There are many options available to get a car loan, but what is going to be the best option for you to get a car loan?
Here is a list of options available when getting a car loan.
Quite often people would assume that their bank is going to look after them, as they have a great relationship with them. This may not always be the case and would be limiting your options to their only product and their lending criteria.
Whilst in some cases this can be the best option, more often than not, there are better options available. If you shop yourself bank to bank can also be time-consuming, and some banks may advise you to apply with them to see what interest rate you would qualify for, which can affect you from actually getting the best available deal for your circumstances when you actually do find a good deal.
Credit Unions may offer reasonable rates, but a lot of credit unions only offer variable interest rates which can fluctuate with the market, meaning your interest rate and repayments can increase over your loan term.
If you don’t have a relationship with the credit union, they can really make their lending criteria quite strict, as they use their advertised rates to try and gain more banking customers.
I won’t lie and say that you cannot get a good deal with dealership finance, but you have to understand the finance market and how to negotiate. Just remember that a dealership’s finance department is the most profitable department of a dealership, and management expects big results and huge upsell targets from these departments, so these salespeople have a vested interest to ensure that the dealership is making as much profit out of every opportunity.
Make sure you are ready for some pretty typical dealership sales tactics, making you believe you don’t have many options. In most cases, you will have plenty of options, and if you apply for finance at the dealership, does not mean that you are committed to purchasing your car with that finance agreement, even if you have applied and have been approved. Your car purchase contract does not and cannot state that you must pay for the car with their finance before, during, or after the sale, as long as you decide prior to picking up your new car how you intend on settling the car purchase contract.
Home Loan Bundle
Whilst many people will believe this is the best option as they will focus on the interest rate alone, in most cases your interest rate will be variable and this can increase over time. The biggest risk of taking this option is if you make the minimum repayment and pay your car loan off over your home loan term, then this option will actually end up being the most expensive. Don’t get me wrong, if you are disciplined and pay an equal amount to what you would on a car loan, this option can end up being cheaper, depending on where interest rates end up, but we don’t know where they could end up, unfortunately.
Car Loan Broker
A car loan broker can be an invaluable tool if you find a good, ethical broker. They will usually have most of the main motor financiers on their lending panel and can save you time shopping around and gain you access to their discounted interest rates that they can achieve through the volumes of business they provide their lenders. Not only that, the convenience of them guiding you through the maze of paperwork, presenting the application correctly to the lender and doing this all from the comfort of your own home is an added bonus.