a longer time period, you’ll end up paying more. On this note, it’s also advisable to put down the biggest deposit, especially for a new car, to avoid the larger costs of depreciation.
Throughout the journey of financing your vehicle, there are many accompanying costs, such as registration fees, maintenance costs, sales tax, insurance, documentation fees, and other supplementary features like extended warranties. However, if you roll these fees into your financing, you’re increasing the loan amount but not the value of the car securing the loan.
Speak to us today
By consulting with our team, you can find the various options available for financing your next vehicle. We have access to a large number of lenders and will be very familiar with the different car financing products most suited for your financial circumstance. We’ll examine your assets, liabilities and credit rating to find out whether you’re qualified to get a car loan for a specified amount. Additionally, you can speed up the car-buying process in the dealership if you get a pre-approval, since both parties know you have a fixed limit and can more effectively avoid suspicious deals.