Unless you have plenty of savings in the bank, or the new car you have your eye on is ridiculously cheap, then it’s very likely you’re going to need to finance that new car. Some might decide to go the personal loan route through their bank while others opt for car financing through the car dealership.
Let’s take a look at your options for new car finance and what to look out for.
Convenience
Let’s say you’re at your local Honda dealership and you are keen on one of their latest models fresh off the production line. You might have a deposit saved, but don’t have enough cash to buy the car outright. You need finance.
If you decide to go the personal or car loan route through your bank, the entire process is likely to take days, or possibly even weeks before you get your loan approved (if you get approved) and the money in ready and available in your account.
While the delay might be okay for some people, what if there’s a special deal on that car, and by the time the bank gets back to you it’ll be too late? Maybe the car you have your heart set on will rise in price by several thousand dollars?
To shortcut the process and make sure you get to buy the car while it’s a great deal, then new car finance directly through the dealership would be your best option.
You can sit down with the salesperson and organise all the details and paperwork right then and there in the comfort of the dealership. No phone calls to your bank manager, no running around back and forth from the bank.
You can arrange the finance for your brand new car right on the spot.
Competitive Interest Rates
This is also something you seriously want to be mindful of and weigh up when it comes to a car loan or car financing through a dealer.
What are the interest rates and terms like?
Does your bank offer a better deal, or the car dealership with their own finance plans?
Sometimes banks and finance companies will offer special interest rates for car loans specifically, but you’ll often discover these are secured loans where you have to offer something as collateral, such as your house. Usually though, to get finance for a car from the bank, you’ll need to go the personal loan route, which attracts interest rates up to 15% or even more.
On the flipside, car dealerships are trying to sell cars. They want buyers. They want you to be able to buy a car from them, so they’ll put together very attractive in-house finance deals to get your business.
Sometimes financing from car dealerships will offer super low-interest rates, way lower than what the banks will give you. You might even find there are less (or no) loan establishment fees.
One of the reasons new car dealers can afford such great terms is they have a margin to play with on their brand new cars. They can negotiate highly competitive terms with a financier, by offsetting some of the loan through the profit on the car they’re selling.
Plus, financiers want to work with dealers and will offer good finance deals, simply because the dealerships are sending them lots of business, and consistently.
Drive Your New Car Sooner
Another major advantage to going the dealership financing route is you’ll be driving your brand new car sooner rather than later. While it could take weeks to get the deal done waiting on approval for a bank loan, with new car financing through a dealership, it might only be a matter of days.
You’ve been dreaming about your new car for months, maybe even years. You’ve been saving hard for a deposit and now you’ve found that dream car. Not only that, the dealer is offering it for a great price for a limited time only.
You don’t want to wait. You want your butt in that seat as soon as you can and your hands on the steering wheel. You’ve already waited long enough.
That said, always check the fine print before signing off on any finance contract.
Things To Watch Out for When Getting New Car Finance
Unless you have plenty of savings in the bank, or the new car you have your eye on is ridiculously cheap, then it’s very likely you’re going to need to finance that new car. Some might decide to go the personal loan route through their bank while others opt for car financing through the car dealership.
Let’s take a look at your options for new car finance and what to look out for.
Convenience
Let’s say you’re at your local Honda dealership and you are keen on one of their latest models fresh off the production line. You might have a deposit saved, but don’t have enough cash to buy the car outright. You need finance.
If you decide to go the personal or car loan route through your bank, the entire process is likely to take days, or possibly even weeks before you get your loan approved (if you get approved) and the money in ready and available in your account.
While the delay might be okay for some people, what if there’s a special deal on that car, and by the time the bank gets back to you it’ll be too late? Maybe the car you have your heart set on will rise in price by several thousand dollars?
To shortcut the process and make sure you get to buy the car while it’s a great deal, then new car finance directly through the dealership would be your best option.
You can sit down with the salesperson and organise all the details and paperwork right then and there in the comfort of the dealership. No phone calls to your bank manager, no running around back and forth from the bank.
You can arrange the finance for your brand new car right on the spot.
Competitive Interest Rates
This is also something you seriously want to be mindful of and weigh up when it comes to a car loan or car financing through a dealer.
What are the interest rates and terms like?
Does your bank offer a better deal, or the car dealership with their own finance plans?
Sometimes banks and finance companies will offer special interest rates for car loans specifically, but you’ll often discover these are secured loans where you have to offer something as collateral, such as your house. Usually though, to get finance for a car from the bank, you’ll need to go the personal loan route, which attracts interest rates up to 15% or even more.
On the flipside, car dealerships are trying to sell cars. They want buyers. They want you to be able to buy a car from them, so they’ll put together very attractive in-house finance deals to get your business.
Sometimes financing from car dealerships will offer super low interest rates, way lower than what the banks will give you. You might even find there are less (or no) loan establishment fees.
One of the reasons new car dealers can afford such great terms is they have margin to play with on their brand new cars. They can negotiate highly competitive terms with a financier, by off-setting some of the loan through the profit on the car they’re selling.
Plus, financiers want to work with dealers and will offer good finance deals, simply because the dealerships are sending them lots of business, and consistently.
Drive Your New Car Sooner
Another major advantage to going the dealership financing route is you’ll be driving your brand new car sooner rather than later. While it could take weeks to get the deal done waiting on approval for a bank loan, with new car financing through a dealership, it might only be a matter of days.
You’ve been dreaming about your new car for months, maybe even years. You’ve been saving hard for a deposit and now you’ve found that dream car. Not only that, the dealer is offering it for a great price for a limited time only.
You don’t want to wait. You want your butt in that seat as soon as you can and your hands on the steering wheel. You’ve already waited long enough.
That said, always check the fine print before signing off on any finance contract.
