Get a Finance or Loan Pre-Approval.
Arrange your Car Loan before you buy a car.
You will know exactly how much you have to spend, and the age of car required.
Tips When Choosing Your Finance.
You need to understand that it is important for you to understand your credit situation before deciding on buying a car using a car loan.
How much you can afford, both as a payment and the total amount to be borrowed.
Who your lender will be, this will be subject to your credit profile, this will also determine the interest rate you qualify for?
You can check your credit at www.freecreditreport.com.au it will not show as a credit enquiry or damage your credit score. It is a free service.
We recommend getting your loan pre-approved so that you know how much you can
afford on a regular repayment, the total amount you can spend and the age of car you need to target to get the best finance deal. This can all be done before visiting a car dealership.
- Don’t sign a contract with the condition “‘subject to finance”. It should say “subject to finance to suit purchaser”’ this will stop you from being pushed into the dealers finance that may be expensive.
- The dealer will try to avoid writing this clause on the contract. As the wording allows you not to buy the car if the finance doesn’t suit you.
- There are some great finance deals offered by dealers.
- Do your research as sometimes you can end up paying more for your car than if you paid a higher interest rate and negotiated the purchase price.
- Check the total price and see how it compares with other options.
- Always read the loan documentation carefully and get legal advice if you need clarification or are unsure of any terms.
You can avoid a lot of the stress in buying and financing a new or used car by applying online with www.loans123.com.au .
We can even help you find the car you want with our free car buying and car find service.
This is a free service to our clients that can often save you time and money.
We can even bring the car to you for your approval.
Do I Need to Pay a Deposit?
- A finance company may approve your loan subject to a deposit being paid. This reduces the financiers’ risk and lowers your repayments.
- A dealer may ask you to pay a deposit to hold the car. This is optional. The dealer may not hold the car if you do not pay a holding deposit.
- If you are buying a car privately do not pay a deposit until you have had the car checked and your finance approved. This is the riskiest way to buy a car.
- A private sale does not have any warranty and you should do a PPSR check to make sure that no money is owing on the car.
- Most financiers will not finance a private purchase or if they do, they will charge a higher interest rate because of the higher risk of fraud or the quality of the car not being as good as from a dealer.
Insurance.
The only Insurance you must have is comprehensive insurance.
Any other insurances are optional.
If the car is financed, it is a condition of the loan that the vehicle must be insured.
There are some great loan protection insurances available since the Royal Commission.
GAP insurance is known as guaranteed asset protection or shortfall insurance.
This covers you if your car is written off, this insurance will pay the lender if there’s a gap/difference between what you owe to the lender and what you get from your comprehensive car insurance.
These insurances can cover your loan repayments if you lose your job, if you get sick or injured and can’t do your normal job.
They are completely different products to the insurances that were once termed “rubbish insurances” or add on insurances.
Have a clear idea of what insurances you need.
Loan termination insurance
This insurance covers you if you must give up your car because you can’t make repayments due to illness or injury.
This insurance will pay the difference between the car’s value when returned to the dealer and what you owe on your loan.
As with all insurances you should check the PDS (product disclosure statement) for the terms and conditions.
Credit Score.
You can check your credit score and credit file with www.freecreditreport.comn.au
This will not register on credit file as a loan application or damage your credit score.
Your credit profile is used to determine the chances or likelihood of you (as borrower) defaulting or not paying back a loan.
Some of your credit score is determined in by your credit payment conduct and enquiry history.
We recommend that you review your credit report for accuracy at least once a year.
If you believe it’s inaccurate, you have the right to challenge that information.
When your credit score is less than you thought it would be, there are some suggestions that could make a difference to your score:
Consistently pay your bills on time.
Pay down your debt.
Don’t apply for new loans or credit, this applies to loans like a credit card or home equity loan.
Maintain a stable employment history.
Don’t make multiple applications for loans.
Dispute and correct any incorrect information.
Pay off any outstanding amounts.
Don’t use payday lenders. These are loan companies that offer small amounts over short time periods.