pre-approved for a car loan pre-approved for a car loan
pre-approved for a car loan

Getting ready to finance a new car purchase? Waiting to drive off into the sunset in your perfect new vehicle? If so, it’s time to find a car loan that can suit your needs.

It’s something that we know all too well at Fox Finance Group. We have been connecting Australians with suitable loan providers and unbeatable loan products for 17 years and counting. We know what they should and shouldn’t have, and in this guide, we’ll explain those things in more detail.

If you want an easy car loan pre-approval, call on the services of a car loan broker and let them do the work for you. If you’re just at the beginning of your car finance process, consider the steps below.

Assess Your Car Loan Needs

What do you need and how much can you afford?

These are typically the first two questions you should ask yourself when obtaining a car loan pre-approval. It helps you to set a realistic budget and ensures your feet stay firmly on the ground.

We’d all like something better, whether that means bigger, more luxurious, or faster. But there’s no point buying a sports car just to do the school run and if you can only afford a couple hundred dollars a month, luxury is out of the question.

Beyond that, you should consider what loan features you will need:

  • Balloon Payment: A final payment that is added to the end of the loan. It can reduce the monthly payment, but often at the expense of a higher interest rate. What’s more, you’ll have one final hurdle to clear before the car is yours.
  • Repayment Term: How long do you want the loan to last? A longer term reduces the monthly payment but increases overall interest; a shorter term could put you at risk of missing a payment.
  • New vs Used: You can get both new and used car finance. The former usually comes with a lower interest rate and more guarantees, but it’s also the more expensive option and you could lose a lot via depreciation.
  • Payment Schedules: Do you need flexibility regarding repayment schedules and overpayments? What happens if you miss a month or need a break? Such terms can vary from loan to loan, so consider these needs in advance.

Car Loans - Noosa

Research and Compare Lenders

Customer review sites, testimonials, and social media posts—these are just a few ways you can research the efficacy of a particular company. If it doesn’t pass these initial tests—lots of bad reviews, complaints, and warnings—take it off your shortlist. If it does, compare its products, paying special attention to:

  • Loan amounts
  • Interest fees
  • Penalty/other fees
  • Flexibility
  • Terms

Borrowers often go with the first legitimate lender they find, assuming that the differences are minor and not worth their time. But that couldn’t be further from the truth. What’s more, a car loan is a long-term commitment, so it’s always worth taking some time to compare.

Of course, you could also just skip all of that and work with a car loan broker like Fox Finance Group, as we’ve already done the research.

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Evaluate Interest Rates and Fees

Lender 1 offers you an interest rate of 6.5% and Lender 2 charges 7.5%, but you’re more familiar with Lender 2 and like their TV ads, so you go for that option. After all, who cares about 1%?

Well, if we assume a 5-year term, a loan of $30,000, and monthly repayments, it’s a difference of over $15 a month and $800 during the lifetime of the loan. Are those fancy ads really worth $800 to you?

Always consider the interest rate and accompanying fees and remember that every seemingly minor difference can equate to a big saving over the loan’s term.

Assess Lender Reputation and Customer Service

Getting a car loan pre-approval is not something you do every day, so everyone is a little inexperienced. It’s can also be a daunting experience that will throw a lot of numbers, terms, and document requests your way. And then you have the desperation factor, with many consumers keen to settle quickly and with minimal fuss.

All things considered, it’s easy to see why scams are rife.

Working with a licensed car finance broker will help you to avoid any pitfalls. You can also check that the lenders you use are actually licensed (the Australian Securities and Commission website can help with this).

You shouldn’t stop there. Google the company and check social media to see what kind of reputation it has for customer support. It might not sound like a big deal, but if you ever have an issue or complaint, you’ll want to know that you’re dealing with a company that cares.

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Check the Loan Application Process and Requirements

Fast applications and a user-friendly process are at the top of the agenda for most modern loan companies, but it’s still worth checking. Consider how easy it is to apply, how often the lender rejects, and whether there are any special circumstances that could complicate matters, such as self-employment.

Consider Flexibility and Additional Features

Some lenders may offer additional account management tools, including online access and budgeting software. Others may give you more flexibility or offer additional products that you could need in the future. These features might not be as important as interest rates and payment terms, but they should still be considered.

Conduct a Final Evaluation and Comparison

After completing all the above steps, you should have a good idea of which lenders and car loans are best for you. Create a shortlist, draft the pros and cons, and then make your decision.

You could always leave it to the experts

As you can see, there are a lot of steps involved with finding the perfect lender, including:

• Assess your needs
• Check for legitimacy
• Compare interest rates
• Read reviews
• Look for good customer support
• Browse additional features

And that’s not all. If you have friends who have previously acquired car loans, you should ask them who they used and whether their experience was worthwhile.

Need a little more guidance? Talk to one of the expert brokers at Fox Finance Group. Our lending specialists can help you to secure the best car loan by scouring dozens of lenders and hundreds of loan products across Australia. We’ll assist with pre-approval and will also be there to answer any questions you have about the car loan process.

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