Last year, around 480,000 buyers likely accepted higher rates on their car purchase than they needed to. Why?
Because they opted for dealership financing without exploring their other options.
By choosing to accept a deal offered by your dealership, you could be accepting higher interest rates and far less flexible loan terms compared to other financing options. By comparing different lenders and their rates, you can find a loan that not only meets your financial needs but also offers the most competitive rate available.
When you take the time to research and compare interest rates, you can save a substantial amount of money over the life of your loan. In this guide, we will provide you with practical tips and strategies to help you secure the best rate on your car loan.
Getting the best car loan rate: What’s the big deal?
Because car financing will typically involve a shorter loan term, many borrowers will assume the interest rate is less important. However, even small differences in interest rates can cause significant effects on the total cost of a loan.
To secure the best car finance possible for your financial situation, there are number of steps you can take:
Improve your credit score
When determining what interest rate to offer you, the first thing a lender will look at is your credit score. To make sure you are best representing yourself, start by making sure your credit history details are correct and that any issues or incorrect information is rectified quickly. After this, you should pay off any existing debts and avoid applying for new credit applications as these will cause your credit score to dip.
Compare different loan products
Although tempting, don’t accept the first offer presented through your dealership. It may seem easier, or like a good deal, but it's important to compare a variety of loan products through a range of lenders. When considering a deal, look at the interest rate, as well as the loan terms, fees and charges.
Negotiate for better loan terms
When you negotiate with a lender, you may be able to secure a better loan term. An example of this is if you requested a shorter loan term to reduce your overall amount of interest, and possibly reduced interest fees.
Beware of Balloon Payments
A ‘balloon payment’ means you will pay off part of your loan as regular repayments, then pay a final lump sum amount at the end of your loan term. Although this seems like a good deal because it lowers your monthly payments, you’ll have to repay the lump sum with interest. This will often mean the total cost of your loan will be higher.
Secured vs unsecured
Most car loans are secured, with the car itself used as collateral. If you don’t pay the loan back on time, the lender can repossess your car and sell it. Due to this security, you will often be able to secure a lower interest rate. With an unsecured loan, you won’t have to provide your car as security, but the interest rate will be higher.
Ask a broker for help
The easiest way to secure the cheapest car loan rate on the market is by contacting one of our experienced Jade Finance brokers. By using our brokers, you’ll receive next-level loan comparisons from a range of 80+ banks and lenders. By coming directly to us, we’ll negotiate for the best deal on your behalf.
Closing thoughts
Although acquiring a loan through a dealership is more convenient, they will often have higher interest rates and less flexible terms. When seeking a loan, it is essential to compare various loan products to find the most competitive one for your financial needs.
It is important to remember that small differences can make a big impact on your total loan cost. By improving your credit score, negotiating terms, and considering secured or unsecured loans, you can boost your chances of acquiring the best rate.
To Get the Best Car Loan Rates in Australia, Talk to Jade Finance.
If you want to feel confident in your decision to finance your car, the only business that should come to mind is Jade Car Loans. An enviable reputation in the motor vehicle finance sector, cheap interest rates, and a service tailored to your needs are just a few of the benefits you will receive through our personal and professional finance brokers. We have a large source of options available to ensure you are getting the right loan for you and your car. If respect and attention to detail is the kind of service you want, Request a Quote with Jade Car Loans today.
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