There is a multitude of options available in the market for car loans and a whole range of factors to consider determining what actually a cheap car loan is.
There is so much information in regards to interest rates available in the media, online and in most major lending institutions advertising campaigns, but what are not usually published are each and every lender’s criteria, what kind of cars they will give those rates on and fees, charges and early exit costs. The lowest rate advertised is the best way to ‘reel the customers in’. Although they have to advertise comparison rates as per legislation to try and combat this, this will not take into account early exit costs and if they will finance the car you are looking at.
The cheapest car loan may not always be the right loan, or the best loan, dependent on what your future intentions are with that car loan. For example, if you were planning on paying the loan out quite early, the interest rate should most likely be the third biggest consideration, as you would want a loan that will charge interest on the daily balance, ensuring when you pay the loan out early, all outstanding interest is saved, then second, you would look for a loan with no or low early exit costs, whereas if you opted to take the loan with the lowest interest rate, with high exit fees and no discount on the interest at time of payout, this could cost you way more in total once you pay that loan out. This would demonstrate here that the lowest interest rate loan was not the cheapest car loan available for that scenario. In that same loan, if the client was planning to keep the loan for the full duration, then this loan may suit their requirements and be the cheapest option.
So what is a cheap car loan?
- Is it the lowest rate
- The lowest fees
- The way interest is calculated
- The lowest repayment
In each application the cheapest car loan should be sourced by determining the applicant’s objectives and requirements for the present and the future, a loan that is able to be approved based on the vehicle and the application and shortlisted down to be able to give the best overall solution based on that individual application, which may give them the cheapest overall option, based on how long they plan to keep their car and their loan.
CarLoans.com.au can provide you a free car loan assessment, this assessment will determine what loan product suits your needs best as well as providing you with the interest repayments.