Car Loans - Things to Consider
Cars play a big part in our lives and the choices are many depending on your taste and of course your budget. Whether you buy brand new or used, the cost is often quite high and most people, especially first time car buyers will need to borrow the money
There are several options to take when obtaining a car loan.You may approach a lender directly or choose to apply online as more and more people are doing everyday. Car loans are provided by banks, credit unions, building societies and private lenders. Many car yards offer car loans as well. You may also wish to contact a broker who will shop around for you and look for the best car loan available.
When looking for a car loan you should consider the following:
Can car loans be pre-approved?
Knowing your budget in advance will help you with negotiating the price of the car. Also, it will prevent you spending more money than you have. Cars lose their value quite quickly so if you can get a really good purchase price the loss is not as great.
Are there application fees for car loans?
Different lenders have different application fees. They may range from $0 to $250. In some cases you are better off to pay a $250 application fee and have a lower interest rate rather than have a $0 application fee and a high interest rate.Often these lending fees are unavoidable so bear this in mind when shopping around..
Are there ongoing monthly or annual fees?
Some lenders will you charge an ongoing monthly fee, they may call it an account keeping fee and it could be up to $15 per month.
What is the interest rate?
This is the obvious question when applying for a car loan. The higher the interest rate the more you will pay at the end of your car loan.
Is there a choice of fixed and variable interest rates?
If you are planning to make additional payments on your car loan, and in doing so pay off your loan more quickly, you should take a variable interest rate. A fixed interest rate is more suitable for you if your goal is to have your monthly repayments as low as possible.
Can I make extra repayments or lump sum repayments?
Make sure this is written into your car loan contract, so that you are not penalised if you pay your car loan early. The more extra payments you make the more money you will save and your loan will be repaid sooner.
This is important and allows the process of upgrading or selling if there are no early payment penalties.
Is there an early repayment penalty?
If there are penalties make sure the amounts are clearly outlined in your loan contract.
Are there missed payment penalties?
Again, different lenders will have different penalties for missed payments. Make sure that you know what they are.
Buying a car can be an exciting time and quite overwhelming for some. Good planning prior to your purchase will ensure process goes smoothly.
Tags: auto finance, car finance, car loans, vehicle loan