Before applying for any type of loan, make sure you are ready to set aside a budget for the monthly payments. Ask yourself if your current salary is enough to pay for it and still have ample money for your other necessary priorities, like utilities, groceries, rent, etc.
Is It Smart To Get A Car Loan?
Loans can be a useful tool when you find yourself in a situation needing to urgently purchase or pay for something massive like a home, an engagement ring, hospital bills, or a car. There are a lot of corporations that are geared towards aiding you financially, just like Loans Unlimited. These companies are here to help you achieve your financial goals and help set you up for an enjoyable life.
What Are Two Options I Have?
The two main options that you have are either to finance through a dealership or a bank. Making the right decision can be determined by your current situation, it is crucial to make the correct choice to save both money and time.
1. Bank Financing
This is basically you heading to a bank to apply for a car loan. So before you even go to the dealership, you will acquire a preapproved loan. Two things must be provided by the bank or lender: a letter of commitment and a quote. These will save you some time so you can have the contract finalized faster.
The application for pre-approval can either be done online or in-person at a bank or credit union. Make sure you’ve decided on what vehicle you want to purchase because you will be asked to provide its information.
While the rates are usually more upfront with this option, its availability and range can also depend on whether you’re looking to buy a brand new car or a second hand one. Some banks set limits based on a used car’s age or mileage. If you’re looking at other vehicle types such as motorcycles, you may be limited with the types of banks which will offer you finance. A recent study from MotoNation showed that less than 30% of lenders would finance a motorcycle in Australia.
2. Financing Through A Dealership
It’s pretty much the same but with just one difference, the car dealer will be handling the paperwork. Once you’ve decided on a vehicle of choice, the dealership will ask you to fill out a credit application form, which they will then distribute to various lenders, thus giving you more options to choose from. One of the benefits of this option is they are more inclined to help you if you’re looking to buy a second-hand vehicle. But of course, this service doesn’t come for free. The dealership will most likely add on top of the interest rate as commission for the convenience they’ve provided.
How Do You Know Which Option To Choose?
Well, with any situation that involves money, the best option is always the one that will save you the most money in the long run. If you have the time of day, I suggest you take matters into your own hands and gather as much information from both the bank and the dealership, you can even approach different banks and dealerships while you’re at it. This way you can lay down all the cards on the table, calculate the total expenses for each and make a decision depending on which is most worth it.