Knowledge is Power!
Looking for a top bargain on a second hand car loan? Taking on lenders at their own game can sound intimidating, but with some industry knowledge on your side, you'll be well-placed to get yourself a great deal.
Here are our pointers for driving a great deal on your used car finance.
Tips for getting a great deal
Shop around. But beware of credit checks.
Go online and check out rates and terms. Make sure you’re comparing like-for-like quotes by looking at comparison rates, not interest rates. This more accurately reflects the actual interest you will pay after all fees (e.g. loan establishment fee, additional payment penalties) are accounted for.
Here’s where you need to do, but be careful.
By all means, get quotes from different lenders so you can make an informed decision. However, DO NOT allow any lender to run a credit check on you during your research phase. A credit check should only be run once you’ve made a solid decision on which lender you’re going with. Otherwise, it would be easy to run up multiple credit checks against your name in the research phase. And every time a credit check is run against your name, a note goes on to your credit history. Too many of these in a short space of time actually deters lenders from offering you a loan, as it can make you look suspicious and/ or desperate.
The best way to avoid this is to contact a finance broker, who may run a 'soft' check, which is not a no credit check car loan. They’ll run a single credit check and then use this information to get multiple quotes from different lenders without the need for further checks. They can also use their expertise to find a suitable deal to suit your circumstances.
Compare apples with apples
Make sure you’re comparing figures for used car loans, not new car loans. New car loans tend to have lower interest rates and come with additional conditions – the vehicle often has to be over a certain sale price, and the loans often must be secured with a deposit or against other property.
DO NOT allow any lender to run a credit check on you during your research phase.
Used car loans tend to have higher interest rates because older cars depreciate quicker. The higher interest rates mean the lender is making enough money to cover any losses should they need to repossess the car and sell it at auction.
Drive a hard bargain
Don’t be afraid to negotiate on the interest rate. While the percentage you pay depends on your overall circumstances and profile, many lenders will inflate their initial rates so that they have room to move if you’re unhappy with it.
Also, bear in mind whether the car you’re planning to buy will be from a dealer, or a wholesaler or a private sale. Some lenders charge extra fees or impose different conditions if the car is bought through private sale – make sure you’re aware of any special conditions before you commit to anything.
Consider the other options
Is a car loan right for you? Generally, a secured car loan is preferable, however, for some cars, you may be better off looking for an unsecured personal loan - e.g. if you're buying a classic car.
Negotiate hard on price
A lower sale price means the financier is lending you less, which will bring down your loan-to-value ratio and potentially have a positive effect on your interest rate.
Still not sure what to do?
Talk to the experts. At Rapid Finance, we use a range of industry resources to determine a fair value for your car, and to get you a good deal on finance.
Rapid Finance has built a reputation of matching our clients with the right lender. In most circumstances, we can help you find used car finance that's suitable for you.
Call 1300 467 274 to discuss your situation today.