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5 Factors to think about before you apply for a car loan

October 1st, 2015 / No Comments /

Buying a new car is an exciting time! If you’re planning to finance your new purchase with a car loan it’s important that you don’t rush into a decision and you take time to research your options so you can find the right loan for you.

If your loan is being secured against the vehicle, your lender may insist on the vehicle being new or less than two years old.

Here are a few things you should think about before you choose a loan or start the application process.

  1. Do you want a fixed or variable rate loan? Variable rate loans are usually cheaper but the monthly repayments could change and potentially increase. Fixed rate loans often come with higher rates and less flexibility but you will have certainty around your monthly payments for the fixed period of the loan.
  2. Are you buying a new car or a used one? If you want to buy a used car you may face some restrictions around the type of loan you can apply for. If your loan is being secured against the vehicle, your lender may insist on the vehicle being new or less than two years old. Make sure you check individual lenders’ policies if you want to buy a used car.
  3. Do you want extra features on your loan? Some car loans come with additional features like extra repayments but these can come with an extra fee. Decide ahead of time what extra features you want on your loan if any, so you can avoid paying for anything you aren’t going to need.
  4. Work out a budget. While you may be tempted to borrow the maximum your lender will give you, be wary of taking on too much. The quicker you can pay off your loan, the less you will pay in interest. Decide ahead of time what you will be comfortable paying off each month and stick to it.
  5. What will you do for insurance? Many lenders require your vehicle to be fully insured until your loan is repaid. If you don’t have the adequate insurance in place it may create delays in getting your application approved.

The right car loan can help you achieve your goals of vehicle ownership but the wrong car loan can cause financial stress and headaches. If you aren’t sure what car loan will be right for you or you want to evaluate all your options, professional advice can help.

At Home Buyers Finance we can help you find and apply for your car loan and we can even help you arrange your insurance so you don’t have to deal with multiple providers. Contact us today to arrange a free consultation and discuss your situation.

This article is general information only, and is not advice. You should not rely on it as advice. We recommend you speak with a credit licensee or authorised credit representative, licensed financial service provider, registered accountant or tax practitioner, or lawyer for any credit, financial, tax, or legal advice.

5 Factors to think about before you apply for a car loan

Buying a new car is an exciting time! If you’re planning to finance your new purchase with a car loan it’s important that you don’t rush into a decision and you take time to research your options so you can find the right loan for you. If your loan is being secured against the vehicle, your […]

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