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Car financing represents one of the best ways to purchase the vehicle you need to get you to all your essential destinations daily. At the same time, applying for financing can seem intimidating. Understanding some key facts about car financing and the process involved can help to clear things up and reduce the stress of the application process. Here are ten truths about car financing that you need to know about.
Car Financing Can Offer Advantages Over Buying Outright
The simple reality is that cars are expensive purchases. The availability of car financing options opens up doors for many individuals who need to replace their current vehicle. Even if you do have the money to purchase a vehicle outright, it can still be a good move to choose the financing option rather than simply putting a large sum of money into a single purchase.
Lending Institutions Look at Your Credit Score for Car Financing
Lenders who offer car financing will look at your credit score when assessing your ability to repay your loan. Given this fact, knowing your score and working to keep it healthy is essential.
There Are 4 Key Pieces of Information Needed for Successful Car Financing
The four critical pieces of information that you need to provide for car financing are as follows:
- 100 ID Points (Passport, driver’s license, Medicare card)
- Proof of Your Current Income (Recent payslips, two years of tax returns, contact information for your employer)
- Your Asset and Your Liabilities (Other current loans, details regarding property you own, other debts, ongoing expenses)
- The Vehicle’s Details (Registration number, make/model, new or pre-owned)
You Should Save to Contribute 10 to 20% for a Car Loan Deposit
Saving 10 to 20% for a car financing deposit is always a good move and can help to demonstrate to potential lenders that you take financial responsibility seriously.
There Are Several Different Ways to Finance a Car
There are several car finance options in Australia that you can avail of. They include:
- Car loans
- Personal loans
- Novated lease agreements
- Hire purchase agreements
- Home loan redrawing
A Large Number of New Vehicle Purchases in Australia Involve Car Financing
A significant number of new vehicle purchases made in the Australian market involve car financing. As recently as 2017, every one in five new vehicle purchases was done through car financing.
Too Many Car Financing Enquiries Can Be a Negative Thing
You will often be advised to shop with different lenders to find the best car financing options. This can be good advice, but it is important to note that too many financing enquiries can negatively affect you.
Though you may make multiple car financing enquiries to improve your chances of getting approved, too many applications can result in hard credit checks on your report. This can lead to potential lenders seeing that you have been applying for multiple loans. This is generally not viewed favourably by lenders.
There Are Several Key Components to Successful Car Financing
The key components involved with car financing include the interest rates, the loan period, the repayment schedule, additional fees/charges and the lender. The first four components significantly impact your decision regarding the final one.
Pre-Approval Is a Key Part of Successfully Applying for Car Financing
Getting pre-approval is one of the best ways to avoid some of the most common mistakes associated with car loans. Pre-approval provides an immediate advantage when you go into a dealership to purchase a vehicle. It allows you to negotiate a vehicle purchase with good knowledge of your current financial situation.
Choosing the Right Lender Can Make All the Difference With Car Financing
Choosing a trusted lender can make all the difference in getting the car financing you need. Selecting a lender with a proven track record for helping customers to make vehicle purchases is always a great decision!