6 Tips for Getting a Car Loan
Today's lifestyle and tempo require most people to have a vehicle. Whether for daily activities or for going on an occasional trip. While it is affordable for some to buy a new car, many people require financial injection as the car nowadays is not cheap but rather a significant expense that can mean applying for a car loan. However, even though finding the right vehicle for your needs and affinities is quite simple, getting a car loan can be a task. As a car loan is the solution of choice for most people for buying a car, EZ car title loans has provided tips to help you make the right financial decision and avoid getting into a poor car loan arrangement.
1. Interest rate
Do some research and compare the interest rates of different lenders. You can go to FinImpact and read reviews of lenders like Fundbox to compare different interest rates. Finding the lowest interest rate can mean saving significant funds. You might be surprised how even a fraction of a penny can mean a big difference in the overall loan amount you have to repay.
2. Loan fees
Loans usually incorporate certain fees besides interest rates. These fees are the additional expenses that will be included in the loan sum. For this reason, besides comparing the loans' interest rates, look at and compare other loan costs such as monthly accounts, prepayment, and other fees.
Even though you might not be thinking about early repaying the loan, consider the prepayment fees and opt for a loan that doesn't charge prepayment fees.
3. Look for a loan that allows you to make extra repayments
Consider if the loan agreement allows you to pay extra repayments in case you can afford it. If you save some extra cash or get a higher salary it would be beneficial to make additional repayments to lower your loan debt and reduce the interest rate amount you have to pay.
4. Consider the Loan that allows you to redraw
Redrawing considers that a loan contract allows you to draw down extra repayments you have previously made in case you need funds for emergency expenses.
This option can be a great advantage and even a rescue in financial crises. For this reason, look for a loan that provides a redraw option and secure this precaution.
5. Pay down
If you have certain savings and can afford to make a paydown it`s recommended to do so. The less money you borrow the less you will have to repay due to the lower interest rate. So the bigger the down payment you can afford the less you will have to borrow.
Current general estimations are that for every 1000$ you put down, monthly repayment reduces by approximately 18$.
6. Loan Tenure
Loan tenure for car loans usually is around 7 years. However, even if the number of monthly repayments is lower for long-term loans, the shorter the loan tenure the less the interest rate you will pay. For this reason, opt for shorter loan tenure if you can afford to pay higher monthly repayments, as it will save you funds on the overall loan amount you will repay.
When deciding on a car loan, keep in mind the balance between that monthly repayments fits into your budget and the possibility to save by taking the shortest loan tenture you can afford.
Summary
Most of the provided tips, except for interest rates, are the aspects that borrowers usually overlooked until the end of loan process and the first repayment installment arrives. Considering the above tips will help you save funds when taking a car loan and also help you find the loan that meets your needs and financial capabilities.
