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All you should know about cheap car loans

The idea of cheap car loans is not as easy as most people think. Due to the several factors and requirements that you would have to fulfil before accessing the loan, one can arguably state that getting cheap car loans is not an easy task.

Factors determining the “cheapness” of a car loan

The first consideration when looking for cheap car loans is the different concepts of secured and unsecured loans. While the details of these two different kinds of loans easily state the difference between them, the cost of each of the options shows that secure loans are significantly cheaper than their unsecured counterparts.
A secured car loan is a car loan backed with security, in this case, the car. A case of default or failure to meet up with monthly payments usually leads to the sale of the vehicle to recoup the money. Other assets like the home can also be used as security.

Another factor that determines the cost of a car loan is the age of the car. People purchasing used cars have different car loans from those buying new cars. The rates given by the finance companies differ based on the age of the automobile with car finance companies charging higher rates for used car financing.

Another determinant of the cost of an auto loan is whether or not on-road costs will be incorporated in the financed amount. Such costs include insurance taken by the individual in case of death, unemployment or disability. Other such costs that could be part of the deal include comprehensive insurance and registration. Car loans that have such costs incorporated in them tend to be relatively more expensive.
The last factor that could determine how cheap a car loan is is the addition of a balloon payment. A balloon payments is like a reverse deposit, as it is payable at the end of the deal. This kind arrangement is preferred by persons that have the hope of a better financial condition in the future. Such arrangements usually lead to lower monthly repayments or shorter loan terms.

How to obtain a cheap car loan

There is a common belief that obtaining a cheap car loan is difficult especially considering the supposed hurdles one might have to pass through. The commonest mistakes most people in search of cheap car loans make is to head out directly to car dealers or finance companies, as these people are usually after their profits and of course, your money. It is therefore advised that you visit a car finance broker first. An experienced and reputable broker will help you analyse your financial situation and subsequently offer you professional advice on the most suitable car finance option for you.

Another benefit of using a broker is their good negotiation skills that come from their knowledge of the market and experience in car financing. You therefore have the advantage of not only getting a cheap car loan, but one that fits your financial situation and ensures that you get value for every penny you spend.

Get Me Finance Ltd