Should You Use a Bank, or a Finance Company for a Car Loan?

So you’ve decided you can’t resist any longer, and you MUST have that new car!

Like most people, you probably don’t have $30,000 worth of cash in the bank ready to spend on your new vehicle. You will probably need to borrow some money to make up the difference between what you have saved, and the total value of the car.

This is when getting car finance can come in handy.

Most people usually contact the bank they use for their everyday transactions, or the bank who they currently have a mortgage with.

Whilst it might be more convenient and save a bit of hassle to have all of your accounts in one spot, using your normal bank may be a big mistake.

These banks typically offer a higher rate of interest, and often times you will end up getting a worse deal than you would if you used an intermediary such as a finance broker who have access to EVERY banks products – not just one.

It’s probably a good idea to outline a few things that a finance broker can do, that your typical bank cannot:

Benefits of a Finance Broker

  • Offer wide range of banks’ products
  • Work for you, not the banks
  • Can negotiate a better rate with the leasing company
  • It can save you time
  • It’s free, the broker gets paid commission by the finance company

Another aspect you should consider is the type of loan you will need to take out, and whether you can purchase the car through a business and whether you will be able to claim any GST back from the purchase.

This page from the ATO helps explain a bit more about the way GST works when it comes to cars and Money Smart provide more detail about how your credit rating can impact on your ability to get a loan.

So Who Should You Use?

When taking out a car loan, it definitely pays to shop around and find the best deal for your personal situation.

Our recommendation is to speak with a specialist car finance broker as they have the ability to source the best loan, the best rate, and the best repayment schedule for your circumstances.

The best part about a finance broker is that they work for you to get a great deal, and they have access to a wide range of loan products which a solitary bank just does not have access to.

So at the end of the day, ask around, but if it were up to us, we would say choose a broker every time!

Car Finance for New Car

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