If you’ve recently been thinking about upgrading to a new car, your focus has (most likely) primarily been on which manufacturer you’d like to buy from and the model that’s right for you. This is, undoubtedly, the most fun part of the entire process - spending time researching each car’s specs to compare them with one another, reading existing owners’ reviews to make sure there aren’t any common issues, visiting dealerships and getting behind the wheel to take them out and give them each a proper test drive… it really is all rather exciting.
What you may not have been focusing on very much yet, though, is which lender you’re planning to go through when you’ve finally decided on a car and it comes time to purchase. If this is the case, great! You’re reading this article at the absolute perfect time. If, however, you’ve already begun going through all the different rates being offered by banks and other lending institutions, that’s ok too - provided you haven’t signed anything, it’s not too late just yet.
We are, of course, talking about comparison rates within the car loan spectrum and how they’re a vital factor that must be understood before putting your final scribbles on any paperwork.
What is a car loan comparison rate?
Although it may seem that the best car loan is always going to be the one that offers the lowest interest rate, this is certainly not the case due to fees and charges lenders can charge over and above the interest rate. Which is where the car loan comparison rate comes in to save the day.
So what the car loan comparison rate is, is the interest rate combined with whichever predictable fees and charges which are associated with the loan such as application fees and loan approval fees. Also taken into account to calculate the car loan comparison rate is the amount borrowed as well as the term of the loan, plus frequency of loan payments.
There are some fees and charges that are excluded from the car loan’s comparison rate to be mindful of, which include:
- Transactional fees (early repayment/termination fees, statement fees, refinancing fees and overdue payment penalties)
- Governmental/statutory fees
Why are car loan comparison rates useful?
With so many different lenders and loan packages out there - each with its own set of terms and conditions - comparing just the interest rates simply isn’t accurate to determine which is the right one for you. Even if Loan 1 offers a 4.5% p.a. interest rate while Loan 2 offers a 5.5% p.a. Interest rate, adding all the fees and charges could result in Loan 2 being a better deal.
As such, what makes car loan comparison rates incredibly useful is that when you’re shopping around for the best possible car finance deal, using the comparison rates means you’re doing ‘like for like’ comparisons between lenders and finance packages.
It’s important to remember, though, that while comparison rates are the ideal method of comparing the costs of different car loan packages, there are a number of other loan features available from particular lenders’ car finance packages that may be able to save you a reasonable amount of money over the life of the loan, such as:
- Redraw facilities
- Direct debit
- Repayment flexibility (e.g. able to make additional repayments)
- Loan portability
With so many different factors to take into consideration when it comes to getting a loan for your new car, things can get pretty confusing - pretty quickly. Thankfully, with a huge amount of experience in the car finance industry we’ve got the experience to clear everything up for you!
Gain access to comparison rates across a multitude of lenders from one place
Forget having to spend hours upon hours scouring through the endless list of lender options yourself! Save yourself time, headaches and potentially a lot of money by getting in touch with the team at Stratton Finance today. With more than 20 years working in this industry, our network of lenders is absolutely massive, which means we can match your individual needs with the perfect car finance deal from the right lender every time.
Find out just how low your monthly repayments could be today with our handy online finance quote tool and if you like what you see (we know you will) or you have any questions for us, give us a call on 1300 787 288. Alternatively, you’re free to message us via our online contact form and you’ll hear back from us shortly.
And whether you’ve already got a make and model in mind for your new car, be sure to hit up our industry partners over at carconnect. They’ll not only tap into their nationwide network of dealerships to source you an amazing price, but can even assist you with obtaining a great sale price for your current car!