Picking the best car loan: secured vs. unsecured loans. Fluctuating and fixed interest rates: which one to pick?
The car loan remains the most common vehicle purchase solution in New Zealand. Hardly a marvel, since not many people have sufficient savings to afford a new car off the bat. That only goes to prove that the car loan offer is rich and, albeit not always optimum, still more preferable to other payment methods.
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Regardless of your car of choice - new or used, one way or another, you will be able to qualify for some type of loan. Car loans broadly fall into two categories: secured and unsecured. Secured loans protect the lender against the case of debtor defaulting and have lower interest rates. Unsecured loans, on the other hand, have higher interest rates, but are asset-free. Qualifying for an unsecured car loan is, as you might have guessed, way more difficult than the other way around.
Both loan types can come with variable or fixed rates - the first being lower and the latter - higher. As for variable rates, they can go both up and down. It is ungrateful to speculate which is more likely, as the fluctuation depends on various factors and the specific lender.
Last but not least, new car loans have lower interest rates than used car loans, but that isn't to say buying a new cars is a better option. Keep in mind that car values go down as time passes, making them cheaper than at the time you applied for your loan.
Qualifying for a cheap car loan: what are the options?
Obtaining a cheap car loan is not a myth. To find the best choice for you, you will need to calculate your monthly budget and do in-depth research. The task may be tiresome but is certain to pay off in the long run. You should also be aware of the fact that a new car does not necessarily need to be purchased with the help of a car loan. Applying for a low- or no interest loan through a family member is also a viable option in some cases.
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Apart from banks, you can also apply for a loan through finance institutions and credit unions. Banks offering car loans are ASB, Kiwibank, Co-operative Bank, and Westpac. Credit unions offering car loans are First CU, Police CU, and NZCU Baywide. Paraloan provides low-rate car loans for people with physical disabilities and MAS is there for medical professionals. Finance Companies offering car loans are AA Finance, Avanti Finance, Christian Savings, Finance Direct, Finance Now, Financepoint, Financial Holdings, Gem, I Finance, MARAC, MTF, NZ Loan, NZ Vehicle Finance, and Stadium Finance, to name the best known ones.
All of them offer car loan support on a regular basis, so make sure to contact them with any inquiries you might have.
Vehicle loan paperwork: mastering the requirements. Financing a car using the bank.
Nobody likes paperwork and that's a given. When it comes to your vehicle loan, things get simpler merely because nearly all lenders allow for online applications. Deposits, documentation, warranties can all be submitted online, so no time wasted waiting in queues. The decision on your loan is also to be expected shortly. Replies can take anywhere from several hours to a couple of days.
To apply for any car loan, you will first need to prove you are the person you claim to be. Your passport or driver's license are usually sufficient in that regard, but sometimes the lender may ask for additional documentation. Car details, including dealer info, engine number, and registration also need be submitted. As for other requirements, they vary depending on the loan type. For unsecured loans, most lenders will require your credit history records and copies of bank statements.
On top of car loans, banks offer other options when it comes to purchasing a car. Overdraft is one of them. Overdraft interest rates are higher than car loans', but the establishment fees are considerably lower. The greatest benefit with this type of payment is that you get to pay the loan off as fast as you like. The sooner you do it, the more money you will save.
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Extending your mortgage can oft prove more beneficial than applying for a car loan. This move allows for repaying the car at the mortgage interest rate, which is considerably lower than any car loan interest rate. The catch is that repayments can get extended depending on your circumstances, multiplying the fees in the process.
Using a low interest credit card to finance the purchase of a new car is another beneficial alternative. If you transfer the balance, you will get a new introductory rate - e.g. 2.99% for the next twelve months. If you transfer the remaining balance to a new bank afterwards, you can easily end up paying off the debt at below market rates.
As always, an in-depth calculation beforehand will make the decision easier in more ways than one. Make sure to double-check your monthly budget and never lose sight of the big picture. Get your car loan support here and now. Contact us for assistance at any time!
Steps for getting the best car loan out there.
Having familiarized yourself with the alternatives, you should be ready to pick the best car loan to suit your particular needs.
Checklist:
- Define your monthly budget;
- Double-check the solutions deemed suitable;
- Single out the most beneficial option;
- Read the fine print;
- Get the car keys!
One last tip: if you manage to find an affordable car loan with the no early exit penalty feature, you will be able to pay off the loan sooner and thus save on interests in the long run. Make sure to read the fine print carefully, as some loans stipulate additional fees for early repayments. Sticking to your initial plan and making use of the benefits such as this one guarantee a happy ending!
