This article is brought you by Vietwheels.com, Vietnam’s leading online marketplace to buy and sell cars.
The information in this article does not constitute as financial advice or any other sort of advice, and your should not treat any of the content as such. A qualified professional should always be consulted before making any financial decisions.
In this article, we discuss six tips to save money on your car loan. Just like when you do your research to compare cars, you should also do your research to find the best deals for car loans in the market in order to save costs. Here are six things you should consider if you’re looking to save money on your car loan.
1. Do your Research
It pays to do your research so search far and wide. There are dozens of lenders in Vietnam that will loan you money for a new or used car. While most of the big banks do offer car loans, it’s worth assessing what other lenders have to offer, particularly those that specialise in loans for vehicles. Sometimes lesser-known lenders may offer a more competitive rate.
Compare loans before you meet the seller. Find out what you can spend and how much your repayments will be. Make sure to read the terms and conditions of the loan carefully and compare these things especially:
· Interest rate: the rate of interest you’ll pay on the amount borrowed. Is this interest rate fixed or variable?
· Application fee: the fee when you apply for a loan
· Other fees: monthly service fee, default fee, misses payment fee and any other fees
· Extra repayments: whether you can make extra repayments without paying a fee
· Loan term: how long does the loan last and is there penalty fees if you choose to pay off the loan earlier?
· Loan conditions: For example, if there are limits on how old the car is or whether its for a second-hand car or only for a new car
2. Consider Refinancing
Refinancing also allows you to extend the term of your loan, in turn reducing those monthly repayments. As discussed on the earlier point, do your homework to know the best rates in the market and consider refinancing your car loan to the most attractive loan on offer. Not only does it lower the monthly payment, it reduces the amount of interest you’re paying which allows you to pay off our car sooner.
3. Borrow responsibly and use your savings
Like any large purchase, saving up for a car will take time and discipline. But if you have a good savings plan and disciple it will help you pay for a decent deposit for your car loan. Once you have a decent amount saved, you will have aa decent deposit. This way you will reduce your monthly repayments and interest and also unluck lower interest rates, further sharpening the deal.
4. Plan accordingly
Plan your car loan according by considering the appropriate loan amount and time to pay it off. How much you borrow and the loan term you select clearly has a bearing on how much you’ll have to make in repayments — as does how quickly you pay it off. Longer loan terms mean lower monthly repayments which can be better from a cash flow perspective, but keep in mind this does lead to more interest overall and is ultimately more expensive.
5. Improve your credit score
Your credit score gives lenders an idea of how good you are with your finances and how likely you are to pay off your loan in the agreed time. It’s calculated by looking at your loan repayment history, how well you go at paying bills and how much and how often you’ve applied for a loan, among other factors.
A better credit score means a lender will view you as a lower risk, in turn potentially offering you a better rate and lower fees. The terms of your loan are based on your credit score. If you have perfect credit, you receive the lowest possible interest rate. If you don’t, you have to pay more because of your questionable repayment history.
If you have problems with your credit and you don’t need to purchase a car right now, consider waiting until your score increases. Doing simple things such as consolidating your debt or controlling your credit card spending can help improve your credit rating.
6. Buy a Cheaper Car
It seems like an obvious but the cheaper the car the lower the amount you borrow. Do your research to find the best car price for the models you are seeking. At VietWheels we have plenty of high-quality cars available to compare prices and models in stock. Please check our current inventory using this link.
We hope that this article will help you save money on your new or existing car loan. If you found this article useful, please visit our other News and Reviews. On behalf of the VietWheels team we wish you all the best in finding your next dream car in Vietnam.
