Buying a car can be costly. So for many of us, taking out a car loan is one way to finance that new set of wheels. You may think that you can just rock up to a dealer and work out a finance package. Taking the dealer’s finance option may be convenient. But it may not be the most sensible option. We are here to tell you why it could be worth your while to get a car loan quote first.
A quote will help you budget
Getting a car loan quote before you step anywhere near a car showroom can help you to establish your budget a bit better. If you have no fixed idea in your mind, you may find yourself persuaded into buying a car that costs more than you can afford.
By organising your finance beforehand, and going in armed with a car loan quote, you know exactly how much you have to work with. So you can look at cars that are within your price range. Or if there is something a little out of your budget, you know what you have to negotiate the price down to.
A quote can help you get a better rate
By comparing car loans before looking to buy a car, you will be able to find the best interest rate for you. Dealerships can offer 0% finance deals. But these could potentially be factored into a higher purchase price for the car, or there may be a fee attached.
By comparing quotes online, you can seek out the most competitive interest rate for the loan amount you want. And because the representative APR rate is usually only awarded to 51% of applicants that are accepted, if you sort your finance before buying your car, you will know in advance what your interest rate is likely to be.
A quote can help you estimate your monthly payments
Any sort of car loan will see you paying a monthly repayment. Getting a quote before buying a car can mean that you have a clearer idea of what that monthly payment will be.
As a fixed monthly outgoing, it is important to choose a loan repayment that is within your monthly budget. This is because if you were to miss one, you could damage your credit score. This, in turn, could make future borrowing more difficult. So getting a monthly payment that works alongside your other financial commitments is key.
A quote can give you more choice
If you decide to go with dealer finance, then you are committed to buying a car from that dealership. But if you get a car loan quote beforehand, you can approach whichever vendor you choose.
This gives you the freedom to pick the right car for you. It also allows you to be flexible if you see a better deal come up on the model you want.
For more on loans in general, check out our personal loans page. For more on car financing, take a look at our car buyer’s guide to car loan financing. The Money Advice Service also has a great page on the best way to finance buying a car.
If you’re looking for more ways to make your money work for you, why not sign up for MyWalletHero’s email newsletter? You’ll receive our team’s top money-saving tips, lifestyle hacks and handy personal finance ‘must-knows’ – delivered straight to your inbox…
Just enter your email address below to sign up now:
Some offers on MyWalletHero are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.