New Car Buying Tips For All Credit people Good, Bad or No credit
Step 1 - Car loan vs. personal loan
CAR loans are usually personal loans that may use the new or newish car as security that you'll repay the money. They're specific loans, so you can't change your mind and use the cash to go to Bali instead.
Step 2 - Understand the interest rate
The better the security, the smaller the interest rate. Lending starts for a new car at a cut-throat 6.8 per cent interest (that's about the lowest home loan rate going - and only if you had $20,000 in their term deposit account plus $50 fee), according to a recent survey.
Using a new car as security, it was from 7.9 per cent. Without security there was a special of 8.6 per cent, but usually its the older the car, the higher the rates - 4-5 years is 10.5 per cent while an old bangers attracting a rate of 13.9 per cent-plus.
Step 3 - Putting a car on your credit card
Credit cards offer more flexibility (interest rates have been slashed on many no frills' credit cards), while car loans wipe out the debt in a fixed number of years, through monthly installments. Yet cards aren't likely to be offered because of the hefty merchant transaction fees ($800 on a $25,000 car) incurred by the car dealer.
Step 4- Beware of dealer financing
Beware of dodgy credit offers from car dealers which give them a big commission but leaves you spending years paying off. Preferably organize your loan before buying a car or at least separate haggling over the car price from the cost of a loan. Get to know the current interest rates to work out if you're getting a good deal. Compare loan providers by asking for the total cost of the loan, including interest rates and all applicable fees.
Step 5 - Check out credit unions
Banks and building societies offer car loans but credit unions have made car loans and personal loans a specialty and offer the best rates. Of 410 personal loans surveyed by the ratings agency cannex.com.au, 45 received five stars, with 38 of them from Credit Unions with not a bank in sight. Yet they vary, as do loans features, terms, interest rates and fees from banks, credit unions and other lenders.
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