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Everything you need to know about car loan specials

Don’t make the mistake of signing up for the first car special you see. You might think you’re being offered a good deal – but if you don’t shop around, how would you know?

A lot of people don’t realise that lenders regularly offer car loan specials. Why? Well, the market is competitive and these lenders want to grow their market share. That means that if you take your time to do your research, you might discover that various lenders have unveiled limited-time specials that are significantly better than anything they usually offer.

Some of these lenders might be offering interest rate reductions; others might be offering fee reductions. Cash rebates or gifts might also be on the menu.

Whatever the offer – why wouldn’t you at least consider it?

Special deals aren’t always better deals

Just as you shouldn’t jump at the first car loan you see, you also shouldn’t jump at the first car loan special you see.

There are two reasons why you want to stop and think. First, there might be better car loan specials out there. Second, one lender’s special deal might actually be inferior to another lender’s regular offer.

Yes, it’s true: there are some lenders that provide such good value that they don’t have to offer car loan specials to stand out from the market.

So once you’ve finished scanning this page for car loan specials, make sure you visit RateCity’s online car loan comparison tool. This tool will allow you to compare dozens and dozens of loans according to six different criteria:

  • Advertised interest rate
  • Comparison interest rate
  • Monthly repayment
  • Upfront fees
  • Ongoing fees
  • Loan amount

This might confirm that there are, indeed, regular car loan offers out there that are superior to the car loan specials currently being offered.

Don’t let car loan lenders take you for a ride

As you peruse the car loan specials on offer, don’t forget that conditions will almost certainly apply. For example, an interest rate reduction might be temporary; or a fee reduction might apply only if you borrow a certain amount of money. So it pays to read the fine print.

You also need to understand the difference between advertised rates and comparison rates, because lenders might use a bait-and-switch trick to make a car loan special seem better than it is.

The advertised rate is the interest rate you’ll be charged. But this can give a misleading view of the damage to your wallet, because it doesn’t include fees and charges. The comparison rate, though, does include these extra costs, which is why many people regard the comparison rate as the ‘real’ interest rate.

Why is that relevant? Well, a lender might triumphantly announce that it has temporarily reduced its car loan interest rate from, say, 6.50 per cent to 6.00 per cent – but its fees might be so high that the loan might have a comparison rate of 7.00 per cent. Meanwhile, another lender might offer a product that has an advertised rate of 6.20 per cent and a comparison rate of 6.40 per cent. Effectively, then, the cheaper rate would be the dearer rate and vice versa.

Spread your net even wider

There are two other ways you can go about getting a better car loan deal.

First, don’t be afraid to tell lenders that they’ll have to lower their rate and/or reduce their fees if they want to win your business. The market is competitive, so many lenders will agree to your terms to prevent you from going to a rival. And if they don’t – well, you haven’t lost anything.

Second, you can ask a finance broker to conduct the research and negotiations on your behalf. Brokers are finance professionals who are accredited to work with a range of lenders. Their job is to understand your unique financial circumstances and goals, and to then recommend loans that are best suited to your individual needs. Also, most finance brokers don’t charge consumers, because they generally make their money by collecting commissions from lenders.

Both the ideas mentioned above might ultimately produce a superior loan than any of the car loan specials currently on the market. But if they don’t, you always have the option of taking up one of the car loan specials after all.

The moral of the story is to do your research and take your time before signing up for a car loan. You could save hundreds of dollars in the process.