How to Choose the Right Car Loan for You
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Once you've found your perfect car, the next step is deciding how you're going to finance it. If you don't have the cash on hand to buy a car outright, you'll likely need to consider what car loan options are available to you; but this can seem pretty daunting!
Armed with the below information, you'll be informed and ready to start shopping around to find a car loan that works for you.
Decide how much you can afford to borrow
The first step is deciding how much you're going to borrow. If you're in the position to put a deposit down on your car, even if it's just 10% of the purchase price of the car, this can reduce your total loan amount and result in smaller monthly repayments.
It's good to have a solid idea of your budget and how much you can afford to spend, in total as well as in regular repayments, before you start shopping for the car. You can use an online car loan calculator to get an idea of what your loan repayments might look like. Don't forget that in addition to your loan repayments, you'll also need to pay several ongoing costs like fuel, registration and insurance.
Compare interest rates and terms from different lenders
It's really important that you don't just pick the first lender you see! Take the time to compare a number of different car loan options (which you can easily do with Driva!) so that you can ensure you're getting the best rate possible. It's also important to consider the loan conditions and lender fees associated with each loan option.
Understand your loan options
There are a number of different loans out there, so it's a good idea to familiarise yourself before you start shopping around. If you're looking for a car to use primarily for personal use, you'll be looking at either getting a secured or unsecured loan. A secured loan uses your car as collateral and normally has a lower interest rate, while an unsecured loan doesn't require any collateral and will be accompanied by a higher interest rate.
If you're after a car to use for business purposes, there are a number of commercial loan options out there, including chattel mortgages, hire purchase arrangements and ongoing leases.
Key loan features to look out for
When you're comparing loan options, there are several features you should keep an eye out for:
- What's the interest rate?
- What lender fees are involved? (These could include early repayment fees, monthly fees or early exit fees)
- What's the repayment frequency? (Repayments are normally made weekly, fortnightly or monthly)
- How long will approval take?
- Can you pay out your loan early without penalty?
- How long is the loan term?
Ask Driva for assistance!
Our final tip is to ask for help! Driva is an Aussie fintech start-up and your one-stop shop for all your car finance needs. You'll be able to compare personalised loan options from more than 30 different lenders and get pre-approved rates in less than 60 seconds. Best of all, all fees and charges are shown upfront, so the amount you see is exactly what you'll pay each month (with no sneaky hidden surprises!). To get started on your finance journey and find the best loan option tailored to you, head to driva.com.au.
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