Now is the time to be buying a car. The dealers are competing fiercely for business after a slow year, and the interest rates are at record lows. In fact, have you heard the phrase: zero percent interest rates and ultra-low dealer finance?
50% of vehicle buyers gain a pre-approval either with their own bank or through their broker before approaching a car dealership. This allows buyers to budget correctly for their purchase without being caught up in the moment and overspend at the dealership.
0% car loans; What’s it all about?
0% loan contracts usually have restrictions that other financial loans won’t. Many 0% loans have a fixed car sale price, meaning you cannot negotiate on the retail price of your new vehicle as the loan interest is sub-vented (included) in the price of the car. You also need to take into account what fees will be charged or any insurance / aftermarket products that haven’t been discussed with you. These are usually sold in the loan as the total repayment, but add a significant cost on the loan. Are there any early payout fees? Are you able to make additional repayments without penalty.
Rather than start a loan believing you’re paying 0% interest, look at the total cost of the loan over the term to see if it’s viable. Quite often, negotiating a lower sale price with the dealer and opting for a ‘normal’ interest rate loan can work out cheaper in the long run for you.
Used Car Over New Car
Used cars are cheaper to buy, yes, but when financing an older model the car, the higher the risk is to the lender , the higher the interest rate is. Newer used vehicles still attract competitive and near new interest rates with slight interest rate increases the older the vehicle is.
Compare Your Rates
Don’t make the mistake of merely comparing the interest rates. Take into consideration the lenders establishment fee, monthly service fees, any early payout fees or risk fees the lender may have. This will give you a clear picture on the overall cost of the loan. Consumers tend to be wholly focused on gaining the lowest interest rate possible,but fail to look at the additional loan features. Spending some time comparing lenders and loans will help you make an informed decision on your new loan.
This is a good way to get an understanding on rough repayments for your new loan. Lenders also show a comparison interest rate, meaning this is the true interest rate based on the loan term, fees and charges and monthly costs.
Early Pay-off / Termination Fee
This is where your investigation into penalties will have been helpful. Early termination fees are essentially admin costs recouped by the lender for unpaid interest over the term. Early payout fees can range from $0 to $700 at the commencement of the loan contract and reduces for every month the loan has run. You pay a pro-rata of the early payout fee, if completing the loan in full before the contracted loan term.
Using A Broker
No one loan is the same. With more banks and car finance companies offering their own form of car loans, it’s easy to become confused with guidelines, costs and terms. Using a car finance company expert is the best way to negotiate a great deal as they understand each lenders individual requirements and can easily match a car loan to your individual needs & budget.
A broker can save you a lot of time from errors or misunderstandings. They can profile your application with lenders in the background, which will reduce the number of credit enquiries noted on your credit file. They can present your loan application to the appropriate lender correctly also arrange the loan paperwork for you to view once approved.
A car finance broker can be a better, hassle free process to go through when comparing car finance options in Tweed Heads.
If you need help finding the most suitable option when going to compare car finance in Tweed Heads, contact us today. We will have you shopping for your next car with knowledge and confidence in no time.