It does to matter if you are looking to borrow for a new car or you are a seasoned car buyer, car finance does require some effort and preparation. Approaching a car loan application the way you would a purchase of a carton of milk at a supermarket, almost guarantees a decline at worst or a loan that does not meet your requirements at best.
Working out your budget
Do you know how much you can afford to pay for a car loan? That is quite distinct from how much you wish to spend on a vehicle. Remember that there are different car finance options available and most lenders should be able to structure a repayment plan that meets your budget…providing they know what you budget is. Therefore the first step is to work out what down-payment you can make, what balloon if any is acceptable to you and what periodic repayments will comfortably fit your budget.
The larger the deposit the better
While it is generally not essential to have a deposit towards your car finance, you will find that having a deposit can be advantageous. Your monthly repayments can be reduced and at the end of the loan or the lease, you will not need to make a large payment to get ownership of your vehicle. Furthermore if your credit history is not perfect a deposit can make the difference between loan approval and decline.
Employment stability is important
It is advisable not to move jobs / industries if you are looking to make a car finance application. This is true of all applications for finance. Lenders prefer to see employment stability. Qualifying for finance can be very difficult if you have changed professions recently or have moved from PAYG to Self Employed.
Don’t forget about the “other costs”
There are various other costs associated with purchasing a vehicle and taking out a car loan. These include car registration and transfer fees as well as the stamp duty on purchase. The larger is your purchase price, the higher can these costs be. Then there is car insurance which is an absolutely essential cost that needs to be figured into your budget. Also dont forget about life insurance quotes
Make sure that you do not overpay
Nothing is more important than to understand your market. Most people will take a lot of time to research car models, makes and prices but will dedicate next to o time to researching car finance. That can prove to be an expensive mistake.
Have an exit strategy
Before buying any vehicle and taking out the car finance, you should understand what your exit strategy will be at the end of the finance term. If you need to come up with a lump sum to pay out the lender, make sure that you know where this money will come from before signing on the dotted line. Forward planning can save you money and protect from disappointment.