How can you get the best car loan rates? It’s a question that doesn’t get asked enough. According to the Royal Commission into Financial Services, almost 40% of car sales in Australia are paid for with dealer finance. With more than 1.2 million cars sold in 2023, that’s around 480,000 buyers who are just accepting whatever rates their dealership offers!
Why won’t you get the best car loan rate through dealership finance? And how can you ensure you get the best car loan to suit your needs?
How Can You Get the Best Car Loan?
Whether you’re buying a TV, a house or a car, the only way to get the best deal is by shopping around. Comparing various car finance products will not only help you identify what kind of loan will best suit your needs, but it will also help you identify which lender is offering the most competitive rates.
Why is it important to compare interest rates on car loans? Because it could end up saving you a lot of money by securing the best car loan rate you can get.
Getting the Best Car Loan Rates: Why Does It Matter?
Because car finance typically has a shorter loan term, many buyers assume the interest rate is less important (compared to a 30-year mortgage). However, even minor differences in an interest rate can have a significant effect on the total cost of your loan.
For example, imagine you’re applying for a $30,000 car loan with a 5-year term. If your interest rate was 7%, you’d pay around $35,643 over the entire life of the loan. Increasing the interest rate by only 2% would add an extra $1,723 to the total cost of the loan. Meanwhile, a 12% interest rate would end up costing you over $40,000 in total (that’s over $10,000 worth of interest).
5 Tips to Help You Get the Best Car Loan Rates in Australia
Fortunately, there are steps you can take to ensure you get the best car finance to suit your needs. These include:
1: Improve Your Credit Score
Your credit rating will play a major role in determining what kind of interest rates a lender will offer you. Start by checking your credit history to make sure all details are correct and rectify any issues as soon as possible. Next, work on paying down existing debts and avoid applying for new credit applications.
2: Compare Different Loan Products
It might seem tempting, but don’t be tempted to just accept the default offer available through your dealership because it seems easier or like a good deal. Instead, compare a variety of loan products available through a range of lenders. Make sure you compare the interest rate, as well as the loan terms and any added fees or charges.
3: Negotiate for Better Loan Terms
You may find that negotiating with the lender will enable you to secure better loan terms. For example, requesting a shorter loan term will not only reduce the amount of interest you pay overall, but it may also result in the lender offering reduced interest rates.
4: Take Advantage of Special Offers
Lenders may offer limited deals and special incentives to new borrowers. By making the most of these special offers you may be able to secure a more competitive interest rate or improved terms.
5: Ask a Broker to Help You Secure the Best Car Loan Rate
The easiest way to secure the best car loan rates in Australia is by contacting an experienced car finance broker. A broker can analyse your current financial situation and provide tailored suggestions for how to improve your credit score. They can also expertly compare loans from a wide range of lenders, negotiate on your behalf and give you access to specialised incentives that may not be advertised to the general public. Basically, they’ll do all the hard work for you!
To Get the Best Car Loan Rates Australia, Talk to Muscle Money
Finding the best car loan rates doesn’t have to be difficult or time-consuming. And it could end up saving you a lot of money! Contact Muscle Money today to get personalised assistance securing a competitive car loan tailored to your needs.
Caleb Waye-Harris, Senior Manager of Asset Finance at Muscle Money, has almost 15 years of relevant experience in the finance industry. His extensive background includes project management, consumer and commercial lending and asset-based lending.
