Whenever you’re looking to purchase a car, the most important thing to consider is how you’re planning on paying for it. Getting a vehicle financed could be a very complicated process, but the vast availability of car financing brokers has made it slightly easier to obtain secure loans. Throughout the purchasing process, car buyers are constantly assisted by these car brokers. In fact, most car financing brokers will provide the most appropriate advice and options that suit your needs perfectly.
In definitive terms, a financial car broker is an experienced personnel who has a complete insight on the current situation of the car industry. They tend to keep good relationships with multiple different lenders and can easily make recommendations on which specific lender is best for a specific client.
However, there are multiple different car financing services available in the market today and making the decision on which one to work with is becoming increasingly difficult. As the customer, you must remember that not all car financing agencies will be fair with you. Therefore, if you’re looking to purchase a vehicle through an external financing service, here are a few tips to always keep in mind:
1. Determine your Credit Score
Before you go ahead and apply for a car loan, check on your credit report and score first. While you may still receive a car loan despite having bad credit, you may have to pay a much larger amount. The main reason behind this is the bank keeping its safety margin to repurchase a car in case you don’t pay back. However, if you have a mediocre credit score, dealerships are likely to misinform you and hide away the lowest rate available.
If you already know your exact credit score and do some research before you apply, you can determine beforehand whether or not you quality for the best car financing rates. The lower your credit score, the more significant it is to consider your options and finalize the best rate you can get.
2. Get Financing Quotes
If you’re amongst the majority of people who do not have a flawless credit score, you should always get multiple different financing quotes before you head out in the physical market. By opting for online lenders who only ask you to complete a credit application, you can receive a fixed interest rate and the maximum amount you would have to spend on your vehicle. With these statistics, it is much easier to make the right decision during the car financing process.
3. Choose Short Terms
When you apply for vehicle financing, you should opt for a shorter time period with low interest rates but high monthly payments. While a fancy car salesman may try to convince you to opt for longer terms by showing you attractive low monthly payments, you should always refuse. It may be true that you’re paying lesser every month, but you’ll definitely end up paying a larger amount than you should’ve. With longer terms, you will be charged interest for a longer period of time therefore increasing the overall price of your vehicle. Additionally, some financing agencies may also charge higher interest rates for longer loans, which will further increase your credit cost.
4. Make the Down Payment
Many big dealerships will allow you to drive away with your brand-new car without even paying a penny. While this may seem attractive at first, it is definitely a huge risk for the future. By making a down payment of at least 20%, you can be in safe hands. In case you need to sell your car in the future, the down payment amount will make sure that you don’t owe more to the financing agency than the worth of the car.
5. Pay in Cash
Whichever vehicle you plan on purchasing will not come without some extra fee involved. Be it taxes, miscellaneous expenses or additional features, there will always be some sort of amount to be paid. While it is tempting to have this amount added to your monthly installment, you must not fall for this trap. Instead, remember to always pay for such expenses in cash only.
6. Don’t Purchase GAP Insurance
Gap insurance, or guaranteed auto protection insurance, is a safety hand provided by most car dealerships or lenders. This insurance is meant to cover the gap between the worth of your car determined by the insurance company and the amount you owe to your financing agency. It is advertised wrongly to portray that in case you crash your car, the insurance company will be responsible to pay off most of your loan amount. However, if you structure your loan amount and time period correctly, there is no way that the amount you owe is higher than the value of the car itself. The main reason why you should avoid this insurance is that it is extremely costly and will only act as an added burden on your shoulders in the future.
7. Check Accreditation of Financer
Whichever car financing broker you opt for, you need to ensure that you are aware of all lender accreditations. These official certifications are what determine the options that they can legally offer. The main benefit of knowing these beforehand is that you can be one step ahead of the agency and know all the financial options available to you, as well as the quality of all these options.
8. Legal Requirements
Speaking of legal terms and conditions, you must always conduct a background check on the financing agency that you are opting for. Considering an example of Truck Finance in Australia, your automobile financial advisor must be a member of the FBAA, COSL, or both. Both Finance Brokers’ Association of Australia Ltd. (FBAA) and Credit Ombudsman Service Limited (COSL) are renowned membership bodies that are responsible for quality controls and safety checks. The membership of a specific financial broker can easily be confirmed by browsing the list that is publicly available.
9. Experienced Staff
To ensure your smooth experience with a car financing agency, you must choose one that has highly professional and knowledgeable employees. Your advisor must be an experienced professional who has worked in this industry for multiple years and can guide you accordingly. This advisor must be able to show you all of your available financing options and make sure that you leave feeling satisfied with your choice of vehicle and financing method.
10. Availability of Additional Services
Since there are many different financial agencies present in the market today, you must focus on the services that each one offers. You must consider different factors such as receiving detailed information regarding every little expense that may incur, including extra fees or taxes that you may have to pay. The key point to remember is that your finance broker must be able to clarify the rate of your recommended vehicle financing and the ultimate cost of the financial package.