Buying a car is always an important financial decision. For most people, it will be the biggest financial decision they ever have to make aside from their mortgage. That’s why it’s always best to be as prepared as possible if you want to get the right deal.
Unless you are lucky enough to have the assets to buy a car outright, the likelihood is that you will have to take out a car loan so you can afford to drive it off the lot.
To help you through this process, we’ve compiled five simple steps to help you get out on the open road quickly and smoothly.
1. Think before you apply
While it is always good to shop around for the best deal, don’t apply for your financing until you’ve found the most competitive deal. Every time you apply for a loan, credit reporting bodies make a note and this can negatively affect your credit score. Also, if the financing companies see you have applied for multiple loans in a short period of time they might consider you a high risk, and will reject your applications.
Never apply for multiple loans at once to see what happens. Take your time, check out your credit report to make sure everything is in order, and then apply once you’ve found the best rates.
2. Read the Small Print
A simple point, and one that is drilled into us over and over again. You probably won’t be surprised by the amount of people who don’t bother reading all the Terms & Conditions, but you will be surprised about how much you can miss out on if you skip this step.
For example, some companies add administration and arrangement charges in addition to interest rates – so unless you want to get surprised by hidden fees that you hadn’t budgeted for, make sure you understand every aspect of your contract.
It would be an untrustworthy company, however, that didn’t run through any details on your loan contract on request. If you need a hand understanding the jargon, or just want to double check the terms, ask your provider to help you, or contact a car loan expert.
3. Get your financed approved before you enter the shop?
Having a finance deal pre-approved when you enter a dealership will put you in a much better bargaining position and will speed up the buying process. You will also save money as local dealerships cannot compete with the rates offered by brokers that specialise in car financing.
4. Consider Buying New
I know it is tempting to buy a used car, but it becomes a lot easier to get financing if you are purchasing a shiny new car. While this will cost you more than buying used, you could get a better car loan deal for the price, as well as a manufacturer’s warranty just in case you need it.
Finance companies understandably view older vehicles as an increased risk when compared to newer ones. Older used cars could have hidden issues with them, are worth considerably less than new cars, and are harder to sell, which makes for less attractive collateral for the finance company.
5. Pre-prepare your paperwork
This is not just the first line of a tongue twister. If you can approach your chosen car loan company with all your paperwork ready to go you can reduce the time you’re waiting to be approved, as well as save a load of emailing back and forth. To increase your chance of being approved for a loan you will need proof of employment, such as payslips, a detailed employment and residential history for the last 3 years, and photographic ID such as your passport or driver’s license. If you can show you save money regularly and have a steady job, it will make your job getting approved for a loan much easier.
Hopefully, if you follow all these steps you should have no problem getting approved for the loan you deserve so you can drive away in your brand new car as soon as possible.
If you need any more help getting approved for a loan, get in touch with one of our knowledgeable consultants.