A car is the second most expensive purchase you can buy after your home. This is the reason why car finance loans are a common option for those thinking about purchasing a car, whether it’s new or used. With a good repayment plan, anyone can easily pay off a car finance loan in no time. Here are a few tips on getting a car finance loan.
Make sure you have a good credit score.
You can take advantage of the best credit deals if you have a good credit score. Basically, this means that you may be allowed to borrow a large amount at a reasonable interest rate. It is important, however, to make sure that you are able to make repayments on time so you need a clear picture of your finances to ensure that you’ll have enough to meet each payment period as it comes. A good credit score is crucial whether you choose the dealer’s financing options or a personal car loan.
Know which type of loan options are best for your situation.
There are a number of loan options that could work for you but it is important to choose the one that carries the most reasonable terms with the least amount of risk. Generally, car loans can run for 3 to 5 years and interest rates are tiered depending on the amount of the loan. Some experts recommend going a tier up if your loan amount is just below the next upward tier to take advantage of a lesser interest rate. If you have the capacity to pay, take a shorter term to decrease the overall cost of interest you need to pay in the long run, even if it means making larger monthly payments.
You have the option to buy a car through hire purchase agreements. Hire purchase agreements are offered by car dealerships and brokers and they come with flexible repayment terms and fixed interest rates. This is ideal if you can easily pay the deposit and you prefer to buy a new car because rates are very competitive for new cars under hire purchase agreements. However, in hire purchase, you do not own the car until the last payment is made. This makes this option ideal if you don’t need a car right away and can afford to wait until all monthly payments are made.
Use a credit card.
Experts recommend paying some of the deposit on a credit card because doing so opens you up for Section 75 protection. It will be easier to sort out any problems with the loan down the line when the credit card provider is jointly liable with the car dealer. This option is ideal if you choose a personal loan to pay for your car.
How a Car Finance Broker Can Help
A car finance broker can be the best person to help you choose the best type of loan for you. Car finance brokers help you find the best finance loans with the most competitive rates and repayment options so you don’t have to do the legwork when it comes to seeking and comparing different loan options and providers. This can be a big help if this is your first time applying for a car loan. A car broker will collect your financial information, perform credit checks for you and approach lenders to see if they can offer the loan packages that best suits your financial situation. Car finance brokers also work on commission, which means that they only get paid if they find the best loan product for you.
Work with your car finance broker to get the best car loan deals in the market. Get in touch with your car finance broker today.