Need Auto Finance? Here Are Some Tips When Looking For A Car Loan

Your auto finance is now less than an hour away from becoming a reality.  You can now easily apply online for a car loan and the process of approval is quick - a matter of minutes.  You can be well on your way to the car dealer to purchase your dream car as early as the following day with an approved online auto finance facility.

You also have at your disposal, the traditional approach for acquiring a loan for your car - that is going into the bank or other financial institution and being interviewed by one of their loan's officers.  This will certainly take more time than the online application.

For most people, a car loan is the second largest investment they will make - second to a mortgage. That's why it is important to shop around for the best auto financing available to you. Have in your mind the car make, model, and options you want in it, as well as how much you're willing to pay for it. Shop around! Exercise your right as a consumer to ensure that you get what you want and at the best possible price.

Here are some useful suggestions that you can follow when looking for auto finance:

• Your credit history can make or break the whole deal. Even though you can afford it, if your credit report is bad, chances are you will be declined the loan facility. The first thing you should do is know what your credit report is up front! Do not leave anything to chance and do not take anything for granted.  Find out what your credit score is in advance of seeking to get auto finance.  That way, you can rectify anything that may need to be rectified prior to going through the stress of finding your dream car - the exact make model and color - then seeking a car loan, only to have it declined because of a bad credit report.  So know what's in your credit report in advance.

• Find the car dealer with the car you want at the best price.  Always remember that the dealer wants to sell you the car more than you want to buy it.  He needs the sale - the commission - more than you want the car. Use this to your advantage. Make them offer you maximum features for what you are willing to pay.  Use your negotiating skills.

• Do not settle for the first deal that is presented to you.  There are many car dealers out there and unless you are looking for a custom made one-of-a-kind car, you will find the make, model and color car you want at more than one dealer. At the end of the day, you should ensure that you get maximum value for the money you will be spending.

• If you cannot find what you want on the dealer's lot, then consider ordering the car you want. This will involve a delay, but depending on what your budget is, cars on the lot may have options you don't want - and that come at a price. However, dealers often want to sell their current inventory quickly, so you may be able to negotiate a good deal if an in-stock car meets your needs.

• After you have found the car you want, your next step is getting the auto finance to pay for it.  Now, many car dealers offer financing as a matter of convenience to you the shopper. That way you get all you want in one convenient place. Well almost.  Generally speaking, the loans will cost more.  That is because car dealers do cars and not auto finance. They will generally have to borrow the money from financial institutions to make credit facilities available to you.  You will have to pay for that.  So I recommend that for a car loan, you should go to a financial institution.



• Shop around for the best loan available to you. Compare packages that the various finance houses offer. Here is what you should look for in a car loan:

  • What is the minimum down payment that is required for the loan?  This may vary from one company to another and may depend on whether the car is new or used.

  • What interest rate will the loan be calculated at?

  • What is the maximum repayment period that will be given to you?  Of course, the longer will give some measure of repayment comfort.  It will also mean that you will pay back more on the loan since it is over a longer period.

  • What are the security requirements for the loan? Some companies will have a mortgage bill of sale done on the car as well as have the insurance assigned to the bank, both for the duration of the loan, and that will be sufficient.  Some companies however, may require more tangible security.

  • What other charges are included in the cost of the loan?

  • What penalties are there?

  • Can the loan be repaid before the term is up? If so, are there any penalties? Depending on the type of auto finance that is being offered, repaying the loan before the agreed term will result in a loss of interest earned by the financial institution.  That is not a good thing on their part and they may have penalties for that to safeguard their projected income from the loan sale.

  • If you already a car loan, will that be refinanced and incorporated into the current loan?

  • Make sure that you read ALL the fine prints before signing on the dotted line. If necessary, ask your financier if you can take the contract away to review it more closely.  That way you can study it in detail and fully understand what you are committing yourself to.

As you can see, the purchase of a car and getting it financed required some thought and preparation and is not something you should rush into. Good planning and understanding of the entire process will serve you well.

All the best in your search