Not All Car Loans Get The Best Interest Rates
Consumers continually complain that the rate they eventually get for their car finance is never as good as when they use on line calculators supplied by some financiers and car brokers. They don’t understand that these calculators give a “best case” scenario. So unless you have great credit, are buying a new mid range car from a dealership, have an extremely well paying job and you are buying your own home you are never going to get the advertised rate.
Factors Determining Rates on Car Finance
A low interest rate is often sighted as one of the most important factors used by consumers when comparing loans. However, what consumers don’t understand is that the rate increases with the age of the vehicle, it increases if you decide to purchase a vehicle privately, it can increase again if you rent your home, it can increase yet again if you haven’t been in your job all that long. In the industry it is called “Rate for Risk”, that is the lower the risk the lower the rate, the higher the risk the higher the rate.
What many consumers do not realise is that securing a low rate loan often involves more than simply comparing lender to lender to see who can offer the lowest rate car finance on any chosen vehicle. Often a consumer goes about selecting a loan by firstly finding a vehicle they want and then secondly seeing what finance and on what terms they are able to secure on that vehicle. What many consumers don’t fully understand is that the choice of vehicle plays a very large factor in determining the interest rate.
Choosing the Right Car for the Right Rate
Not all vehicles are viewed the same by finance companies, in fact there is a wide difference in how finance companies view the makes and models. What the finance company looks for is ideally a newer vehicle, even better if the car are still under new car warranty, gives a better chance the vehicle will be maintained in good working order over the life of the loan. If a finance company uses the car as security, they want to be sure that their loan is protected. In the event that you are unable to repay your car loan, they are able to sell the car as a way to recover their money.
Ideally, if you want to secure the very best deal on car finance, which includes the best interest rates and low repayments, then should look for a car that is less than 4 years old and in good mechanical condition.
One way to buy a quality car is to purchase through a licensed car dealership. Some consumers feel that purchasing a vehicle from a dealership costs more, but licensed car dealers not only offer a warranty but often spend a considerable amount on repairing a vehicle and bringing it up to a high standard before sale. You have the added benefit of protection under Dept of Fair Trading through the Motor Dealer Act. As with any purchase, it is important to do your research and find out what is the best deal for you.
For further assistance call us now on 1300 142 277. For your added protection we not only carry an Australian Credit License ACL 390454 , our group also carries a Motor Dealer Consultants License under our Car Buying Division New Cars Australia.
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