For a successful vehicle purchase, you have to select the ideal automobile, negotiate a reasonable price, and most importantly, finance the acquisition in the most affordable manner. Unless you have a considerable amount of money saved to buy the vehicle in cash, you’ll certainly have to borrow the funds.
A car loan will help you purchase a vehicle that costs more than you can actually afford in cash. Generally, you pay off your car over a period by making monthly loan payments. Here are tips that will help you get the best auto loan, save you money, and reduce the stress associated with buying a car.
Do Your Research
One of the most vital things to do before buying a car is conducting market research on the latest prices, models, and trends in the car market. Do not make the mistake of going to a car lot without researching the vehicle you want to purchase. You can research everything you need to know about vehicles on the internet.
Also, if you want to purchase a new car, you have to determine the price the car dealer paid the manufacturer for the vehicle. This will be very helpful when price negotiations start. Meanwhile, if you wish to buy a second-hand vehicle, find out the latest resale prices for that particular car model. This will be a valuable bargaining tool.
Get Finance Ready
Before stepping into a car lot, you should consult various lenders to find the auto loan options you have. When shopping for a car loan, you could opt for dealer financing or direct lenders. Although dealer financing seems like the right option, mainly because it’s a one-stop-shop for your entire auto needs. However, when you carefully weigh the options, direct lending is the ideal option.
Although dealer financing may provide you with low-interest rates, you will have little room for negotiating on the actual car. On the other hand, direct lenders will get you preapproved for a car loan, thus increasing your bargaining power at the car dealership.
Examine Special Offers Carefully
It’s so enticing when a car dealer promises you free servicing up to 80,000 km or for five years. Particularly if you have a fancy car that requires dealer servicing to keep the warranty valid, it can cost you up to $1,000 each service! Evidently, you could end up saving $5,000 during the first five years of owning the vehicle.
However, these offers do not shave off a substantial amount from the price of the vehicle. Isn’t it rather ideal for negotiating $5,000 0ff the car’s price and getting your vehicle serviced at an independent mechanic for $300? Therefore you should rethink the special offer and negotiate the sale price of the vehicle.
When you get extra money, you should put it towards your debt. This can be put towards your auto loan, mortgage, or credit card repayments. This will help you pay off your loans faster, which translates to less interest paid over time.
Therefore, if you want the flexibility and freedom to repay your auto loan whenever you can, you should work with the ideal lender and product that allows free extra repayments.
Get a Fixed Rate
Some borrowers prefer a variable rate as they anticipate low-interest rates during the period of their loan. But what if the cash rate falls and your loan provider does not give you the benefits? You will most likely feel ripped off.
On the other hand, when the cash rate goes up, the lender will increase the interest rates. Therefore, you should opt for a fixed rate to get predictable monthly repayments at a reasonable rate.
It’s okay to be charged an application fee, but fees such as early repayment penalty and monthly service fee are unnecessary. When shopping for an auto loan, you should work with a lender with minimal car loan fees. It is also necessary to determine whether the fees payable are offset by low-interest rates or vise – versa.
Auto Loan Flexibility
When shopping for a car loan, you can opt for a personal loan. A personal loan offers you the flexibility of using it for other purposes, such as paying for a vacation and renovating a home. If you want to borrow more money than your vehicle’s worth, you should opt for a personal loan. However, you should know you will most likely pay high interest.
Purchasing a car is a significant investment, and it’s essential you research every part of the process. When you follow the above tips, you will get a good deal on your auto loan. Need help exploring your car loan options? Visit Perth car finance experts for the best car loan deals.
About the Author:
Ray is a sought after thought leader and an expert in financial and money management. He has been published and featured in over 50 leading sites and aims to contribute articles to help novice financial planners. One of his goals is to impart his knowledge in finance to educate and help ordinary people create and achieve their financial goals.