In the past, getting car finance was quite simple. The same place you bought your car would also offer you a car loan if you needed it.
Most car buyers hardly thought of visiting other financing institutions to compare rates or to window-shop. On top of that, shopping for car financing online was out of the question since the internet was not as popular as it is now.
With the onset of technology, a lot of things have changed. More car buyers are now able to access different sources of finances, compare prices and even apply online from the comfort of their homes.
Having options to choose from saves you money while choosing the right asset finance partner. Below are some places you can get the best deals on car loans.
Online lenders
Online lenders make getting car loans very easy. You can research, apply and get pre-approved for a loan while at home. One major advantage of online lenders is that they offer very competitive rates and allow you to apply for a loan at any time of the day.
With this option comes the possibility of easily getting scammed. Be very careful, inquire first and research the credibility of the lender before settling. Visit their social media platforms and find out what other customers are saying about the lender’s services.
Banks
To get financing from a bank, you will need to have an active bank account and a source of income. To show proof of income, you will be required to submit your most recent payslip and at least three months of bank statements.
If you are buying a used car, there are a couple of documents you need to have. Amongst them, you will submit the logbook, the valuation report and the agreement of sales.
These will help the bank know how much money to lend you. To confirm your identity, you will also be required to submit a copy of your national ID or passport as a recent passport photo.
Banks are quite secure and there are low risks of getting scammed. However, you do not have to settle for your bank. Feel free to talk to other banks and find out what they have to offer. You can get pre-approved at several banks, compare the rates and then settle for the best offer.
Note that some banks only offer loans on cars bought through dealerships with whom they have a partnership. This helps them to mitigate the risk of lending out money with the probability of not getting it back. Ask them what their terms and conditions are before you make a decision.
SACCOS
Getting a loan from a SACCO is quite similar to getting one from a bank but with very low-interest rates some going as low as three percent. A SACCO is an organisation whose members own its shares and the profits are returned to the members as dividends based on the interests earned on savings.
To be able to enjoy such advantages, you will have to be a member of a SACCO. If you are already a member, you are in luck. If not, research and find out their terms and conditions before joining one. Some require you to be working in specific organisations to be a member while others do not have strict membership requirements.
To secure great car loan rates, allow the SACCO to make direct withdrawals from your SACCO account to offset your loans.
Dealer-arranged financing
Most car dealerships already have a relationship with asset financing organisations, making it easier to get a loan as you buy a car.
However, their interest rates will certainly be higher with some dealerships charging as high as twelve percent. This can be avoided if you look for a car loan independently. The dealer gets a cut from bringing in a customer which would not happen if you got your asset finance provider.
Convenience is very important and dealer-arranged financing offers you that. You just have to decide how much you are willing to pay for the sake of convenience.
Take note
After your housing expenses such as rent, your transport costs are probably the second-highest. Regardless of your budget, ensure that your monthly repayments fit comfortably into your budget.
Take note of the interest accrued from the loans and the length of repayment. Think about the percentage required as a downpayment before you settle on a loan. All these will go into determining if you are truly getting a good deal on your car loan.
Parting shot
The best way to know you are getting a good deal on a car loan is to shop around and ask questions. Interest rates tend to change from time to time. Do the car loan shopping close to your time of purchase.
We have given you different options to choose from but remember no option would suit everyone. The option you choose is unique to your specific needs.