3 tips to get the best car loan

1. Decide how long you want your loan term to be

Before applying for a car loan, it’s a good idea to think about how the car loan repayments could affect your personal finances over time, and whether repaying the loan could become a burden.

Consider your other outgoing expenses, such as insurance or other loans you’re paying off, before working out a repayment amount you can afford. This can help you narrow down the ideal borrowing length (or term). 
  
As a rule of thumb, the longer the term, the lower the repayments. But bear in mind that a longer loan term does mean that you'll pay more interest in the long run.

2. Understand insurance options and the costs involved

Insurance can help to provide peace of mind for anyone taking out a loan. But understanding how much to set aside for insurance payments could affect how much you end up borrowing. When looking to buy a car, you’ll need to get the right insurance to cover your individual needs. Here are some of the options available to you:

• Comprehensive car insurance. This’ll cover the replacement cost of a vehicle if it’s stolen or written off, or if you crash or damage it. You may also be given the option to insure your vehicle for its market value or another nominated amount. 

• GAP insurance. This is the difference between an insurance payout of a vehicle and the balance still owed on the financing. For example, if you’re financing a car, then GAP insurance could save you thousands of dollars if your car is written off and you still owe money on it.

• Consumer credit insurance, or CCI. This protects you if you’re suddenly unable to make loan repayments, such as in the case of unemployment, illness, injury due to an accident. 

All new cars come with a manufacturer’s warranty that guarantees that mechanical faults to your car occurring within a certain period will be repaired. However, once the manufacturer’s warranty period is over, you’ll be responsible for paying for any repairs. Purchasing an extended warranty allows you to extend the coverage on your original manufacturer's warranty.

3. Get different quotes before deciding 

You have several options when looking to finance a vehicle. You could go to your dealer, enquire at your bank or search for lenders online. Make sure you do the research to see which option suits you best. By taking the time to evaluate a few car loan quotes, you could save enough money to spend on upgrades or accessories for your new ride.