Many Australians like Toyotas because they are compact cars that save people money on petrol, insurance, and repairs. To ensure that you keep your costs low when financing the car, you need to know how financing works for car buyers.
Before you buy a Toyota or similar make and model of car, you should review your credit report. You should know your credit rating even if you can still get a car with a poor credit score. Unlike credit cards or mortgages, car loans are easily approved as the bank can repossess the car for nonpayment.
Know Your Credit Score Before You Arrange Financing
However, that being said, knowing your credit score — either good or bad — will help you make a deal for the best possible rate. Keep in mind that dealerships usually advertise good rates for new cars with some even offering 0 percent. But you don’t want to take these terms seriously as they are usually given to people with excellent credit ratings.
The lower the credit score, the more vital it becomes to make sure that you get the best interest rate. Whilst you may have to pay more than someone who has good credit, you should not pay the first rate presented. Make sure that you receive the lowest rate for your situation even if your credit rating is shaky.
If you don’t possess perfect credit or your credit is lower, obtain rates for financing online or over the phone. Find the most competitive rates. Pre-arranged financing is used by some car buyers as a negotiating tool for getting a better, lower interest rate.
When financing new or used cars in Canberra, it is a good idea to put 20% down on the car loan. That way, you can pay off the car sooner and you assume much less financial risk. Also, when you are financing a Toyota or similar type of car, try not to finance the car’s fees and extras. Instead, if you can, it is usually better to pay for the extra fees or amenities with cash.
If you don’t want to end upside down on your car loan, it is better to pay for fees or other incentives yourself or with cash. All that you will do by adding these amounts is increase your loan and not the value of your vehicle.
Consider Refinancing at a Later Date
If you continue to pay on the loan and need to refinance, you can come out ahead financially. Always be aware of the total cost of the financing and see where you can slash some of the cost. That is a good goal as cars such as Toyotas offer a good value. Therefore, paying less for financing will make owning one of these cars both profitable and worthwhile.
When financing a car, try to use pragmatic reasoning. Yes, it is exciting to buy a new car. However, you have to be realistic about the financing. Just make sure that you know your credit score when you negotiate your car loan and compare rates before you visit the dealer. Put money down if you can and try to keep the terms of the loan shorter if possible. You can also consider refinancing the loan if your current credit score is low and you want to save on the interest later.