Many of us will turn to car loans at some point in our lives as car owners. A car is a big purchase for most people, and raising the necessary cash to pay for a new car outright is often not a possibility. Car loans can be an excellent means of helping you afford the car you need – you just have to make sure you choose carefully. Compare the available car loan options and do as much research as you can to ensure that you get a competitive deal and don’t overextend yourself.
How much should I spend?
It’s a good idea to set your budget before you start looking at cars. Work out exactly what you can afford so you don’t get tempted by something out of your price range – the last thing you want is to agree to a car loan that you can’t keep up with.
Remember to factor in running costs and extra compulsory charges - like stamp duty and registration - when working out your price limit. Use an online Car Loan Repayment Calculator to get a sense of what your repayments will be, and decide on a monthly amount that you can comfortably afford.
When should I organise car loan?
Arrange a car loan as soon as you can. Most lenders will pre-approve car loans, so you can know exactly how much you have to spend when you go shopping. If you’re buying from a dealership, organising your car loan before you go will eliminate sales pressure to use dealer finance, which often carries high interest rates.
What car loan options should I choose?
When it comes to choosing car loans for a private purchase, most people go for a car loan or a personal loan. These are probably the most convenient and straightforward options, and they work in much the same way - the only difference is that a car loan uses the car being purchased as loan security, which can result in a lower interest rate