Personal loans better than car dealer finance

Purchasing a car is a two-step process: first you do your research on cars; then you do your homework on finance options. Media spokesman at consumer group Choice, Christopher Zinn, says 40 per cent of new-car buyers arrange car finance before going to a dealership. “You are in a stronger bargaining position if your finance has been pre-approved.”

Zinn says having pre-approved finance gives you leverage to focus on a better price or free ”extras”. ”If you don’t have finance worked out and you’re in the car yard, they’ll have something convenient and ready for you – but it might not be the best deal,” Zinn says.

Analyst at financial comparison website InfoChoice, David Lalich, says most car loans are structured as personal loans, secured against the vehicle, and smaller banks, credit unions and building societies have competitive car financing. Banks also sometimes offer a ”relationship discount”, which may be better than advertised rates.

Source: Sydney Morning Herald