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To say that buying a car can get tricky would be a massive understatement. There are so many variables that first-time buyers often don't know where to start. This sometimes holds true for experienced buyers, too, though they usually know what to avoid. A good way to begin unriddling the conundrum would be using a car finance calculator.
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Determining how much you can spend is always a preferable start. If your savings are enough, you are indeed lucky, for only a small percentage of people can boast of achieving that target. If you are just another mortal soul, like the rest of us, you will need consider a car loan. That is where the troubles start. What loan type would be the best for you? Is it better to buy a new or a used car? What lender to choose? Questions keep multiplying while you are not getting any smarter. So, first things first!
We cannot even begin to explain how important using a vehicle finance calculator truly is. For starters, it will give you a good idea on the best course to take, including choosing the best vehicle for you. For, depending on your creditworthiness, buying a used car might prove way more sustainable than getting a brand new car. Sometimes it is the other way around. Whatever the case, you will, at least, need to determine what vehicle model you are hoping to buy.
Universally, low interest rates are the first thing people tend to notice. Use our car loan calculator here at Glimp to get the idea of what to expect, then work things out from there. Remember that the average car loan is to be paid off in up to 48 months - the main reason why car loan interest rates appear to be higher than home loan rates. Never make the mistake of comparing the two!
Pro Tip 1: Stick to your budget! Don't dismiss this notion as useless because "of course I will stick to it"! You'd be surprised to learn how many people actually end up buying a completely different car model , thus adding extra financial pressure on themselves. Over-borrowing is the first no you'll need to adopt. Calculate your monthly budget: you should know the exact sum you will be able to afford monthly in order to pay off your car loan.
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Calculating car loan rates comes next. Once you know your monthly budget, you will be ready to choose the best among the vehicles you can afford. There are different car loan types and not all lenders offer the same conditions. The next step towards your goal, therefore, should be singling out the loan that works for you.
Pro Tip 2: Ungrateful as the task may appear, generalizing car loans can still be achieved to a certain extent. In the broadest sense of the word, all car loans fall under one of the following categories:
Pro Tip 3: Your choice of car also matters a good deal when it comes to loan types. E.g., if you are planning to buy a new car, you should look for a new car loan. The usual conditions deal with the age of the car and, in some cases, the amount of kilometres on the clock. Namely, some lenders offer new car loans for buyers of brand new cars, while others might have different standards. Generally (again, broadly speaking), an up to two years old car can be considered new by some financial institutions. If your mind is set on buying a used car, you should look for a used car loan. Restrictions on the age of the car vary depending on the lender, so make sure to check them out before deciding on the specific loan. Keep in mind, however, that used car loans' interest rates are somewhat higher than the new car rates.
Pro Tip 4: Never forget to double-check the fine print. The loan features also depend on the lender, so there is no general master tip here. Still, make sure to look for the extra repayment- and the no early exit penalty features. The first one allows you to pay off the loan sooner, which can save you loads of money in the long run. Well, it could, if the no early exit penalty feature was also on the table. That one allows you to pay off the loan sooner without being penalised.
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The hated paperwork will not necessarily slow you down when applying for your chosen car loan. The key here is in knowing what to expect. Although certain variations apply here also, there are some general requirements every applicant will need fulfil.
Having used our car finance calculator, you now know the sum you can afford. Pick the loan with your name written on it and make sure to collect the following paperwork: proof of income, car details, copies of bank statements, and credit history records. It goes without saying that you'll need prove your identity, so make sure to have your passport or driver's licence ready.
The first two are always required. Car details include registration, engine number, and seller information. These specifics will vary depending on whether you are buying a new or a used car, so make sure to check them out with the lender beforehand. Most finance institutions allow for online applications and the decision making process rarely takes more than several days. Hence, brighten up! Your new car is just around the corner!
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