When considering a major purchase such as a boat, car, motorbike or caravan, buyers will generally have a fairly good idea of what they can afford. They know essentially what price range to look at when reviewing what is on the market. If planning to make that purchase with finance, buyers will also want to have a good idea of what loan repayments they can manage.
When purchasing goods with a loan, affordability can refer to a greater extent to the loan payments than to the total advertised purchase price. After all, that is the amount that the buyer will need to be paying out each month. The repayments have to work with their resources, their budget and their financial goals.
To achieve the optimum affordability for their purchase, savvy buyers will be looking to secure both the lowest purchase price and the lowest monthly payments. Negotiating the lowest purchase price with the seller will essentially be up to the seller’s flexibility and the buyer’s bargaining skills.
But when it comes to getting lower monthly loan repayments and dealing with banks and lenders, what tools, strategies and resources can buyers utilise? Individual loan applicants often have minimal bargaining power with a large lender. Jade Finance outlines a range of methods that can be used to tailor a personal secured loan to achieve lower monthly loan repayments.
Loan Structure
Secured loans comprise a number of elements and causative factors. The features and inclusions that work individually and together to derive the repayment.
- Loan Interest Rate
- Total Loan Amount
- Term of the Loan
- Type of Lender
We’ll go through how each of these can be varied to achieve a cheaper loan repayment.
Get the Cheapest Interest Rate
When scrutinising the lending market for a personal loan, the interest rate on offer will usually be the main feature which is promoted by the lender and searched for by the buyer. Under the Consumer Laws, consumer finance lenders must display both an Advertised Interest Rate and the Comparison Rate. The Comparison Rate is based on a specific loan example which will be detailed adjacent to the rate. This rate includes certain fees and charges.
After the total loan amount or principle, the interest component of a loan is the next major cost. So the cheaper the interest rate the cheaper the repayments. The interest rates offered will vary across loan categories – cars, boats, caravans, and from lender to bank to finance company.
Lenders set their rates according to their own costs and the RBA’s official cash rate as well as their interest in being competitive in that market. While some of the percentage variations from lender to lender may seem quite small and as such not very important, a quick referral to our Interest Rate Comparison and Loan Calculator will show you how important this actual is.
By inputting the details of your loan into the calculator and keeping all values steady while changing the interest rate, you’ll see the effect of the rate on the repayment.
So that is step one, realising that securing the cheapest interest rate is important. Step two – how do you actually get the cheapest interest rate? That takes us to choice of lender and why engaging a broker-style lender like Jade Finance can assist. Our consultants handle the quote sourcing from across our vast group of lender accreditations and use our bargaining power to secure our customers the best interest rate possible for their requirements. More on choice of lender below!
Request Different Loan Terms
Another method to achieve a lower repayment amount is in regard to the loan terms. The term is the number of years to repay the loan. In simple terms, if you want the lowest loan repayments then request the longest possible loan term. If the loan term is shorter, the repayment will be higher.
But be mindful that interest is a per year rate so the more years of the loan the greater the interest payable in total.
Access the Right Lender
Finding and applying to the right lender can have a big impact on the repayment amount offered in the loan quote. When a loan applicant contacts a bank or finance company for a quote they are often TOLD not ASKED how the loan will be structured – at what rate and over what terms.
By using the services of Jade Finance, we ask our customers what they are seeking and then proceed to source the loan quote as close as possible to those specifications. As lenders we have the bargaining power to negotiate that individual borrowers simply don’t have.
Another tip is to consider specialist lenders. In addition to banks and finance companies, there are lenders that specialise in different loan markets such as leisure goods such as boats and caravans. With particular interest in the sector, these lenders often have a greater understanding of the market and may offer better interest rates and an overall better loan with those essential lower repayments. Jade Finance has connections with such lenders and provide the access to these channels.
Lower loan repayments can be achievable by having an understanding of how personal secured loans are structured and priced and by engaging experts such as Jade to source and secure the loan for you.
Contact Jade Finance by phone 1300 000 008 to discuss a lower repayment loan for a car, motorbike, caravan or boat.
DISCLAIMER: NO LIABILITY IS ACCEPTED IF ERRORS OR MISREPRESENTATIONS ARE FOUND IN THIS ARTICLE. THE ARTICLE IS PREPARED AND PRESENTED FOR GENERAL INFORMATIVE PURPOSES AND IS NOT INTENDED TO BE THE SOLE SOURCE OF INFORMATION FOR MAKING FINANCIAL DECISIONS. THOSE REQUIRING GUIDANCE AND ADVICE SHOULD CONSULT A FINANCIAL ADVISOR.
