Low Rate Finance
A low interest rate is often seen as a very important factor used by buyers when comparing car loans. It is important to also know that there are other factors that are as important, if not even more so that you should consider in the process of selecting a loan. These include the ability to repay the loan before the deadline, ongoing fees, various hidden charges and also whether you are eligible for the loan.
What few consumers realise is that securing a low rate loan can sometimes involve more than simply comparing lenders to see what lender can offer you the lowest rate finance on any chosen car. Many consumers often go about selecting a loan by primarily finding a vehicle that they want, then seeing what finance they are able to secure on that vehicle, and on what terms. But what many buyers don’t realise is that their choice of vehicle plays a very large part in what interest rate they receive.
To give a brief idea of how finance companies factor in rate, a finance company essentially makes their profit by charging an increased amount on what their own funds cost them. The interest rate is a method in which finance companies are able to price a loan depending on how risky they think the deal is.
Finance companies will look at three things when offering low rate finance. They look at the client, the type of loan being looked at, and the car.
Factors that finance companies look for when offering finance at a low rate include buying or owning a home (instead of renting), or equity in a mortgage, stable employment – length of time within the same job, type of employment the individual is in, being in a good financial position, history of savings, good previous credit history and shared ownership.
What sort of vehicles are ideal for low rate finance?
A newer vehicle is more ideal, finance companies prefer new vehicles to old ones. This is because there are less chances of mechanical problems or faults due to the vehicle being newer, but not only this, it has the added protection of new car warranty. Also, the vehicle is more than likely being sold at a fair price. To find the price of most new cars you can simply pick up the motoring section of the local paper and look through advertisements, or visit a manufacturer website. For example, it is simpler to work out the price of a 2008 Honda Accord than it is for a 1997 Vauxhall Vectra.
To secure the best deals on finance you should ideally look for a car aged less than 4 years old and in decent working condition. Buying through a franchised car dealer can make you feel safer that you are buying a quality car, and purchasing a car through a franchised dealership doesn’t always cost more, as many consumers think. Also, car dealers often spend a lot repairing a vehicle and bringing it to a high standard before selling, and offer a warranty. Like any purchase it is important to do research to find the best deal that suits you.