natloans – Finance & Leasing

Choosing the best car loan isn’t just about the interest rate.  A car loan should suit your needs and profile.  Before you start looking into a new car purchase, ask yourself a few questions.  This will give you a good idea of what you are really looking for in a car loan.

1. What is the age of the car?  Car loan rates vary depending on the age of the car.  If you are going for an older car, don’t expect as sharper interest rates as a new car loan.  A car is a depreciating asset and lenders take this into account even if you are a ‘prime customer’. The age of the car may restrict how long you can have the loan term for.  For example, a lender may not like the car to be older than 9 years at the end of the loan term.  This means if you are looking to finance a 2004 model, this is already 6 years old and the lender may only approve the loan over a 3 year term.
2. What is the loan amount you are looking to borrow?  This also effects the rate and the products available.  Some loan products have lower rates for borrowing more.  For example a loan for 5K is not going to attract the same low interest rates as a 30K car loan.
3. Are you putting in a deposit or a trade in?  100% is more difficult to obtain.  In many scenarios (mainly consumer loans) lenders want to see that you have made a savings commitment to you new purchase. This reduces the risk  or exposure on the asset to the lender.
4. Is the car for business use or personal use?  This will determine the type of car loan product you require.  Its best to seek your accountants advise on loan product particularly when its for business use.
5. How long would you like to pay the loan back?  Loan term determines repayments.  You need to think about your budget and your monthly expenses before adding the car loan.  Of course, if you pay the loan back sooner you pay less interest.
6. What is your credit history?  Do you have defaults? Have you been bankrupt?  Do you have a lot of experience in having car finance?  Or is this your first loan?  Lenders will assess you for approval based on your credit file.  Be aware of what is on your credit file and don’t make multiple loan enquiries.  This will give you an ‘active’ credit file which lenders dislike and are more prone to rejecting your application.

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