26 Apr 5 Handy Tips About Car Finance
By arming yourself with some basic knowledge you can ensure you get a solution that meets your needs, and here are some handy tips to help you do just that:
Tip 1: Know Your Credit File.
Your credit file is a good indicator as to whether you are likely to encounter any issues when you apply for finance. If you’ve defaulted on a payment to someone such as a power company or internet service provider, it’s possible they will have lodged it on your credit file. A debt collection agency may also have done this on their behalf. If you do see something listed on your credit file, you can contact the company who listed the default directly to discuss your options to pay it off. If you’re unsure what the default is for, they will also be able to clarify this for you and if it was lodged on your credit file in error, remove it. Call The Finance Lady for further information on accessing your credit file.
Tip 2: Limit How Many Finance Applications You Make.
Your credit file lists all the enquiries that any company makes on your credit history, such as when you sign up for a fixed mobile phone plan contract, or open a utility account such as power or Sky TV. Something that finance companies look at is the number of enquiries you have on your credit file and multiple recent enquiries can have a negative effect on your application for finance.
Each time you make contact with a finance company or walk into a dealership, their priority will be to secure your finance application, and sometimes they might not make it obvious that you are consenting to them carrying out a credit check on you. By limiting the number of places you allow to submit a finance application on your behalf, you give yourself the best chance at securing finance from a prime finance company, who offer the best rates and terms.
Using the services of a finance broker is another option to consider in order to minimise the number of enquiries that are carried out on your credit file while ensuring you get a competitive interest rate. As a finance brokerage firm, The Finance Lady and Credit One have accreditations with over a dozen of New Zealand’s most reputable finance companies. It’s our job to know which finance companies would be willing to give you the best deal for your circumstances and compare them on your behalf, saving you not only time and money, but from clocking up too many enquiries on your credit file.
Tip 3: Look beyond the interest rate and compare all aspects of the loan.
It’s not just the interest rate that determines how much you pay over the life of your loan. There is always an establishment or documentation fee to set up your loan and these vary hugely between finance companies.
Does the finance company charge weekly or monthly account fees? What if your intention is to settle the loan early? A larger fee to do this or weekly/monthly account fees could cancel out the benefit you’re getting even if the interest rate sounds better because it’s 0.5% lower.
Compare the actual weekly or monthly repayments rather than interest rates at face value. Since the repayments include all fees and charges, they will give you a much better comparison.
Tip 4: You don’t have to finance through the dealer you’re buying from.
Dealership finance is often used as a way to control their sale, as it gives them direct insight into your financial position and lets them know you can afford to buy their car without having to negotiate on the price. They also tend to only have access to at most three finance companies.
Our team works with over fifteen leading lenders and compare them on your behalf to help you achieve the best outcome – because we want your business and love happy clients.
Tip 5: Researching/Applying Directly vs. Using a Finance Broker
When contacting finance companies and banks directly, you can’t be sure that they are offering you a competitive finance package or whether you’ll even meet their lending criteria.
The established relationships The Finance Lady and Credit One have with our finance companies give us the advantage of having a thorough understanding of each and every one of their individual guidelines, and the unique opportunity to ‘paint a picture’ to the financier considered appropriate on your behalf, explain your circumstances and why you deserve a great package.
It is our team’s job to ensure they keep updated with any policy updates or guideline changes and the latest rates and fees. This knowledge enables us to effectively compare finance solutions for you to secure the right solution for your individual requirements.