Should you go with Car Loans or Dealer Finance?
- Car Insurance,
- Sep 13, 2019
Auto loans sure are an interesting way to easily get your car. One moment you have your head in your hands, thinking about how tough the job is and how you always get late because public transportation is really slow. But you can not do anything about it since you do not have enough money to buy your own car now. At the very next instant, you are stuck with a really great idea of auto loans or car finance and apply for one. The very next day, you are driving to your job in your very own car; courtesy of the loans and finances. But they come at a toll, never forget that. You have to pay back, otherwise, you might get your car repossessed, or something else might happen like additional fines that really break a person down.
There are a lot of options when you think of ‘car finance’. The auto loans are one very common thing, but there are other types like lease, business vehicle finance, etc. You can get any of them and they all come with their own set of benefits and advantages that the others do not have, and thanks to the banks doing businesses with the help of these loans, new types are emerging rapidly and they are greatly helpful for the people in need.
Car Loans or Auto Loans are the simplest and most common type of car finances known to man where a bank, credit union, a company, or an individual provides you with a sum of money to buy a car which you have to eventually pay back in installments with interest. Car Loans can be of many types but the two leading ones are secured car loans and unsecured car loans.
Secured Car Loans:
Secured car loans, as the name suggests, are ‘secure’. There is a security on the vehicle you purchase and in case you fail to pay the repayments in time, your car will be repossessed and sold off to pay the debt. These types of loans are usually lower in interest rates and are generally easier to acquire since you are putting your car as collateral.
Unsecured Car Loans:
Contrary to the secured car loans, the unsecured auto loan does not have anything as security hence the name ‘unsecured’. These are really difficult to acquire and you need to have a good credit history and score in order to get one of these. To top that, the interest rate is higher than the secured car loan to compensate for no security or collateral.
Car Loans, as mentioned, are offered by lenders like banks and credit unions. These companies check your history and credit score and then offer you the loan according to how much you need, which car you are going to buy etc.
There are a few advantages of car loans which are:
1- You can get the actual amount of loan you are going to get and the one which you are going to pay back with interest. This is usually useful because other parties charge you a little more as a commission for being the middleman between you and the actual party that provides you with the loan.
2- You will get your loan before you visit the dealership. It is much convenient since you know your budget range and can decide better this way, and having a pre-approved loan also makes a good impression on the dealership managers.
There are a few drawbacks that come with getting a car loan:
1- The interest rate might be slightly higher depending on the choice of your vehicle.
2- You will have to decide on which car you want as the bank would ask for specifications of the vehicle, so the vehicle to be purchased must either be pre-planned or fall into the same budget range of the vehicle you applied to finance.
One of the alternatives to financing through a bank for a car loan is financing through a dealership. It is a method where you can apply for auto finance through a dealership. This happens when the dealer submits an application on your behalf to a number of lenders and lets you choose the best plan.
1- You are free to compare the car finance rates among the different lenders’ packages and choose the one that suits you the best.
2- You can choose any car you want at the dealership and are not restricted to a specific budget.
1- Dealers charge a little more than a bank to get a little profit they take as a commission since they got the loan on your behalf.
So, should you go with car loans or dealer finance?
While both methods have a different set of advantages and disadvantages that compete against each other, it is safe to say that both are really good ways to acquire finance. To say that one is better than the other would be a little too harsh for the other method, but if certain factors are taken into consideration that vary from person to person, one might provide an advantage to the person that the other could not, therefore making it better than its competitor.
You must look at your current situation, and then decide which method is better (if it is). Most of the times, both are good and there is little difference between them. You can find out which loan is good for you by going through this article.
Regardless of which method you use to acquire the finance, you should run REVs check on the car you buy and in Australia, there is no better way than to do it through QuickREVs who does it from you in a click of a button!