What is a Car Loan? This is a secured personal loan used specifically to buy a new or used car or any other type of vehicle. Some lenders will provide you with an unsecured loan to buy a car, meaning you will get the cash loan which you would use to buy a car.
How do these two types of loans compare? A secured personal loan will have lower interest rates but you are required to take full comprehensive insurance on the vehicle before the loan is approved. With an unsecured loan the interest rate will be 2% – 3% higher than the interest rate for a secured personal loan, but you don’t need to take full comprehensive insurance on your car.
The interest rate can be variable or fixed. In general, if you think you will repay your loan before the end of your contract, you should take a variable interest rate. If you would like to have lower monthly payments then you should opt for a fixed interest rate. Other fees and charges include an establishment (application) fee which can range from $50 to $250. Also some lenders will have a monthly fees for the duration of your car loan contract.
If you pay out your loan before the end of the loan contract you may also have to pay an early repayment fee. This fee will vary from one lender to another. You should also enquire if there are any missed payment fees, meaning each time you are late with your monthly payment you may be penalised with an additional fee.
Depending on the intended car use (ie. business, personal use, etc), car loans can be categorized as:
More to consider when looking for car finance
To obtain a car loan you may approach a lender directly such as banks, credit unions, building societies and private lenders. Many car yards offer car loans as well. You may also wish to contact a broker who will shop around for you and look for the best car loan available.
When looking for a car loan you should consider the following:
Can car loans be pre-approved?
Are there application fees for car loans?
Are there ongoing monthly or annual fees?
What is the interest rate?
Is there a choice of fixed and variable interest rates?
Can I make extra repayments or lump sum repayments?
Is there an early repayment penalty?
Are there missed payment penalties?
BMW Car Finance
German automaker BMW is known for her luxury and good performance vehicles. The cars are manufactured in a variety of models ranging from saloons to SUV’s to suit the needs of most of the users. BMW’s are also quite pricey, and most customers cannot afford the entire one-off cost required to buy them. Fortunately, BMW Car Finance Stratton plans enable users to own the cars and pay for them in bits.
Depending on your financial situation, there are several types of BMW car finance plans. A secured loan allows you to borrow money from a lender while using the BMW as collateral. On the other hand, an unsecured loan provides funds to buy the BMW without any guarantee. One crucial difference between the two credits is the high-interest rate imposed on the unsecured loan.
Dealer financing is also a common BMW car finance option. A car dealer allows you to own your preferred BMW and make periodic payments. At the end of the repayment period, you are required to pay a lump sum payment to finalize the deal.
BMW car finance for leases allows customers to borrow funds to hire a BMW for a fixed period. There are two types of contracts depending on your financier. A novated lease can be provided your employer where the lease payments are made directly from your pre-tax income. An ordinary car lease is granted by a financier who already owns a BMW and leases it to you while you make monthly payments. Some people choose to buy the BMW at the end of the lease.
Reputable institutions that offer BMW car finance in Australia include Stratton Finance and Bank of Melbourne. Stratton Finance provides financing worth $18,000 minimum at 6.62 percent per annum for up to 10 years. The loan features monthly repayment of $927, an application fee of $499 and $7 as monthly service charge. Bank of Melbourne offers a secured loan of up to $80,000 at 9.6 percent per annum with $ 965 monthly repayments. Borrowers also have to pay an application fee of $195 and a monthly service charge of $12. Other BMW car finance providers worth trying include Latitude, IMB, Beyond Bank and RACV.
What is a Novated Lease for Cars?
Even though you might have heard of car leases before, one thing that you might not have ever heard of is a novated lease. However, if you have not yet heard of this type of car lease, you could be missing out on an opportunity that will work out really well for you.
A novated lease is designed to be a part of the salary and benefits package that is offered by an employer. In addition to your salary, your employer will agree to pay lease payments for you for a vehicle of your choice. This will be taken out of your pre-tax salary, and you may take a pay cut because of it. However, the vehicle will be there for you to use for your personal use, so you will not have to worry about paying for a personal vehicle for yourself.
The benefits of a Stratton Novated Lease can be numerous. For one thing, you might find that you will get a lot more for your money than you would get if your employer were to simply pay you the money as a part of your salary instead. Even though your paycheck might not be as high, you might find that you come out better financially every month.
There are also a lot of tax benefits that go along with a novated lease. Since the amount of the lease is taken out of your pre-tax income, you do not have to worry about paying taxes on this part of your salary. For someone who is looking for every tax break possible, this can be a really good thing.
Additionally, you might find that you are able to qualify to drive a nicer car than what you would be able to drive if you were to go out and purchase or lease a car yourself. Even though your information will be taken into consideration when you lease the car, your employer’s will be as well. The lender will know that your employer will be on the hook for paying back the lease payments, so you can help improve your chances of getting approved for a vehicle that you might not get approved for on your own. For someone who is in a situation in which buying or leasing a car can be difficult, this can be helpful.
Overall, even though a novated lease is not necessarily a good option for every driver, it is definitely something that you may want to check into. If you are currently looking for a job and have been offered a novated lease as a part of your compensation package, you should know that it can be a positive thing that you might want to consider. If you are thinking about asking your current employer to improve your benefits and salary package, it might also be something that you will want to mention. You can also talk to someone from a local dealership or look online for more information about a novated lease if you would like to learn more.
How to Get a Car Finance Loan When You Have Bad Credit
There are a lot of things that can cause a person to have bad credit. You might have lost your job and found yourself unable to pay your bills, or you might have just gotten yourself in too deep and had trouble keeping up. All of these things are normal and can be understandable, but it can make it hard for you to get approved for a car finance loan. Unfortunately, a lot of lenders do look at your credit history when determining whether or not to grant you a loan, and if your credit score is low, you could get denied. This can be unfortunate news when you’re in need of a car and do not have the cash on hand to buy one outright.
Luckily, it is possible to get a Car Finance Stratton loan with bad credit, although it can be a bit more challenging. These are a few tips that can help you do so without having to wait for years for your credit to be repaired.
Buy a Cheaper Car
For one thing, you should know that the cost of the vehicle that you want to finance can have a big impact on the process of getting a car finance loan. Lenders can sometimes be nervous about financing large car purchases for those who do not have good credit scores, so if you’d like to improve your chances of getting a car finance loan, you might want to start your search by looking for an affordable used car. Then, since the loan company will not have to loan you as much money to finance the purchase, it might be more likely to give you an approval.
Save Up as Much for a Down Payment as Possible
Another way that you can improve your chances of getting approved for a car finance loan is by saving up as much of a down payment as you can. Even though your credit history might be bad, being able to save up a significant amount of money to put down on the car can help you show that you are financially stable and responsible. Plus, again, it reduces the amount that the lender has to finance, which can also help you get approved.
Look for Lenders That are Used to Working with People with Bad Credit
Some lenders are more accustomed to working with individuals who have higher credit scores. With these lenders, you might not have much luck in getting approved. If you look for a car finance company that has experience in working with individuals who have bad credit, however, you can help improve your chances of getting approved.
Be Willing to Pay a Higher Interest Rate
Since car finance companies consider themselves to be taking a bigger risk when loaning money to those with bad credit, they often charge a higher interest rate to help make up for the risk. Even though you might want to pay the lowest interest rate possible, this might not be something that you can be picky about if you have bad credit.
As you can see, it is possible to get a car loan when you have bad credit. If you follow these tips, you might find that getting approved is easier than you thought it would be.