When you are arranging car finance, you should carefully consider all of the options on the table before signing the finance application on the dotted line and driving your new car off the showroom floor. Here are our top five most important things to consider before you drive away.
DON'T JUST ACCEPT DEALERSHIP FINANCE
Most car dealers will only have one financier, and although they may be the easiest to obtain an approval with, they may not be the most suitable option for your needs.
It’s easy to trust the Business Manager at a dealership, but don’t forget their job is to get as much profit out of your finance package as possible. So shop around beforehand and also don’t sign anything with the dealership unless you have done all your research and they truly do have the best deal on offer. The convenience factor they will sell you can cost you thousands.
COMPARE ALL FEATURES, NOT JUST THE INTEREST RATE
If you’re looking to compare quotes from multiple financiers, it’s important to compare like for like. Ensure the quotes are for the same duration, and the amount being financed is the same. It’s important to look at the final repayment figure. Whilst interest rates are important by comparing the actual payment you avoid being tricked by high fees and low rates. Also check what any early exit costs would be if your intention is to pay the loan off quicker.
DON'T APPLY FOR CAR FINANCE UNTIL YOU ARE SATISFIED WITH YOUR QUOTE
Although many financiers or credit assistance providers will encourage you to formally apply to get the best deal for you, this may have an effect on your credit file. The more times you apply in a short period of time, the worse your credit file looks, and this can impact on the deal that you should have achieved if you were to apply to the correct lender straight away. If a credit assistance provider requests personal information from you in order to quote, be very clear that you will not provide this information for the purposes of a credit check.
UNDERSTAND WHAT IS ON YOUR CREDIT FILE PRIOR TO APPLYING
You are able to apply for a free copy of your credit file online. It is a good idea to do this prior to applying for a car loan, so you can address any issues before you apply. You are generally able to get a copy of your credit file for your own personal use without that enquiry being recorded. A financier who accesses your file for the purposes of providing finance will have to record their access.
SHOULD I DO MY OWN RESEARCH AND APPLY DIRECTLY MYSELF?
Although you may be able to negotiate a good deal after a lot of research, it will be very hard for you to understand each and every lender’s criteria, as they will all be vastly different. You should consider speaking with a car loan broker who has access to a panel of lenders, as they can sift through all the different lender’s guidelines and not only recommend a lender that you could qualify for, but also get you a great deal through their relationships with their lenders. This not only saves you time, but can also ensure that you don’t place unnecessary credit enquiries on your credit file, protecting its integrity.