Financing a car can be one of the biggest financial choices you’ll make in your life, next to buying a property. The total cost of the loan will depend on a few factors: how much the initial loan amount is for, the interest rate and the length of repayment. Not all loan companies are created equal and it really pays to do some research before you get a car loan as you can save yourself thousands of dollars over the course of the loan. We’ve got a few helpful tips for car finance that will help you get your loan sorted sooner and ensure you don’t spend unnecessary amounts of money on interest:
1) Shop Around
The Internet has changed almost every aspect of our life in some way or another, and that change even extends to finding the best value car loan. There are so many different companies that you can search online that are offering car finance. I suggest spending some time looking around at different websites and making a full car loan comparison to find out which company offers the most competitive interest rates. A few differences in the interest percentage can equate to a few thousand dollars saved if you take the time to shop around.
2) Have a Beefy Deposit
This rings true with anything you buy, but especially big purchases like car loans or a mortgage. Having a large deposit means that the balance you owe will be significantly smaller, which means it will take less time to pay off. Paying off your loan faster means that you’ll save money on interest and you’ll get it cleared up faster, which is great for your bank account. Saving an extra thousand or two for the deposit can make a substantial difference in how quickly you can pay off your car loan.
3) Be Aggressive
Often people will pay car loans back at the minimum rate, but I think it’s better to be aggressive with your loan. The higher your weekly, fortnightly or monthly payments are, the faster the loan balance will be cleared. Increasing your repayments by even as little as $10 or $20 a week, can make a big difference on an annual basis.
4) Be Realistic
Maybe your dream car costs $60,000 and you’re pretty keen to buy it, but before you sign anything take a moment to make sure this value is realistic. How much is your annual salary? How long will this loan take you to pay off? Can you afford the monthly repayments? There’s nothing worse than overcommitting and finding yourself struggling to make repayments. Prior to getting a loan, try spending a month or two putting the repayments you’d spend on your new car into a savings account and see how you cope without this spare money. If you manage fine for a month or two, chances are it will be a viable option over the course of your loan.
Buying a new car is very exciting, but make sure you don’t get too wound up in the excitement of it all. Spend a few hours finding a competitive car loan, ensuring you can meet the minimum repayments and figuring out how fast you can get the loan paid off.