How To Buy A Car And Get Approved On Your Car Loan Application
Buying a car is pretty much the same process everywhere.
Different taxes and fees may apply in your country of residence, but the basics are the same: get a loan, provide a down payment, and negotiate a good price. Right now is one of the best times to buy a car because the prices are rock-bottom. The hang-up is getting a loan. Here are some tips on how to buy a car and get approved on your car loan application.
Finding Car Financing
Recently, GE and GMAC announced that they will no longer be financing car loans in Australia. These are two of the biggest financers in the industry, and the news has had a tremendous impact. Uncertainty is never good in monetary markets and with the threat of ever-decreasing available financing, car dealerships have slashed prices on their product. Unfortunately, low prices on cars does not necessarily mean record-low financing. Decreased competition among lenders means higher interest rates, and in a short while, you’ll no longer be able to negotiate at the dealership for a car loan.
It is best, therefore, to get an approved car loan before you go shopping for a car. A loan of this type is based solely on your ability to repay a set amount, therefore, your credit rating is approved, too. A pre-approved car loan also gives you some bargaining power at the dealership. When a dealer knows you have a certain amount of money to put toward a car, he will be more likely to fit a car into this price range.
Without dealer financing, you’ll have to turn to more traditional financers, such as banks and credit unions. These days though, you can also find financing online so don’t neglect that source as a car loan.
Consider Using A Car Finance Broker
Lenders these days have introduced almost strangling restrictions on loan approvals. Having the right applications filled out by the correct deadline is vital. The right broker will guide you through all of this – taking care of the paperwork himself and negotiating with the lenders on your behalf. He will consider your income and budget and explain taxation and fees to you. He’ll also make sure there are no mystery charges or hidden fees in the loan, helping you avoid traps such as balloon payments. In short, as an expert, he will know best how you can get approved on your car loan application.
If you choose use a broker, find one that is accredited with a wide range of lenders. If he isn’t, he’ll be very limited in the loans he can negotiate for you. Remember, the amount of money available for car loans is reduced and the number of lenders is reduced as well. Not only will a broker shop around for a top car loan for you, he will represent you to the lender. A broker with a wide range of lenders will find more competitive rates for you and can work lenders against each other on your behalf.
Negotiate The Price
First, do your research. If you already know what kind of vehicle you want, look it up and see what it’s selling for. Don’t forget to find the resale value on the car as well. Knowing what the car with and without certain options will give you more bargaining power with the seller, whether an individual or a dealership.
Next, don’t forget current car sales are low. Dealers are unsure if they’ll be able to clear their lots. In other words, it’s a buyer’s market so you’re in a strong bargaining position. In many cases, the dealers will be more concerned moving inventory than with commission.
Finally, you can use a car broker if you aren’t much of a haggler. Many car brokers can find you the vehicle you’re looking for at a much more discounted price than you would ever find.
What If Your Car Decreases In Value
With the low prices on cars these days, is there really a risk of your car devaluing beyond average depreciation? Probably not, but there are some things to keep in mind.
- Does your car have a bad reputation? You may find that gas mileage and brand recognition affects your desired vehicle negatively. For instance, Toyota has recently taken a hit, ruining the resale value of their cars.
- What are the trends on environmental concerns and gasoline prices? GMC is halting production of its H3 due to falling popularity because of mileage concerns, making this formerly high-dollar vehicle quite affordable in other words slashing the resale value.
To prepare for the unexpected, you may need to consider insurance options. This would mostly be for comprehensive coverage in the event of a total loss on your car. While accidents cannot be predicted, judge for yourself if you are in a high risk situation. If you are, you may want to consider one of these types of insurance.
- You can get ‚agreed value‚ insurance rather than market value and your car will be covered. It may cost a little more, but the security you have with a policy that will replace your vehicle may be worth every cent.
- An upside down debt is a debt in which you owe more than the vehicle is worth. Gap insurance will pay the difference.
Regardless of whether you get financing on your own or go through a broker, there are many safeguards you can take when you buy a car and get approved on your loan application. ¬†Do your research on cars as well as lenders and don’t write off hiring a car finance broker.
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