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6 tips for getting the best car finance deal

The wrong finance deal can cost you thousands of dollars over the life of your loan. Here are our top five tips for carving out a better deal.

Shop around

Car finance deals are not all the same. There are many different lenders, finance package structures and interest rates on offer. To ensure you are getting a good deal it is essential that you shop around by comparing prices from various lenders online or in person before committing to one offer. You can also look for deals specific to your city, such as if you’re in Victoria check out car loans in Melbourne‘ to get your best local rate.

Check your credit rating

For most lenders, a good credit rating is required to get the best possible finance deal. A low credit rating will generally result in less favourable finance terms such as higher interest rates and more comprehensive terms and conditions. This means that the higher your credit score, the lower interest rates you’ll be eligible for. Check your credit history at least one month before you apply for a car loan, to give time for any errors to be corrected.

Decide on your finance package structure

Before you apply for a car loan, decide which features you want to be included in the finance deal. A comprehensive feature set includes items such as registration and insurance costs but generally will come with higher monthly repayments (due to higher interest rates) than basic or shell loans. When you buy a car through a dealer, the dealer may be able to organise finance for you at their discretion; however, this will usually come with less favourable interest rates than if you were to source your own finance package.

Do your research before buying

When buying a car, make sure you factor the repayment costs into your budget. There are fixed costs associated with finance repayments such as registration and insurance, as well as ongoing running costs such as stamp duty, petrol and general maintenance. By planning your budget in advance, you can ensure that the car you buy is the best value for money.

Take a good look at the fine print

Never sign up for a finance deal without thoroughly checking through all documentation and terms and conditions associated with the offer. Make sure you understand exactly what is included in your finance deal, as well as what your monthly repayments will be and how long it will take to pay off the loan.

Don’t be fooled by guaranteed approvals

Lenders have been known to lure customers into their businesses by offering ‘guaranteed approvals’ for car finance deals. However, these deals are generally based on the customer providing full documentation and having a good credit rating to qualify for the offer. While guaranteed approvals appear attractive, customers may find that once they have provided all required documentation their application is declined by the lender.

Following these tips will help ensure that you get a good deal and don’t end up paying extra for features and services that you don’t need!

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