If you're expecting your second child, you might quickly find out that your car isn't big enough for both kids, the rear-facing car seat, your partner, and the grocery shopping all at once. Or if you've got teenagers who are growing like beanstalks and lugging around school bags and cricket bats, a bigger car might be very helpful.
So if you need a new car because your family is growing or if you're just looking to upgrade, getting a good deal on car finance can be just as important as getting a good deal on the price of the car.
But people often forget that the terms of your car loan will determine the total amount you pay for the car, and good terms on your car loan could save you thousands of dollars. It's enough to make a big impact on any family's budget.
So when you need a new car, remember that you need to consider the features you need from it, the price, and your finance options. So here are some tips for getting a better deal on a car loan for your family.
Choose the loan type
Usually, you have two main options when choosing car loan: a secured car loan or a personal loan. Each of these has it's own advantages and disadvantages, so the one that you choose will probably come down to your circumstances and preferences.
Secured car loans usually have lower interest rates because they are less risky for the lender. This will probably be your first choice if you're looking for the lowest cost car loan. However, secured car loans are usually less flexible, and you will need to pay off the loan in full if you sell the car.
Personal loans usually have a higher interest rate, but they tend to be more flexible because they are not secured by an asset. This means that you could get a personal loan to buy a car and have enough left over to pay for home renovations to build the new baby's room, for example.
Choose the features that suit you
Once you've chosen the type of loan that suits your needs, the next step is to decide if you want any optional loan features. Optional loan features include things like early payout and a redraw facility. Having a flexible loan could also help you pay for unexpected expenses like if your child needs braces.
While these features could be very useful and important to you, they may also come with additional fees and charges. So it's important that you only get the features that you'll need.
Get a shorter loan term
Paying your car loan off quickly is a good way to reduce the total interest payments that you'll make. This will mean that your monthly repayments will be larger, but you could save thousands of dollars over the loan term.
For example, if you borrowed $25,000 with an interest rate of 9% (and no other fees), paying the loan off in 5 years instead of 7 could save you over $2,500. There are many online car loan calculators that you can use to help you calculate the savings of a shorter loan term.
Dealership finance isn't always the best option
People often get car finance directly through the car dealership because it is convenient. However, this may not be the best option for you. After all, car dealers may be experts in cars, but that doesn't mean that they're experts in loans.
There are many different kinds of loans and loan features available, and a car dealer may not have access to all of them. So you may get a loan that suits you better by going elsewhere for finance.
Get help from a finance specialist
If you're not sure what kind of car loan would be best for you, or you don't know where to start looking for one, then a finance broker could help you out. A good finance broker will look at your situation in depth and help you find a finance option that suits the needs of you and your family.
Getting a car loan through a finance broker could also help you get a lower interest rate, especially if you have a less-than-perfect credit history. This is because they advocate the strengths of your financial situation to lenders on your behalf.
Remember that getting a good deal on your new car isn't just about haggling in the showroom. Doing some research and getting a suitable car loan can end up saving you just as much or more in the long run.
ABOUT THE EXPERT
Rapid Finance are finance brokers who specialise in finding suitable loan solutions for Australian families, businesses, and individuals. They have access to a wide range of loan products and options.