The loan intermediaries have taken a firm grip on the stick when it comes to both private loans and mortgages. For some time now there has also been a focus on car loans from the loan intermediaries. In short, you who are looking to borrow money for a car purchase can use a loan broker in the same way as if you were comparing a regular loan.
Through the intermediaries you can compare and choose between two types of car loan. Private loans are in absolute focus, but it is also possible to compare traditional car loans with 20% cash contribution. Here we present a small guide to brokering car loans, through answers to a number of frequently asked questions.
How do I compare car loans through a loan broker?
Comparing car loans through a mortgage broker is not trickier than comparing private loans or mortgages. Your task is to fill in a number of information partly about your desired loan and partly your finances. With this information as a basis, the lender makes a credit check and then sends out your request to the banks and credit companies with which you cooperate.
Soon you will be presented with a selection of offers. Your task then is to choose the offer that suits you best. If you need help choosing, you can contact customer service for a discussion. In the end, it is you, however, who have to make the decision whether to borrow and which offer you should use.
An example of a mortgage broker that offers you the opportunity to compare and apply for private loans for car purchases is Rite Bank. By using this provider you can get offers from up to 25 lenders.
If you want to apply for a car loan for purchases from an authorized dealer (with 20% cash deposit), Lenders Finance is one of the options you can choose from.
Important! Make sure you know exactly what you are applying for. For example, if you submit an application for a car loan through a loan broker, you will receive offers of amounts corresponding to the purchase price less 20%.
Do you have to pay cash?
With a regular private loan, which you use to buy a new or used car in the way you think is most appropriate, no cash contribution is needed. If you instead buy the car from an authorized dealer with a traditional car loan, a cash deposit of 20% is required.
You cannot borrow the cash contribution through the car loan. You must pay it in cash at the dealer, or via another separate private loan.
How much can you borrow?
Since a year ago, the maximum loan amount for private loans is $600,000. So there is so much you can borrow. For a car loan with cash deposit and the car itself as collateral, the purchase price is design-oriented. If the price tag is $500,000, it is thus $400,000 that you can borrow with the help of a car loan.
However, everything around the maximum amount is determined by your finances. Your credit rating and ability to pay are the factors that determine how much you can borrow.
What is required to borrow?
To use a loan broker to find a car loan, three things are usually required, namely:
- You must be at least 18 years old
- You must have an annual income of at least $120,000
- You are not allowed to have a debt balance with enforcement authority (payment notes can, however, be accepted)
Note that the above are only the absolute minimum requirements to be able to receive offers at all. The better your finances are, the more and more advantageous car loan offers you will receive.
What will be the cost of the car loan?
Whether you choose a traditional car loan or a private loan, the interest rate will be set individually. There are a number of different parameters that determine what your interest rate will be. Your financial situation with income, existing credit situation, housing form and more are obviously in focus. Loan amount and maturity are two other factors that come into play.
By choosing a loan broker to compare car loans, you can very likely find the most favorable offer for the current situation.
Do you have to take out the loan?
The result of utilizing a lender's services is a number of loan offers. It is important to note that this is about "offers". There is no requirement whatsoever that you have to take out a loan.
In most cases, the offers are valid for 30 days. So you have plenty of time to compare and choose. You can definitely use this to your advantage to get the cheapest car loan possible.
Can you compare only private loans?
It is excellent to compare only private loans without stating to the lender that you intend to use the loan to buy a car. In fact, it may be a good idea to compare pure private loans with a mortgage broker even if you intend to buy the car with cash deposit and car loan from the dealer.
Example: You are a speculator on a new car that you have seen in the car dealership. Upon contact with the dealer, you are offered a car loan with an interest rate of 5.95%. When you compare loans through a mortgage broker, you get an offer for a private loan with an interest rate of 4.95%. Instead of buying the car with a car loan and cash deposit from the car dealer, in this case you can choose to pay the entire purchase price for the car in cash with the private loan.