The time has come to buy a new car. You're researching makes and models and weighing the pros and cons of buying new vs. second-hand. Excitement's building, and you're keen to hit the road as soon as possible.
But you're also thinking about your car financing options. How will you pay? What's the most cost-effective loan? Where can you find the best terms and interest rates?
There's a whole lot to consider, and the decision you make today will impact your financial health tomorrow. To help you make the best choice for your unique circumstances, we've put together five must-follow tips. Let's get started!
Tip #1: Know the difference between Secured and Unsecured Loans
You know what they say: Knowledge is power.
You'll most likely use a personal loan or car loan to buy your new vehicle. But did you know there are different types of financing solutions within those categories? This includes secured and unsecured loans.
A secured loan is a loan that uses an asset you already own—like another vehicle, or a Term Deposit—as collateral. If you default on your loan, the lender can sell off that asset to regain their losses. This makes it less risky, so you'll likely get lower interest rates and potentially favourable terms.
An unsecured loan is the opposite—there's no collateral. It's higher risk for the lender, so the interest rates are generally greater. That being said, if you don't have any assets to offer as security, an unsecured loan is still a great option.
Tip #2: Check your credit score
Regardless of the loan type you choose, you'll need a good credit score to get approved for a loan and lock in lower interest rates.
A credit score essentially tells a lender how reliable you are when it comes to repayments. The higher the score, the more likely—from their perspective—you are to make your payments in full and on time.
Your credit score is determined by a few things, like whether you pay bills on time and how much debt you already have.
Want to know your credit score? Use a free service like Equifax or Finder.
Tip #3: Compare interest rates and loan terms
Hitting the road
Interest Rate
5.99
%
p.a.
Comparison rate
6.37
%^
p.a.
Secured New Car Loan - Fixed rates for 1-7 years
If you’re shopping around for a new car, van, ute or 4WD, put your foot down and check out our New Car Loan.
Hitting the road
If you’re shopping around for a new car, van, ute or 4WD, put your foot down and check out our New Car Loan.
Personal and car loans differ a whole lot between lenders, so take your time to compare and contrast what's available to you. Even small variations in interest rates or fees can have a big impact on how much you pay overall.
In addition to interest rates, look at the fees, early repayment methods, other terms, and flexibility of the repayment schedule.
Tip #4: Set a realistic budget
Don't stretch your finances too thin. Instead, come up with a realistic budget and stick to it. Figure out how much you can comfortably afford to pay each month and work backwards from there.
Don't forget to consider all those ongoing car-related expenses, too, like petrol, insurance, and rego.
Want a shortcut? Use our personal loan calculator to estimate your repayments now.
Tip #5: Get pre-approval before car shopping
Pre-approval gives you a concrete idea of how much you can spend on your car. It also:
• Gives you bargaining power when negotiating with dealers
• Saves time because you can focus on cars that are actually within budget
• Helps you avoid the temptation of going over what you can afford
Plus, with pre-approval, you won't run into any surprises in the lending process. It's all smooth sailing.
Greater Bank
Score your dream car
Buying a new car is exciting. But the financing process? It can be overwhelming. Use these tips to get your hands on a loan that just makes sense, one you can afford, and one with terms that match your lifestyle.
If you're ready to get started, learn more about our personal loans today and check out our competitive rates. Don't hesitate to give us a call on 13 13 86 or shoot us a message for personalised help.
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