You have been looking for a vehicle of your dreams or for your business and you have found the car you want. What about finance? There is a chance you could get carried away with your find and lock yourself into a financial agreement that does not suit your lifestyle options or does not adequately take into consideration your repayment ability.
Ideally you will look into financing before you look at making a vehicle choice. However, sometimes it may require you to search for appropriate vehicles first to establish a suitable budget. So, at times, the two can go hand in hand. There are many finance options and choosing wrongly or quickly can cause major headaches as time goes on.
Let’s have a look at the two most obvious types of vehicle finance: Car Finance Broker versus Dealer Finance.
Car Finance Broker
This financial service is an independent lender outside of any particular market such as motor vehicles, boats or real estate. Their focus is on the terms, agreement and the credit amount being offered. They have an obligation to assess a debtors circumstances before offering any amount for lending.
Here are the benefits of using a car finance broker
*They offer a range of car loans for both personal and business including:
-Secured
-Unsecured
-Novated Lease
-Finance Lease
-Commercial Hire Purchase
-Chattel Mortgage
*Links to multiple lenders and partners to obtain credit – chosen by the broker and customer together
*Offer multiple finance terms to suit customer circumstance
*Professional and registered financial lenders
Disadvantages of Car Finance Brokers
*Co-ordinate the offers from multiple lenders they may prioritise particular lenders
*They offer multiple loans and may not have extensive expertise with car loans compared with Car Dealer Finance
*They do not have direct access to vehicle purchasing
Dealer Finance
This financial service is directly related to the car dealer and offers a financial service in order to sell the vehicles on their lot. As such using dealer finance means you are subject to the vehicles available to them. They are aware of financial competition and do work with the customer to find appealing financial agreements to suit their needs.
Here are the benefits of using Car Dealer Finance
*They are well educated in the value of vehicles for purchase
*They specialise in car loans and finance and are aware of potential issues and advantages
*Interest rates available through other institutions are matched by car dealers
*Convenience of obtaining finance at the venue for purchase
Disadvantages of using Car Dealer Finance
* Harder to negotiate on the purchase price of the car – potential to pay hundreds of dollars or even a few thousand dollars more than using non dealer finance.
*Limited lines of credit available which means less flexibility in rates and repayment schedules
*Inflated loan establishment fees
*Monthly loan account fees
*Penalties for paying loan off early
Overall any financial choices should be done with research and preparedness. This is a serious commitment that you must be sure you can fulfil. Seek advice from both car dealers and financial brokers to determine the deal which best suits your needs.
