When you want to purchase a vehicle, it pays to compare car finance. Tweed Heads has many lending options available to you, so it is worthwhile exploring what the different lenders have to offer because you might end up with a better deal.
Here at iCREDIT, we specialise in helping our clients compare the different lending options available to them so that they can buy the car that they desire at a price that suits their budgets.
Here are three factors that you should consider when comparing car financing options. Weighing each of these factors together will help you determine which deal is best.
- Interest Rates
Also sometimes referred to as the cost of lending or the price of money, the interest rate that the lender offers will determine how much you will have to pay back over and above the cost of the vehicle itself.
Therefore, the lower the interest rate, the better. When comparing car financing options, find a lender that offers the most favourable interest rate possible.
Generally, the interest rate offered reflects the level of risk that the lender is taking. For this reason, first-time borrowers or borrowers with sketchy credit histories will typically be offered higher interest rates.
To get a lower interest rate, you will need to work on improving your credit rating by racking up a good borrowing track record. You can also achieve a lower interest rate by putting down a sizeable deposit on the vehicle upfront.
- Monthly Installments
It is important to determine what kind of monthly payments you can realistically afford. Different lenders will offer different monthly payment structures, so it is worth considering your options.
The higher the monthly payment, the lower the overall interest rate will likely be and the cheaper the overall cost of lending. Moreover, you will be able to pay back the loan and become debt-free faster. However, large monthly installments will put more pressure on your monthly budget, leading to a higher risk of defaulting.
Playing it safe by lowering your monthly payments is generally wiser if you are at risk of coming up short. This makes it a little easier on your monthly budget. However, the downside to this is that you will end up paying off the car over a longer period. Moreover, the total cost of the loan will increase as the interest adds up.
- Down Payment Requirements
Some lenders might require that you make a down payment upfront to secure the loan. While this might seem like a major hurdle, it can be a good thing, as it can lower the overall cost of the purchase since you will not be charged interest on the down payment portion. Therefore, the larger the down payment, the more you can shave off.
Some lenders might not require a down payment at all, but will then attach a higher interest rate to compensate for the risk.
Another option lenders frequently offer is a balloon payment. This works like a down payment, except that it comes at the end of the loan period rather than at the beginning. In other words, it is a deferred down payment that you only have to worry about later.
These are just a few things to consider when you compare car finance in Tweed Heads. Speak to us at iCREDIT today to find out more about how you can secure the best possible car loan to suit your needs.