If you have your eyes on a new set of wheels at a car dealership it is likely that you have put some thought into how you will finance your new ride. It’s best to identify a range of options so you know if you are getting the best solution possible.
These are the main ways you can finance a new or used car purchase:
• Pay with cash
• Get finance from the dealership
• Get a car loan from a bank or lender
In this blog we are going to discuss the pros and cons with using dealer finance or getting a new or used car loan before heading into a car dealership.
Using dealership finance
Dealership finance can be tempting to many new car buyers due to advertising campaigns promoting zero percentage interest periods and cash back offers. Usually, dealerships finance deals like this come with a few terms and conditions such as large balloon payments towards the end of the loan.
Pros of dealer finance
• You can save time as most dealership finance teams are located within car dealerships so you don’t have to look too far
• You can get promotional low rates
Cons of dealer finance
• You need to have good credit. Dealership finance solutions are usually limited to good credit borrowers
• Dealerships usually only offer promotional rates for new cars, so if you are buying a used car you may not qualify
Using a car loan
Many new and used car buyers will apply for a secured or unsecured car loan before they go into a car dealership to make an offer or make a purchase. As a borrower there are literally hundreds of car loans on the market. Taking the time to compare these loans can lead you to a great finance solution for your new or used car. Time poor? A broker can do the comparing for you.
Pros of getting a car loan
• You can compare different options from various lenders and compare them to see which the best one is
• If you are self-employed, are working part time to casually, have low credit or another non-traditional situation, getting a car loan may give you a better chance of approval compared to dealer finance
Cons of getting a car loan
• You may have to arrange finance before you go into the dealership
• If you go with an unsecured loan, the interest rate may be higher
Dealer finance can be great if your situation is simple and straightforward. If you have credit issues or do not fit traditional lending criteria, getting a great low rate car loan using a broker may give you more choice and save you important dollars down the track.
For more information or to see if you can get pre-approval for a car loan today, chat to our team. Call us on 1300 844 970.