This is sponsored content for loans.com.au.
Not everyone can afford a car outright. There are different ways to secure the car you want. Some people seek financing options instead of paying in installments. Many lending institutions are offering that option to borrowers as it's also quite profitable.
Before heading to your nearest car dealership, here are some financing tips to consider before settling on a vehicle.
1. Look into personal loan
Banks and other lending institutions offer personal loans that borrowers can use for just about anything. As it is a loan, several factors are at play here. First, you must have a good credit history. You're more likely to gain approval from lenders if you have a good score that tells them that you're likely to pay back what you owe.
Personal loan terms can vary, and the duration can spread up to seven years. It's best to shop around for affordable rates first. You may also want to consider which lender you'll approach. Banks would be best if you can procure the requirements they need.
If not, you can turn to online lenders and shop for affordable car finance rates. Such websites have loan calculators you can use to calculate costs so you can see firsthand how much you'll pay every month and plan your budget as well.
2. Consider hire purchase or conditional sale
A hire purchase financing option allows you to own the car when the loan agreement reaches its expiration and is paid in full. The duration is typically three to four years, and the APR is already fixed upon starting the loan.
The lender has rights to the vehicle until the loan is fully paid, but you, as the car's borrower and user, are responsible for insurance and maintenance. The conditional sale option is similar to hire purchase. The only difference is that you gain ownership of the vehicle once the loan has been paid off.
3. Try dealership financing
You can head over to your nearest car dealer if you want to avail of the loan and get the car on the same day. The dealers then send your credit information to other lenders. It is because banks and third-party lenders purchase the loans at a lower price.
They, later on, collect the interest and profit from the borrowers. The institutions also decide on the buy rate that dealerships offer to get a car through dealership financing. They also have the option to raise the interest higher. If you're going for this type of dealership, it pays to look for a dealership that will offer rates you can afford.
4. Find out more about peer-to-peer loans
If you can't get a loan from banks and lenders, you can opt for peer-to-peer lending instead. Regular people lend and borrow from each other. Peer-to-peer lending platform applications are similar to other lending institutions where you'll need to give out personal information. You'll also need to give the reason for your loan application. The platform will match you to various lenders interested in lending you the money you need.
Just like other lenders, you'll need to have a good credit standing before considering P2P lending. There are P2P lenders in Australia today, and they also treat these loans as an investment. While the country is set to change lending laws, it's essential to practice vigilance and borrow only from credible institutions to avoid scams.
There are a few ways to get a car nowadays, aside from borrowing from banks. If you need a car, make sure that you can get a quote that fits your financial circumstances better. The car's make and model is also essential, as luxury cars will get you higher interest rates.
Cars depreciate faster than you can pay your loan in full. If you're trying to save money, opt for affordable car models that can get you to your destination without the extra features. You can easily budget your income if you can afford the rates.