How To Do The Car Finance Dance
April 6, 2020
One of the easiest and quickest ways to get behind the wheel of a new Mitsubishi SUV is with car finance. Historically low interest rates are going to be around for some time, so arming yourself with information and being smart about the way you borrow can really make a loan work for you.
It’s not complicated. However everyone’s circumstances are different, so there are options to consider. That said, we all have to start somewhere.
Where can you find funds?
Not everyone has the means or time to save up and pay for a car in cash. So who can you turn to? Of course, there are the big four banks. You’ll also find credit unions, building societies and plenty of specialty lenders are competing for your hard earned. Many offer quick online quotes, so a bit of screen time research will put you on the front foot.
These days, you may be surprised even the dealership your purchasing from can provide finance that’s highly competitive. And generally, they can get approval much faster. But just like you shop around for your car, it’ll pay to compare lenders and could save you thousands of dollars in repayments alone.
Which loan is right for you?
Most car loans range from one to seven years. You can choose the term of your loan, and whether you make weekly, fortnightly or monthly repayments. Some loans also offer the flexibility to make extra payments so you pay it off sooner and reduce the amount of interest payable.
Speaking of interest, you can also choose between fixed or variable. A fixed rate gives you the peace of mind and certainty of knowing exactly what your repayments will be. A variable rate moves with market forces and lenders may push them up or down at any time. Most people prefer fixed rates because they’re so much easier to budget for.
You can also opt for a secured or unsecured loan. A secured loan uses the car your purchasing as security. Because there’s less risk for the lender, they’ll offer you a lower interest rate. However if you don’t make loan repayments, they’re entitled to repossess your vehicle and sell the asset to recoup costs.
On the other hand, an unsecured loan relies on your creditworthiness alone. If you have a great credit history or credit score you may wish to explore this option. But since the lender has no collateral on the funds borrowed, an unsecured loan is usually hitched to a higher interest rate.
What should you bring?
A few formalities come with all forms of finance. So whether you’re applying for funds at a bank or your preferred dealership, be prepared with these documents:
- Drivers License. (Well, that makes sense!)
- Two of your most recent payslips (plus your partner’s if they’re also on the application).
- If you own your home, a council rates notice in your name.
- If you rent a home, a copy of your lease or landlord’s details.
In most cases you need to have been employed on a full time or casual basis for at least six months.
Move to a pre-approved groove.
So you’ve found the ride of your dreams. But you’ll kick yourself instead of tyres if someone else snares it before you. That’s where pre-approved finance can really give you an upper hand.
Instead of getting bogged down in paperwork when you find “the one”, pre-approval means less stress and more confidence because you know how much you can spend before you’re ready to swoop. It also lets a salesperson know you’re serious and sorted, which means the best deal is more likely to land on the table when negotiating.
The time of your life starts now.
Life is a journey, and a Mitsubishi Personal Vehicle Loan is the ideal choice if your car will mostly be driven for personal or domestic use. To find out more, contact your local dealer or click here.
View our finance calculator here.