car finance

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kdn

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#34133 19-May-2009 10:11

Is it best to get a personal loan from a bank or get a vechicle fiannced from the dealer? assuming i have good credit and could get either..

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#215846 19-May-2009 10:28

Depends on whos offering the best deal really...but ensure you read and understand all the fine print from either, especially the dealers finance company.

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heavenlywild

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#215849 19-May-2009 10:56

Yep, I agree.

If you go with the dealer, spend at least a day to read through the terms and conditions or get someone "in the know" to double check.

tonyhughes

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#215851 19-May-2009 11:05

Bank. Bank. Bank.

(I currently work in the finance industry (and not for a bank)).

If you fail to get a bank loan for some reason, and need to get a 'dealer' loan, feel free to PM me.

magu

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#215852 19-May-2009 11:09

I would go with a bank. Less chances of getting screwed over (note I'm NOT saying 'impossible') and usually better rates. Also, check the policy on repayments. Some of them won't let you pay more than your normal payment in case you want to pay your finance faster, instead only allowing you to make one big payment to close out.
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johnr

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#215854 19-May-2009 11:19

Save for it

John

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#215858 19-May-2009 11:35

tonyhughes: Bank. Bank. Bank.

+1.

When I had my car financed with ASB, there was no penalties for paying back the loan early (which I did, a whole year) plus the interest rate wasn't too bad.

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#215910 19-May-2009 13:57

tonyhughes: Bank. Bank. Bank.

(I currently work in the finance industry (and not for a bank)).

If you fail to get a bank loan for some reason, and need to get a 'dealer' loan, feel free to PM me.

Just wondering why you'd say that? Surely it depends on the terms of the loan? Or are you saying banks are always better, if so, how come?

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#215920 19-May-2009 14:18

Bank finance rates are generally much more favourable than interest rates you will receive from -most- lenders available through a car dealer.

itxtme

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#215927 19-May-2009 14:31

Common sence would suggest it is best to get a loan from which ever is willing to offer you the lowest interest rate. Generally the dealer can do a better job than the bank!

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#215931 19-May-2009 14:35

johnr: Save for it John

Unless it you use it for work and thus generates you money.. I'm with John on this one.

tonyhughes

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#215935 19-May-2009 14:42

I need to have a car because of health issues, and for picking up and dropping off my children. I would finance a modern reliable car if I needed to.

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grant_k

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#215993 19-May-2009 16:57

itxtme: Common sence would suggest it is best to get a loan from which ever is willing to offer you the lowest interest rate. Generally the dealer can do a better job than the bank!

My experience (going back more than 20 years now) is the opposite.

BANKS:

- Will not lend you money for a car unless you have some other form of collateral e.g. equity in a house.

- Assuming you have the required collateral, a bank will give you a far lower interest rate than any finance company.

- If your collateral is equity in a house, most banks will let you top up your mortgage to give the extra cash you need, and the interest rate charged will be a residential mortgage rate of about 6% to no more than 10% depending on your circumstances.

- You will need to demonstrate the ability to service the increased loan repayments i.e. they must not exceed a certain % of your income. What % that is, will depend on the bank's policy, your situation and a whole host of other things including who you talk to, and what the value of your total "relationship" is with the bank.

FINANCE COMPANIES:

- Will lend you money using the car as collateral.

- If you fall behind in repayments, the car may be re-possessed.

- You will only be able to borrow up to a certain % of the car's value i.e. must put up some of the cash yourself.

- You will pay a much much higher interest rate to a Finance Company. I haven't kept up with this in recent years, but a while ago, rates in excess of 20% were common. The exact % is often hidden somewhere in the fine print of the contract but look out for the term FINANCE RATE. This should give the worst-case figure.

CASH:

- Assuming you have reliable transport to/from work, your best option really is to save up for that shiny new toy and pay cash for it as JohnR suggested above. Using other people's money is a quick way to make other people rich, and keep yourself poor :P

paradoxsm

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#216045 19-May-2009 19:17

Be wary of "dealer" loans, I got burnt by one.

Often they have a Finance company documentation fee (around $200) and also a Dealer documentation fee usually of around ($200-$400)

Often they also have a "monthly" fee (mine was $8) which can really bump up the repayments.

Often they also have early repayment penalties.

If you were to add all those fees and charges, the "interest rate" could be incredibly high, you have been warned.

+2 for the banks. Make sure you can repay the loan early without penalty, take the loan over the longest period possible (5-7 yrs) and pay it back at the quoted shortest time affordable (say 2 years) then if you get in a muddle, you don't have such a high commitment.

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#216075 19-May-2009 20:33

i bought a car on dealer finance - it was one of those deals for 0%. if you're not looking at 0% dealer finance deals then bank is usually best.

NB: if you buy a used car on a 15% to 20% finance company loan, you might end up paying more than you would if you bought a new car on a 0% finance loan! Don't know if any dealers have these sort of deals right now. There were a lot of them going before all the finance companies went bust ;)

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tonyhughes

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#216077 19-May-2009 20:35

Hyundai has a great offer on used and new vehicles at the moment. 3 months payment holiday (or paid for you, I cant remember which) if you lose your job, and take the car back with no repo / credit issues if you dont find another job.

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