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How to get the best deal

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Whether you’re full time employed, part-time, casual, self-employed, retired or operating a small business, experienced professionals will help you find the right solution.  Even If you’re on a working visa, a recent migrant or had credit problems in the past you will be matched with a specialist loan expert who can assist you.

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How to get the best deal

Everyone’s circumstances are different but there are some simple tips that you can follow to make sure that you get the best deal for you. In this section we look at the steps to follow: 

  1. Do your research and choose the right type of loan or lease
  2. Prepare for your finance application 
  3. Ways to reduce your repayments
  4. Things to watch out for

 

LoanPlace.com.au is here to help you make sense of it all by providing you with information resources and connecting you with experienced professionals who will search their lenders to find the latest deals so that you get 3 Free Quotes to evaluate and compare.

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  1. Do your research and choose the right type of loan or lease

Compare the different financing options and choose what’s right for you. The key points to consider to help you to decide are: 

  • Do you want to own the asset?
  • Do you plan to use it for mostly personal or business use?
  • Do you want to have equity in the asset at the end of the finance term?
  • Do you want to include a residual value (balloon payment) to reduce your repayment amount?
  • Do you want to put in a large or small deposit?
  • Do you want the ability to make extra payments?
  • Do you just want to finance the purchase of an asset or do you need to combine a loan for more than one purpose?

For a summary of the different financing methods click here.

For more details and to learn more about the individual loan and lease options see the product pages: 

 

  1. Prepare for your finance application

Get the information together in advance that you will need for the loan or lease application. The better prepared that you are the better chance that you have of getting the decision you want and getting it quickly. Different lenders (banks, finance companies) have different requirements but below is a checklist of the information and documents that you will most likely need to provide:

Personal Information – To prove who you are and provide a summary of your personal circumstances

You will need to provide some form of identification to confirm your details. A driver’s license is normally the main acceptable source of ID as it shows your photo, address and signature. If your driver’s licence is not in your current address get it updated or you will need to provide alternative proof of address, such as a utility bill or a bank statement in your name and current address.

Some lenders may require additional identification. Alternative forms of ID include your passport, Medicare card, credit card and debit card.

You will also be required to provide details of your marital status, any dependents that you have and your citizenship / visa status. If you are a visa holder you will normally be required to provide a copy of your passport visa label or visa paperwork.

Proof of Income – To demonstrate that you have regular and ongoing income

You will be required to provide details of your income and provide evidence of it. If you’re employed you’ll usually need to provide 2 consecutive payslips which detail how much you get paid, how your income is made up (e.g. salary, commission, bonuses, car allowance etc.), what your year to date income is and includes your name and your employer’s name.

If you’re self-employed or a business you’ll normally be required to provide up to your last 2 years financial statements. Business Activity Statements (BAS) for the last few quarters can also help to confirm current revenue.

If you receive any income from Centrelink and the lender is prepared to accept this as part of your application then you’ll normally be required to provide the current income statement from Centrelink which confirms your current and ongoing benefits.

If you receive income from a rental property and the lender is prepared to accept this as part of your application then you’ll normally be required to provide details of the rental agreement as well as proof of the income e.g. recent bank statements showing the rental income or a rental statement from the managing real estate agent.

Employment Details – To show your employment stability

You will generally be required to provide 3 to 5 years employment history, so if you’ve been in your current job for less than 5 years you’ll normally need to provide details about your previous job(s). You’ll need to confirm your position, your employment status (full time, part-time, casual) as well as your employer’s address and contact details

Residential Details – To show your residential stability

You will generally be required to provide 3 to 5 years address details, so if you’ve been in your current address for less than 5 years you’ll normally need to provide details of your previous address(es).

You’ll also be required to provide details of your mortgage or rent payments. If you’re a home owner you’ll normally need to provide a copy of your current council rates notice. If you’re a renter then you’ll normally need to provide details of your landlord / managing real estate agent and a copy of your rental agreement / rental statement.

Expenditure Details – To show what your current commitments are and whether you can afford the loan / lease repayments

In addition to providing details of your mortgage or rent payments you’ll also need to provide details of other monthly expenses such as other loan repayments, credit card payments, store card payments, child maintenance payments, school fees, as well as general living expenses (although many lenders make general assumptions about living expenses based on your circumstances).

Asset & Liability Details – To show what your net worth is (how much you owe compared to how much you own)

Most lenders will want to know how much the things that you own are approximately worth compared to what you may having owing against these items.  In terms of assets they are looking for information about items such as property, land, vehicles, boats, business assets, cash savings, shares, superannuation and personal effects. In terms of liabilities they are looking for approximate outstanding balances on mortgages and loans as well as your limits on credit cards and store cards.

Additional Information – Extra information that may be required to support your finance application

Depending on your circumstances, credit history and what you are looking to borrow you may be required to provide additional information such as loan statements (showing good repayment history on previous or current loans), savings account statements (showing that you have been a regular saver) and bank account statements (showing that you have regular income and that you have enough spare cash to meet any new repayment commitments).

 

  1. Ways to reduce your repayments

There’s 2 key ways to reduce your repayments – minimise the amount that you borrow and minimise the amount of interest and fees that you have to pay back.

Interest Rate & Fees

Check the rate and fees. Get 3 quotes and compare!

Cash Deposit

It’s an obvious point but any cash that you can put towards your purchase will reduce your loan amount and in turn reduce the amount of interest payable.

Trade-in

If you have an asset to trade-in make sure that you get the best deal possible. Do your research to get a good idea of its valuation. Don’t just look at how similar assets are being priced at your local dealerships (they won’t pay you anywhere near the price that they sell them for) but do check what they are being listed for sale for in the private sale pages. Selling privately, while it can mean more work for you, could get you a much better price so is well worth considering. Any extra you can get for your trade-in means the less you need to borrow and pay interest on.

Residual Value (Balloon Payment)

You may be able to apply a residual value amount, often referred to as a balloon payment, can be your loan. This is an amount of the loan that is offset until the end of the loan term which has the effect of reducing your regular repayments. However, be aware that whilst you do not make principal repayments on the residual value amount you will be charged interest on it.

If you take out a loan with a residual value, at the end of the term you can decide to pay the amount and keep the asset, re-finance the amount and start a new loan agreement or you can sell / trade in the asset and if the amount you get is greater than the residual value than you can use this equity towards a new asset or simply retain it.

Negotiate on the Sales Price

Never pay the sticker price! We’re talking about high value items here with normally pretty good profit margins in them so there’s often some room to manoeuvre.

Firstly shop around. Doing a bit of research can save you money straight away. Once you’ve narrowed the choice down then show them that you are serious about buying and work on them to see what deal you can negotiate. If you don’t ask you’ll never know, and the worse that can happen is the seller will say no.

Shorter Term

While reducing the term of your loan will actually increase your repayment it will reduce the amount of interest that you have to pay back. These days many lenders can set up loans over any term length in between their minimum and maximum. For example, if it turns out that you can afford the repayments over a 43 month term and the lender is prepared to set up a loan on that basis, taking the loan over 48 months just means that you are paying 5 months extra interest for the benefit of a round figure loan term (4 years) and a marginally lower monthly repayment.

 

  1. Things to watch out for

Dubious Lenders

Just because you may not have previously come across a lender (bank, finance company) it doesn’t necessarily mean that they are not to be trusted. Some of the big banks have subsidiaries and brands that they don’t market to the general public and some smaller lenders only operate in very specific areas.

If you have any concerns do your research. Any reputable lender will have its own website these days so you can look them up and learn more about them. Lenders that have any dealings with consumer finance must, by law, have an Australian Credit Licence issued by ASIC (Australian Securities and Investments Commission). To be granted a licence, applicants must meet the required criteria and adhere to strict standards of conduct. Licence holders must also be members of an External Dispute Resolution body so that complaints are handled correctly. A lender’s website should show details of their licence number and their complaints procedures.

If you still have any doubts then make sure to get everything upfront before signing or agreeing to anything. You should be able to get copies of quotes, terms and conditions and for any insurances Product Disclosure Statements (PDS).

If you’re still not happy then don’t go ahead, look elsewhere.

Excessive Fees

Check and compare the fees involved with the loan or lease. Consider that some lenders may have higher fees than others but lower interest rates. Add the costs of interest and fees and compare the total amounts payable.

Lender Inflexibility

If making additional payments or paying your finance off early is important to you make sure that your lender and finance type allows you to do this. If you have the flexibility to do this then check if there any fees involved.

0% and Low Rate Finance

We sometimes see this being offered on new assets such as cars. It can look like a great deal but always check the terms and conditions. To qualify you may require a large deposit or the offer may only be available over a short term which could make the repayments too high to be affordable. Also, you’ve got to ask how is the below market rate finance being paid for. Normally the price that is being charged for the asset is inflated to cover the financing costs. So while you may be getting a great deal on the loan you may be paying over the odds for the asset.

Paying More Than You Can Afford

Look at your own income and outgoings and work out how much you can comfortably afford for a repayment before committing to any loan or lease. Don’t let anybody else tell you what you can afford, they’re not going to be the ones that have to make the repayments!

Multiple Finance Applications

Avoid making various applications with different lenders. The applications will show on your credit file and multiple applications have the effect of reducing your credit score. This is because many lenders assume that an application that they can see on your credit file that doesn’t result in a new loan or lease agreement is due to the other lender declining the application. If they think that other lenders may have refused to give you credit then it makes them question why they should.

If you are just making an enquiry or getting a quote make sure that you don’t submit an application until you are ready and happy to do so

Impulse Buys

We’ve all bought on the spur of the moment before, but when it comes to an expensive purchase like a car or a boat, for example, make sure that your impulses don’t get the better of you.

Buying and financing in haste is a recipe for disaster and can result in you paying over the odds and being stuck with the something that’s unsuitable. If you want to get a great deal do your research and stick to your plan.

When it comes to your loan or lease getting a pre-approval can be a really smart way to go. By organising your finance in advance you can shop confidently in the knowledge that your money is in place. Having a pre-approval gives you negotiating power as you’re effectively shopping as a cash buyer and can save you time on sales pitches and price negotiations.

 
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