Buying a car is kind of a big deal. It’s also a lengthy process! You need to set a budget, research appropriate safety features, compare your options, and then pick one that’s going to last (…and in the right colour). Don’t forget you’ll also need to consider how you’re going to finance it, and with who…
Whether it’s your first car or a replacement for an aging set of wheels in the driveway, we all need a reliable vehicle to get us from A to B. However, rushing into a finance agreement could blow your budget and see you paying a small fortune in hidden costs, fees, and interest rates.
To help you purchase your dream car, we’re bringing you a list of qualities you should look for in a financial provider to ensure you’re making the right choice. Let’s take a look.
1. Lender Due Diligence
The first thing a reliable provider will do is ask for proof of income. This information allows finance providers like banks and credit unions to determine your ability to pay back the loan amount, in addition to the daily expenses you already carry.
If a lender doesn’t ask to see this information? This should raise a red flag. A lender that’s failing to do their due diligence could see them encouraging you to take out a loan you won’t be able to maintain. They essentially put you in the fast lane to late fees, penalties, and charges.
2. Early Repayment Options
A little flexibility is a great thing to have. When it comes to repaying your debt, it’s no different! That’s why it pays to look for a provider who offers the ability to repay your loan on your own terms, without incurring any fees or charges for repaying early.
This flexibility allows you to increase your repayments when you find you have a little extra cash. Raise at work? Lump-sum tax rebate? These are all great ways to pay off your loan earlier, and save a bunch of money on interest in the process.
3. Low Or No Application Fees
Low interest rates is what draws most peoples’ attention when scanning the web for finance providers. However, interest rates aren’t the only thing you should be looking for. Some loan providers will offer low rates but make up for this with hefty application fees. It pays – literally – to do your research and compare the total amount you’re likely to pay after application fees, interest rates, and any additional costs that may be added along the way.
4. No Hidden Fees Or Interest Rate Changes
There’s nothing worse than taking out a loan, only to have your interest rate escalate part way through the term. So when it comes to choosing a provider, give your options a call and ask about all of their fees, and ask whether interest rates are fixed or floating to ensure you don’t end up getting stung by hidden fees and charges.
5. Secured & Unsecured Loans
When you’re applying for vehicle or car finance, there’s two major types you’ll come across: secured and unsecured. Most financial providers will offer both, though some specialise in one or the other.
Secured loans offer lower interest rates, but are harder to get. Unsecured loans are easier to obtain – making them better for those with a low credit rating – but come with higher interest rates as a result. It pays to seek out a provider that offers the type of loan you need at a competitive rate. Speaking of rates…
6. Low Interest Rates
A low interest rate is the best way to save money over the life of your loan. The lower the rate, the less you’ll end up having to pay on the amount you are borrowing. It’s that simple. In order to achieve the best rate, try:
- Shopping around for a great deal – comparison websites are your friend. Check out:
- Aus – Finder.com.au
- UK – Moneyfacts.co.uk
- USA – Bankrate.com
- Improving your credit score before you submit your application.
- Apply for a secured loan whenever possible.
7. A Genuine Interest In Helping You
Some loan providers prioritise profits. It’s the nature of the business. That’s not true of all providers, however. There’s a few good apples among the bunch, so search out those providers who take a legitimate interest in helping you achieve your financial goals.
Historically, payday loans and cash advances are ones to avoid, while credit unions, banks, and peer-to-peer lenders are usually fairly reliable. Again, it’s up to you. If you feel comfortable and looked after by the staff, it’s a good sign!
This list of qualities are the main traits you should look for when seeking out a finance provider for your next vehicle. Being picky about the provider you use is a great way to ensure you get a loan that suits you while receiving the best interest rate and assistance along the way.