Founder and CEO of Carfin, George Simitopoulos suggests the place to start when shopping around for car finance is finding in your league – that is finding an affordable deal for a car you really want.
Once you’ve chosen your wheels, the real hard work starts. But do your homework and you’re sure to find yourself a good finance deal too.
How Good Is Your Credit Score?
If you are looking for the best rates offered by lenders, then you may want to check if you qualify for it by knowing your credit score. Once you know your score it becomes easier for you to gauge whether or not these lucrative interest rates are attainable. Credit Unions by law are required to give you one free report a year to check on your credit worthiness. You can find yours on www.clearscore.co.za
Financial institutions offering loans may check any standard credit report, so familiarising yourself with the format should give you some time to correct mistakes, if any. If you have a flawless credit history, you can shop around and get a low interest rate from lenders.
How Long Is Your Repayment Term?
The interest rate on short-term loans is much lower, despite the fact that they are accompanied by higher monthly payments. It certainly seems tempting to choose a car financing deal that involves lesser monthly payments, but this also means you will be in debt for a longer time and pay higher monthly premiums. This may also increase the overall costs in the long run. Try cutting down your loan length as much as you can, if you are looking to make savings in the bigger picture.
How Big Is Your Deposit?
If you have a good credit score, chances are the bank may not even ask you to put any money down at the time of taking out the loan. But this doesn’t mean that you should not put down a deposit. For instance, say you got your car financed without a deposit, thanks to your clean credit score and you decide to sell your car months later, you will find yourself in a sticky situation here, as you cannot sell the car if the amount you owe on it exceeds the trade value of the car.
On the other hand, if you have put down a deposit, you’ll have a smaller loan amount and the price you sell your car for will more than cover that. It’s best to try and save up for a 25 – 35% deposit if you’re not desperate to buy a car immediately.
Something to think about too would be to save money for those other chargers, too such as any taxes, optional extras and an extended warranty upfront, rather than adding it onto your loan.
If you’re shopping around for finance for your next car, click here to find out if you qualify for finance.