Choosing a car loan that meets your financial needs and offers you the best deal can be difficult. There are many lenders who will accept your car loan, but choosing the right one can save you hundreds or even thousands of pounds. It is important to shop around, as car loans vary significantly and it is often the case that the first or cheapest offer will not be the best. Loans are offered by banks and building societies, online car finance companies, and many supermarkets. Most of these lenders are now available to contact online, which makes applying for a loan quick and easy.
The Australian Securities and Investment Commission (ASIC) regulations state that a loan's terms and conditions must be clearly stated. Ensure that you read them carefully and ask the lender what a particular term means if you are unsure. Terms and conditions vary between lenders and what initially seems a good deal may cost you much more in the long run. If you think your financial situation may change in the future and you could potentially repay your loan early, find out if there is an 'early repayment fee'. When comparing interest rates, ensure you compare the Annual Percentage Rates (APRs), rather than 'flat rates'. This allows you to compare the true cost of the loan more easily and avoid nasty surprises later on.
Before you decide on how much you wish to borrow, you should consider the cost of both buying and running the car. Remember that a car requires maintenance, petrol, insurance, tax and registration documents, which must be paid for on top of the purchase price. Lenders are usually sensible in deciding how much they are willing to lend you, but you should calculate your limits too. Decide how much you could afford to repay per month and how long you wish to take to pay back the loan. If you are given the option of paying a deposit on the car, you should also decide how much you could afford to pay straight away, as this will reduce the amount you need borrow; the smaller the loan amount, the lower the interest charge and the less the loan will cost you.
