The loan process for the Australian consumer has eliminated much of the hassle associated with financing a vehicle. In no time at all, you can find yourself travelling on any one of the continent’s diverse terrains and enjoying stunning views from the driver’s seat. Whether whizzing through the outback or experiencing the eclectic city scenes, the car of your dreams will be at the helm of these experiences, but first, you need financing.
While lenders have pretty much streamlined the loan process, consumers on the hunt for new wheels should take a look-before-you-leap approach to financing a car. Today’s car shoppers should have few problems in seeking financing, as consumers can easily get a car loan from Latitude and other online sources. Among the normal considerations, other factors related to your personal needs play a role in determining the most appropriate loan.
Continue reading below to learn about some of the factors that influence the type of loan you should choose for your next car.
One of the most important factors to take into consideration when looking for financing relates to your personal lifestyle. Those looking to purchase a car might consider the various ways that the car might be used outside of transportation for work and other daily tasks. This is important because it will determine the amount of mileage and wear and tear on the vehicle, and the type of vehicle you will need.
If you are someone who travels extensively, for example, you might find that purchasing a sturdy vehicle, even though pricier, might be better for your pocketbook in the long run. Alternatively, if you use your vehicle primarily for a few necessities, a smaller vehicle might suffice. In essence, your owner profile is pretty much determined by your lifestyle, and by choosing a loan that adapts to your personal needs, you save yourself a lot of money.
Rule of thumb states that the quicker a loan is paid off the less you pay in interest. In essence, loans that run between three and five years tend to cost less over time. While there are outfits offering loans for longer terms, owners tend to pay more. However, you might gain the advantage of financing a vehicle for a longer term and paying a lower monthly payment for a while, and then trading the car in or doubling-up on payments to pay the loan down quickly. Either way, your monthly payment is a factor influenced by your lifestyle choices.
Additional Car Costs
Car buyers should include the costs of taking care of the vehicle outside the monthly payment. While your monthly payment might be within your budget, costs associated with maintaining, servicing and insuring the vehicle will add more to the budget than planned. Moreover, some cars cost more to maintain and insure than others, so when looking for a loan, consider other costs outside of the loan itself.
The lender primarily determines interest rates but you can influence your rate in a few ways. For one, having a good credit score and a low debt-to-income ratio can drastically reduce the rate of interest. Typically, those with lower scores pay more interest over the term of the loan. However, borrowers can try to get a better rate by addressing any negative comments on their credit report and reducing other debts, thereby improving the FICO score.
Another factor that can influence not only the loan but also your interest rate is the down payment. The down payment is the one factor that can reduce your overall monthly payment and interest rate. However, for the down payment to matter, the amount has to be significant enough to reduce the payment drastically.
Factoring Out The Costs Of Financing A Vehicle
Shopping for a car is not just about shopping for the loan. While the loan greatly influences the vehicle you purchase, shoppers should finance a car keeping in mind all of the factors that influence their overall budget. By doing so, they can significantly reduce how much money will be spent over the life of the loan.