There are multiple different ways to go about getting a loan for a car, bike, boat, caravan or camper trailer. In this article, we’ll run through the three most common ways to get a car loan and the pros and cons of each.
The three most common ways to finance a car are:
- Going straight to a lender, such as your bank
- Get dealership finance, where the car dealership arranges finance for you
- Get a Finance Broker to arrange car finance on your behalf
Below we’ll break down each option and list out some of the advantages and disadvantages of each option.
Going to a lender (or bank)
Going to your bank or another well-known lender can sometimes be a great idea to secure finance for a vehicle. They know your banking history and you may have previously had loans through them.
It is important to consider however, that each lender may only have one or two vehicle finance options available and while their interest rates may be decent, they don’t specialise in vehicle finance, so they most likely won’t be the most competitive rates available in the market. In addition, going to one lender means that you are pigeon-holed into using their finance product and don’t get to shop around for the best finance deals.
Dealership Finance
Dealership finance is another common option to consider when looking for affordable vehicle finance. They typically have affiliations with 2-4 financiers and can usually source fast finance, in some cases even same-day and usually offer very respectable finance rates.
It is important however, to compare apples with apples when it comes to finance and understand exactly what you’re entering into before signing a contract. For more information, check out the following articles, how to compare apples with apples in finance and dealership finance and 0% car loans.
Finance Broker
A Finance Broker (or Consultant) acts as an intermediary between yourself (the borrower) and a financier (the lender). A Finance Broker works for you and it is there job to find you the most suitable finance packages from a wide range of Australian bank and non-bank lenders for your specific needs.
Here at Loans For U, we have affiliations with over 40 of Australia’s most trusted lenders and compare them on your behalf to find the most affordable finance options for your individual circumstances.
What do I need to provide for finance
Whichever method you choose for your finance, you will need to provide specific documentation to support your finance application.
In general, you will need to provide 100 points of identification, along with proof of income to show you can support the loan in addition to your current expenses and proof of current residency. If you choose a secured finance loan for your vehicle, which is the most common type of loan for personal use, you will also need to provide a comprehensive insurance certificate of currency.
You may be asked to provide any combination of driver licence, passport, Medicare card for identification purposes.
You may also need to provide a copy of a rates notice or utility bill such as a power bill or phone bill to prove your residency.
You will also be required to provide proof of income in the form of payslips or most recent tax return if self-employed or Centrelink Income Statement if you receive Centrelink payments. Bank statements may also be requested at the lender’s discretion.
All the documents above are dependent on your individual circumstance and may or may not be requested by the lender.
What is the process to get vehicle finance?
The process of securing vehicle finance may be slightly different depending on which option above you choose, however they’ll all be relatively similar.
- Firstly, you will need to submit an application for finance.
- You will then be required to supply all documents requested by the lender to support your application. Generally, the quicker you’re able to supply your supporting documents, the quicker your application can be assessed by the lender.
- Once your supporting documents are submitted, the lender will assess your application against their lending guidelines and will be able to provide you with a conditional approval. In some cases, they may require further supporting documentation for your application.
- Once your approval is in place, depending on which option you’ve chosen above, you will need to provide a tax invoice for the vehicle you’re buying to the lender so they have all the relevant details of the vehicle.
- You will then need to organize full comprehensive insurance for the vehicle prior to settlement and provide the lender with a certificate of currency to prove the vehicle is insured. You then need to sign all the contract documents and accept the terms and conditions of the finance.
- Once the contract documents are signed and sent back to the lender, settlement will take place. This is when the lender will transfer the funds to the vehicle seller or the dealership. In some cases, settlement can take less than an hour, however it can also take up to a day or so.
- Once settlement is confirmed, you will be able to pick up your new vehicle.
Why choose Loans For U for your vehicle finance?
Our friendly Finance Broker’s can take care of everything or you saving you time and money.
We handle all the paperwork, liaise with the seller/dealership on your behalf, tell you exactly what documents the lender needs from you and can even arrange suitable insurance for your vehicle.
The best part is, the whole process is obligation-free, so at any time, if you are not happy with the finance options or don’t wish to proceed with finance, you can walk away with no obligation to take out finance through us.
So speak to the friendly team today on 1800 538 287 to chat about your specific vehicle finance needs, or simply get an obligation-free instant online quote now.
