Car and motorcycle finance tips
1. The rate you see is not necessarily the rate you get:
Many places will advertise low interest rates, in some cases even 0% although if you get approved for a loan don’t assume you’re getting the interest rate they are advertising. Unlike other loans such as mortgages and credit cards, vehicle finance is unique in the sense that the rate is determined by the profile of the customer, factors that affect the rate include: stability in job, stability in residence, and previous credit history among other things.
2. Do your homework:
Read up and get advice about the type of car or motorcycle you are looking to purchase. Consider how often you will use it and what it will be used for, also important factors such as reliability, fuel economy and price. Automotive review sites and publications are a good reference point to obtain independent advice.
3. Work out what you can afford:
Before applying for finance make sure you have a good understanding of your current and future financial situation. Consider your existing outgoings and whether you are likely to make other large purchases in the near future and how that will affect what you can afford to put towards a vehicle loan. Once you have assessed your situation determine whether you can afford to meet the proposed car or motorcycle payments and also consider other ongoing costs such as insurance and servicing.
4. Take into account the overall purchase price:
If you have decided to take out a loan to purchase your new car or motorcycle look at the overall purchase price, not just the monthly repayments. A longer term will lower your monthly repayments but you will pay more interest and therefore it will increase the overall cost of the vehicle. You should always negotiate the best price possible for your new car or motorcycle.
5. Get a pre-approval:
Before you start shopping around for a new vehicle, get your finance pre-approved. In doing so you will know the amount you are able to borrow and therefore you will know how much you can afford to spend on the vehicle. A pre-approval will normally last up to 30 days.
6. Cash deposit:
If you are in a financial position to do so, consider putting a deposit towards the car or motorcycle as this will reduce your monthly repayments as well as the overall interest you pay over the life of the loan.
To find out more about a loan that’s right for you contact one of our finance consultants on 1300 123 863 or alternatively submit an enquiry at: https://umf.com.au/quick-quote/ and we will get in touch with you.