How to save money on car finance

Money is cheap these days, encouraging many people to borrow more of it – especially when it comes to a new set of wheels. Hey, we all love an indulgent spend every now and again!

But just because you’re getting a better rate with your car loan than you did a few years ago doesn’t mean you shouldn’t shop around for an even sharper deal. After all, no one likes to waste money.

It’s easy to find out if you can unlock a better deal. Online car loan marketplace Driva accesses thousands of lender data points from more than 30 major lenders across Australia. If you enter your details, you’ll be shown interest rates tailored to your profile, ensuring you can accurately compare different lenders without having to visit multiple websites and with no impact on your credit score.

Lenders are always on the hunt for customers and there’s every chance you may be able to get a better loan than the one you’re on now – especially if your circumstances have changed.

Here are six things to consider if you’re looking to save money on your car loan.

Just like a home loan, you can look at refinancing your car loan to save money.

Some lenders are now offering interest rates that are among the most competitive we’ve ever seen, so if you can tap into those you will lower your monthly repayments. Or you may just want to lower those excessive fees on your current loan, in turn reducing how much you’ll pay overall.

Either way, it’s worth crunching the numbers to see if you’re up there with the best of them.

Refinancing also allows you to extend the term of your loan, in turn reducing those monthly repayments.

There are dozens of lenders in Australia that will loan you money for a new or used car, many of whom you might have never even heard of.

While most of the big banks do offer personal 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.

That’s where Driva can also help. Driva provides pricing and loan data from more than 30 lenders around Australia, and by inputting your details you’ll get a personalised comparison of different rates and offers.

It’s a simple way of checking if you’re getting the best deal. Unlike applying for a loan, checking your best rate through Driva doesn’t impact your credit rating.

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.

Make sure you carefully consider the total cost of the loan before you apply – which Driva can help you do.

The type of car you’re trying to finance can have a bearing on what rate you’re offered by a lender.

Some lenders these days offer a lower rate if you’re financing a more environmentally friendly car, such as a hybrid or EV.

It’s worth comparing lenders before you go shopping so you know what rate you will be offered.

Lenders love to see you’ve got skin in the game. That can mean stumping up a little more up-front. It demonstrates you’ve been able to save and that you’re happy to put those savings towards the loan.

As well as reducing those monthly repayments it could also unlock a lower interest rate, further sharpening the deal.

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.

If you’ve been nailing your finances recently, then there’s a good chance your credit score has improved.

If not, it’s time to knuckle down and improve that credit rating. Doing simple things such as consolidating your debt or controlling your credit card spending can help improve your credit rating. And if you’ve been paying your current loan in full and on time, that may also have you listed as a less risky borrower.

A better credit score means a lender will view you as a lower risk, in turn potentially offering you a better rate and/or lower fees.

Simply by checking the latest deals and offers you could find you have access to sharper rates through your better credit score.

There’s no miracle way to save money on finance and often it’s a combination of factors that will influence what a loan will cost you. But the best and easiest way is to compare rates and dozens of lenders to ensure you’re getting the best deal possible.

That’s where Driva comes in… By doing all the heavy lifting for you, it can save you thousands over the term of the loan.

Happy hunting!