To begin with, a very low rate can come with serious strings attached. Typically, you have less room to negotiate on the price of the vehicle – and that can see you paying thousands of dollars extra for your car.
Just as importantly, dealer finance can come stacked with a raft of hidden charges including monthly loan fees and commissions, which quickly bump up the true cost of car finance.
Be sure to ask if there is a ‘residual value’ – that’s a lump sum payable at the end of the finance period, and it can be expressed in dollar terms or as a percentage of the car’s initial sale price. And always ask to see the paperwork before putting your signature to dealer finance. And make sure you clearly read the paperwork before you buy your car, and not on the same day. It’s the only way to know you really are paying the rate – and monthly repayments – you were initially quoted.
Remember too, dealer finance can be very restrictive, often with none of the flexible features found with many other car loans. You’ll simply be expected to chip away at finance until the last payment – and early payout penalties can cost hundreds of dollars.
Happily there is a way to drive a great deal at the car yard without getting stung by higher than expected finance costs. The solution lies in having a car loan pre-approved before you head to the dealerships. Pre-approval gives you a clear buying budget, and with finance good to go, you can focus on negotiating the best possible price for the car of your dreams.
When you arrange your car loan pre-approval through your local Mortgage Choice broker, you can secure the most competitive rate and repayments offered by a panel of over 25 different lenders – and take advantage of flexible loan features that help your loan fit in with your lifestyle – just like your new car.
Talk to your local Mortgage Choice broker about a pre-approved car loan today and be confident about what you’re really paying for your car.