Things You Should Know About Car Finance
When it comes time to get a new vehicle, it’s likely you will need to finance it through a loan. Due to the high purchase price, very few individuals are able to pay for their vehicle in cash. This opens up a whole new financial realm that you should be proficient in learning in order to receive the best loan rates available. Let’s take a look at the must-know things about car finance below.
There Are Two Types Of Car Finance Options Available
When you look into your car finance options, you can do so through one of two different outlets. These are direct lending and dealership financing. Let’s see what each one of these is all about.
Direct Lending – This type of lending is when you apply for an auto loan from a bank, credit union, or finance company. You go to the lender first and get approved for the loan. When you go to the dealership to pick out your vehicle, you pay them with the cash you received from the bank or another lender.
When you opt for direct lending you are able to shop around and compare rates at different financial institutions. In addition, this will allow you to know what your rate is and how much you are able to afford to payback before you get to the dealership. It’s very easy to get caught up in the car buying process and opt for a dealer loan that is more than you originally intended to buy.
Dealership Financing – When you go to a car dealership, you can opt for financing at their location. The dealership acts as an agent between you and the lending facility. In some cases, dealerships may retain the contract between you and them instead of giving it to another lender.
This type of car finance allows for more convenience on the part of the borrower. Dealerships tend to offer special financing and rebate options when you take out a loan with them compared to an outside lending facility and car finance www.strattonfinance.com.au/car-finance/options/car-loan.aspx
Assess Rebates Vs. Zero Percent APR
Many dealerships offer special discounts to those who purchase a vehicle from their facility. These typically come in the form of buying rebates and zero percent annual percentage rates on loans with them for an initial period. Most individuals quickly accept the zero percent interest for a term of usually a year or two, thinking that it’s the most financially sound option.
In reality, this is not always the case. If you are receiving a low-interest rate on your car finance loan with the dealership, you may actually save more money on your overall vehicle purchase by going the rebate route. You should work out what the interest payments would be for the zero percent APR period and then compare that total to that of the rebate to ensure you get the best value possible.
As you can tell, when it comes to car finance there are many things you need to know. You should take some time to read over car finance articles online to ensure you are ready to get the best deal possible when it comes to purchasing your next car.