Do you dream of buying a brand new car, or maybe you need a nice used car as a family car number 2? Or are they the first time to buy your very own car? A car is a status symbol of freedom. If you own a car, you can go wherever you want, whenever you want.
In Norway, which is an elongated country with great distances in some places, it is also almost impossible to get by without a car in everyday life. The car has become the most important vehicle of our time
Car costs money
No matter how useful and comfortable it is to have a car, it costs money to buy and own a car. If you are going to buy a brand new car that has never been used before, you may have to count on $ 300,000 – $ 400,000, and maybe even more, depending on the make of the car, car model and year model. Even newer used cars that are of a relatively new model, recognized car brand and are well looked after and used can cost over $ 200,000.
Few of us have enough savings to put out a new car, so it is very common to take out a car loan when you find the dream car. There are some factors that can help determine whether you are granted a car loan or whether you are denied your application. In this article, we have compiled some great tips for those who need a car loan.
Compare car loans
Don’t choose the first and best car loan. Car loans are expensive, but some are much more expensive than others. Before choosing a car loan you should have done some research beforehand. If you do not have the time or the energy to look through different car loans yourself, a good tip is to use comparison services. Using such services is absolutely no obligation, and the advantage of this is that you save a lot of time and get the best consumer loans from banks and lenders because they compete for you. If you use comparison services, you can get car loans on your terms and not the terms of banks or other lenders.
What you should pay special attention to is the borrowing rate, both the nominal and the effective. Even if you are offered a low-interest rate and costs, the effective interest rate will still be very high if, for example, the loan amount is low and the repayment period is short. Several banks and lenders correctly offer a lower interest rate if the car is environmentally friendly. All in all, there is almost a 4% difference in interest rates on what different banks and lenders offer on a car loan – so do some research. This can save you a lot of money.
Car loan + mortgage = better terms
If you have a mortgage, you should look into the possibilities of baking the car loan into your mortgage. This means that you get a better financial overview in your daily life by getting everything together on one invoice, and the best part is that you avoid high-interest rates. The method of backing the car loan into the mortgage works best if you have so-called flexible loans, but if you do not have flexible loans, a good tip is that you look at opportunities by increasing the repayment period.
If you do not have a mortgage or if it is not worthwhile for you to bake your car loan into your home loan for various reasons, you can still get a car loan on reasonable terms, but this requires you to do some research.
The need for equity
Most banks see it as very positive if you can provide equity, and this will also increase your chances of getting a car loan. The more you have in equity, the better. Equity is the same as a certain amount of savings you have in private.
If you are going to buy a car for the first time, you may want to spend some time-saving money. Also, your very first car doesn’t have to be a car for hundreds of thousands of dollars, so maybe you can save half the purchase price? Then you will get very good terms on the car loan.
If you have a car before, there are many car sellers who will accept your old car when you buy a new one. This is also a form of equity in that you can use the money you get for your old car to deduct the sum of your new car.
Take up a car loan from the dealer
Should you buy a car from a market dealer, the seller can also help you finance your new car. Some may think it’s silly, but in many cases you will get better terms because the seller is applying for a loan for you through their many negotiating partners. You can get both great deals and promotions, and in many contexts the seller asks one of their dealers to get you a more favorable interest rate than what you would get on your own.
With better interest rates and more favorable loans, the advantage is that you save a great deal of money, and this is money you can spend on paying off your car loan much faster. If you receive promotional offers, it is worth knowing that this is only valid for a limited period of time, usually 3 years. Therefore, you may want to pay down as much as you can on the car loan during this cheaper loan period.
A good tip is that regardless of how the car loan dealership compares you with what you can get from other banks and lenders.
Take advantage of your membership
Your membership is worth checking out a little extra. Maybe you have schemes that give you a cheaper car loan? Agreements you have with companies, membership in associations and so on can pay off when you buy a car. Maybe you are a LO member and have access to favorable loan offers through the organization, or through another trade union.
Many of us are members of some trade union, but we often forget to check out the benefits when we really need them, such as when buying a car.