Choosing your dream car should be an exhilarating adventure, but with countless car loan and financing options, it can quickly become confusing and complicated. Don’t stress, though, this blog post will explore the ins and outs of car loan shopping and simplify the process, so you’ll know exactly what to keep in mind when applying for car finance. 

Car Loan Shopping – The Basics

When shopping around for the car loan that will suit you best, it’s important to know the basics so you can make an informed decision and avoid getting overcharged. With all the different lenders, interest rates, and loan terms available on the market today, it can be difficult to navigate. 

Secured versus unsecured car loans

Secured loans involve borrowing against collateral such as a vehicle or real estate, whereas unsecured loans don’t require any form of collateral but usually have higher interest rates than secured ones. Consider your financial situation before deciding which option is right for you. The majority of car loans are secured with the vehicle itself, but there are unsecured options available as well.

Repayment terms

The length of the loan and how much you’ll be repaying each month will depend on the amount borrowed and your financial situation. Consider whether a longer loan period with smaller payments is more feasible for you. Also, make sure to research interest rates or give me a call to do that legwork for you.

Options to consider

Are you a small business owner? If you are and need a car for work purposes, you could certainly benefit from choosing an asset finance loan. Asset loans are secured against the vehicle, which means that the car serves as collateral, lowering the interest rates and making it a more affordable option. Business owners can also take advantage of the tax deductions available for commercial car purchases, and they can choose flexible repayment terms that work around their cash flow. Your bookkeeper or accountant would be able to advise on the best route and should be consulted if this is something you’re considering.

PAYG employees have options as well and can enter into a novated lease. In this type of arrangement, if you’re an employee with a steady income, you can enter into a three-way agreement with your employer and an approved finance provider. It works by deducting your car finance repayments from your pre-tax wages, reducing your taxable income and ultimately saving you money on tax payable. You can also include car maintenance and running costs in the lease, making it an all-inclusive car finance solution that can help simplify your budgeting. 

Be Wary of Dealership Finance

You’ll undoubtedly have the car salesperson offer you dealership finance. And while this might seem convenient, it may not be the best option for you and generally speaking isn’t. Dealerships may offer attractive interest rates and flexible repayment terms, but they usually inflate the price of the car to make up for the low interest rates. This means you could end up paying more for the car than you would with other types of financing. Additionally, dealership finance contracts often come with fees and charges that are not properly explained, so make sure you read the fine print and seek independent advice before signing anything.

Speak to a Finance Broker (Us!)

Consulting a finance broker is an ideal way to determine the best car finance product that suits your needs and budget. At Grow Financial Solutions, we can compare your options across multiple finance providers, saving you time and effort. We are also on hand each step of the way to explain the different jargon and finance terms, compare interest rates, and help you negotiate better repayment terms that work around your budget. We can also assist with pre-approval that allows you to shop for a car with a budget in mind, putting you in a better negotiating position when you’re ready to buy.

When you’ve found the right car, next comes choosing the right car loan, and it’s essential to consider your financial situation and lifestyle. Whether you’re an employee, a business owner, or looking to finance your car through a bank or credit union, evaluate your options carefully before committing. Remember to compare interest rates, pay attention to fees and charges, and choose flexible repayment terms that fit your budget not only now but into the life of your loan. Better still, why not give us a call?  We’d be happy to guide you through the car financing process, ensuring that you make the best financial decision for your situation.