How to Get the Cheapest Car Finance Loan in 2022

Looking for a cheap car finance loan? If so, you come to the right place.

Car Finance is an essential part of the car buying process. But what type of loan you choose can make a huge difference on how much you pay. Even a higher rate as small as 0.1% could mean you pay hundreds or even thousands more in the long run.

Shop for Cars has put together 5 tips on How you can get the cheapest Car Finance Loan in 2022.

Let’s get into it.

1. Improve your Credit Score

When it comes to any type of loan, the first thing that a lender will look at is your Credit Score. Your Credit Score helps a lender determine whether you are a lendable person or not. It also gives them an idea on how much you can borrow, how much you can afford and most importantly what rate you will receive.

To get the cheapest Car Finance Loan, you need to make sure you have a good credit score. Try to limit the amount of credit you have owed, make sure you are paying your existing loans on time and more importantly start or have savings. For those with a poor credit score, there are ways you can improve your score quickly and still receive a good finance rate. The National Australia Bank has put together a step-by-step guide on improving your credit score based on what they look for in applicants. To access the guide click here.

If you are looking for ways to find your credit score, there are free providers available. To find your credit score for free click here.

The better your credit score is, the cheaper the rate lenders will offer you, it’s that simple.

2. Reduce Your Debt-to-Income Ratio

The second thing a lender will look at for finance applicants is their Debt-to-Income Ratio. A Debt-to-Income ratio is a calculation of the monthly debt you owe against your monthly earnings.

Similar to Credit Score, lenders use your Debt-to-Income ratio to help determine whether you are lendable or not. Lenders will not provide finance to individuals who carry a high ratio of debt as you have a significant risk of default. To get the cheapest rate it is important to reduce your current debt as much as possible. The less debt that you have assigned to you, the less risky you are for a lender.

3. Save a Deposit

Having a good deposit is essential if you want to receive the cheapest possible car finance rate. Having a good deposit shows lenders that you have a history of saving and more importantly it reduces the total amount of the loan.

For Car Finance, it is always a good idea to have between 10% to 20% of the vehicles price as a deposit. If you have more than 20% available for a deposit that’s great! The more you have as a deposit the less you will pay in the long run.

4. Choose a Shorter Repayment Period

A mistake that many Car Finance applicants make is choosing the longest possible loan. The problem with choosing a long loan is it significantly increases the amount of money you have to pay. Yes, the weekly repayments will be smaller but the longer a loan is, the more interest you have to pay.

The average length of a Car Finance Loan is between 3-6 years, your ultimate goal is to try to pay the loan off as quick as possible, because the quicker you pay the loan off, the less you need to pay.

5. Shop Around

If you want to get the cheapest car finance loan you need to shop around. The biggest mistake you can make is going with the first lender who offers you finance. You need to make sure that you get the cheapest possible rate.

The only way to know that you are getting the best possible rate is by shopping around and speaking to all the different finance lenders. Some lenders may offer you a significantly better rate than others which can save you thousands.

Where Shop for Cars can Help?

Shop for Cars offers car buyers complete access to over 60 automotive lenders at the click of a button. In a few short minutes, buyers can apply for finance directly on the vehicle listing that they are interested in. Choose the cheapest rate available and have finance approved in under an hour. No broker, no manual shopping around, fast, easy, car finance.

To learn more about Shop for Cars finance click here or search for a vehicle your interested in and choose your options.

Final Word,

To get the cheapest Car Finance Loan you need to understand what lenders look at and prepare yourself as much as possible. Improve your credit score, reduce your current debt and have a reasonable deposit. Shop around, the only way to receive the cheapest loan is seeing what is out there.

We hope you enjoyed this article. To read more articles like this, please visit the Shop for Cars latest news page here.

About Shop for Cars

Shop for Cars is Australia’s first car dealership-only online classified. Shop for Cars brings you the best quality new and used vehicles from trusted motor dealers Australia wide. Shop for Cars currently has over 12,500 cars listed for sale all from licensed Motor Vehicle Dealers ONLY.

Click here to begin your search.

DISCLAIMER: This is all based on opinion please research and consult with all relevant parties to make the best buying decision.