To find the car loan that’s right for you, it’s important to shop around and compare your options based on factors like price and features offered.
How to find the best car loan for you
The car loan that is best for you will depend on your personal situation. While a low interest rate is one factor to consider, it’s worth considering other factors like fees (which can eat away at some of the money you could save in interest) and features (which could increase the overall value of the loan). Also, don’t forget to check your credit score for free, as this could influence your interest rate and borrowing capacity. Here are some factors you can compare:
The interest rate is the interest rate you will pay on the loan per year. Loans can have a fixed interest rate or a variable interest rate. If the loan has a fixed interest rate, that means the rate and your repayments will stay the same. It can give you peace of mind and could help with budgeting. On the other hand, if the loan has a variable interest rate, the rate can go up or down at any time. This means that your refunds may also vary and you may receive lower refunds or have to pay higher ones.
It is also worth comparing the comparison rate of the loan. The comparison rates take into account the interest rate as well as most initial and ongoing fees, so they are intended to give you a better idea of the total cost of the loan per year.
Secured or unsecured
Auto loans can be secured or unsecured. Secured auto loans require you to provide an asset (like the car you are buying) as security or collateral for the loan. If you don’t make your repayments on time, the lender may repossess your property and sell it. Unsecured auto loans do not require any assets as collateral. Because they don’t have that extra level of protection for the lender, the interest rates are usually higher.
Check the fees charged and their amount. Car loans can come with a range of fees, such as set-up fees, monthly service fees, missed payment fees, additional repayment fees, and prepayment fees.
Check out what features are on offer and see if you think they add to the overall value of the loan. For example, can you make additional refunds without paying a fee? This could help you move forward on your loan and save on interest. Some lenders also offer access to a withdrawal facility, so you can access any extra repayments you’ve made if you need them.
Some lenders also offer “lump sum payments,” where you pay a large lump sum at the end of the loan. While this may reduce your regular repayments, you should be careful with this approach as it usually means you end up paying more interest overall.
term of the loan
The term of the loan is the time you have to repay the loan. By choosing a longer loan term, you will generally be able to get lower repayments. However, you’ll also spread them over a longer period of time, so you’ll likely pay more interest in total.
See some of the best auto loans on Canstar’s database
If you’re looking for the best car loan for your situation, Canstar’s star rating might be a good place to start. Each year, Canstar’s expert researchers analyze and score car loans on our database. Car loans are rated on price and features. The best performing loans then receive a 5 star rating. Find out which new and used car loans received a 5-star rating.
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