Whether your dream car is a vintage classic or a top-of-the-line model just off the production line, finding the right car loan can turn that dream car into a reality. So, how do you find the right car loan? One that offers you the money you need to buy the car of your dreams, while still offering affordable monthly repayments? Lucky for you, we’re going to tell you how to do just that.
Work out how much you can afford
The key to finding the right car loan is working out how much you can afford. There’s no point having your dream car if you’re too stressed by the monthly loan repayments to enjoy it. There is also the collateral factor – if you take out a loan you can’t afford, you run the risk of having the car repossessed if you can’t make your loan payments.
To find out how much you can afford on your car loan, create a budget to work out how much you have spare each month to cover your loan repayments. This will help you work out how long it will take to repay your loan, and what to look for when you start comparing loans. Try a car loan repayment calculator to test out different repayment options.
Check your credit rating
The first thing most lenders will do when you apply for a car loan is look at your credit score. Before you apply for a loan, apply online for a copy of your credit file so you know exactly what it says about you. Check for any errors and have them corrected.
If your credit rating is really bad, you may want to put off applying for a loan until you can improve it a little. If you have bad credit, your loan application may be denied, or you may end up paying more in interest. However, it’s worth bearing in mind that if you do still apply for a loan, you can use that loan to improve your credit by always making repayments in full and on time.
Compare car loans
Now it’s time to compare car loan options. Check out a few car loan comparison sites, and find loan options that match your needs and your budget. You can use a car loan calculator for this process too – to allow you to compare loans from a number of different lenders, and find the most affordable option.
Take into account the amount you will pay in interest overall, and any fees you will pay, such as administration fees, monthly fees, early repayment fees, and extra repayment fees. If you want more flexibility and more loan features, make sure the car loan you choose offers you everything you need.
Just as you would negotiate when you buy a car, you can also negotiate with your lender. If you have excellent credit history, this negotiation process is more likely to swing your way. If you are applying for a loan from your bank or your current lender, you may also be more likely to negotiate a better deal. While you may not be comfortable negotiating, there is no harm in asking, and it could help you save money on your car loan (and your dream car).