So, you’re in the market for a new (or at least new to you) car – getting a good deal can be hard to come by if you don’t know what you’re doing. In this guide, we’ll show you some tips for buying your next vehicle and saving money; even if you have bad credit.
Setting a budget
You need to set a budget and you need to have a good idea of what kind of car you’ll need for the job – or one that you want. Make a list of priorities such as fuel economy, safety features, towing capacity, storage space, etc. Now you can shortlist your cars – and get an idea of how much you’ll need to borrow. Here are some cheaper cars you can consider.
To get a handle on how much a car loan will cost, use a car loan calculator. You need to know the interest rate, loan term, and amount you intend to borrow. Remember to factor in rego, fuel, and services, too.
If you have bad credit
Whenever you are applying for any kind of loan as a business or a consumer, your lender will surely be checking your credit score to see if you are eligible for approval and/or what rate you qualify for. Here is how to get a car loan with bad credit and improve your chances of getting a more competitive interest rate. The first is to have a deposit – that reduces the risk on the part of the lender. You should also demonstrate good financial standing with profit and loss statements or tax returns.
Don’t accept dealer finance either – “zero” or “1%” loans usually are too good to be true.
Time your purchase
The Federal Chamber of Automotive Industries says that most cars are sold in June and December. That’s because dealers are clearing the way for new models. Cars on the showroom floor are costing them money. If you can negotiate to take it off their hands, you can get a good deal. If you can’t wait that long, try approaching dealers at the end of the month, as salespeople need to make quotas. You could get a bargain if you haggle well.
Car loan pre-approval is an “in principle” approval from a lender, which means you have 30-60 days to find a vehicle to purchase. Once you do purchase, the loan is activated to the pre-approval limit. This means you have a cap on what you can spend – and dealers will have to lower their prices to meet your cap. Dealers have to sell – so you can use that to your advantage! It also shows private sellers you’re in the market and not just “tire kicking.”
Going private – doing your checks
If you are buying second-hand, you can get a bargain sometimes; but it does mean doing a bit of homework. Ideally, you need to physically inspect the car – and perhaps request a test drive if it’s safe to do so – before considering buying. Sellers should provide a VIN and logbook you can check with authorities to ensure everything is on the up and up. If you can’t see the car or inspect the logbook or VIN – walk away. You are likely being scammed.