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How to Negotiate Your First Car Loan Like a Boss

Date

June 29, 2022

How to apply for your first car loan

Car loans can be a big financial commitment — especially if it's your first time getting one — so it pays to take them seriously and do a bit of groundwork first. Once you've entered into a finance arrangement, it can be tricky to change loans.

Our first two tips on getting your first car loan are all about doing your research before you apply.

1. Understand your credit score

Knowing your credit score can give you a pretty good head start on being able to negotiate when applying for your car loan. Your credit report will show your car loan lender if you've missed any payments on other credit products like personal loans, secured and unsecured loans, or credit cards — so you might like to look at your report before a credit provider runs a credit check.

Not only does this give you the opportunity to amend anything that's been reported on your credit file in error, but it allows you the opportunity to think about anything in your credit history that might make a car loan lender think twice about letting you borrow money. This process will let you form a response to any questions or doubt they might have and give you a better chance of presenting yourself as more than a credit risk, and improve your chances of having your car loan approved.

Did you know:

Finance One can offer car loans to Australians with bad credit history, no credit history, who've been discharged from bankruptcy or who have defaults on their credit file?*

2. Know your budget in advance

Budgeting for a new or used car means more than just looking at the purchase price and stamp duty. Vehicle ownership involves ongoing costs such as:

registration costs,
car insurance,
servicing and maintenance costs,
fuel,
loan repayments on your car finance, including any ongoing fees.

Understanding your full budget means that you can be more decisive when negotiating your car loan. Many loan products offer interest rates that vary, based on the strength of your application and other factors, so knowing how much you can afford to repay before negotiating means you won't sign up for something you can't afford.

Check out our car loan calculator to give yourself a rough idea of how much your monthly repayments could be at a certain interest rate if you are approved for a car loan.

Top Tip

If your dream car feels out of reach, try seeking a more fuel efficient model or read up on our guide on how to set a budget for your dream car. New cars are certainly appealing for many reasons, but the value of cars depreciate as soon as you drive them out of the dealership.

3. Look at all your car loan options

Whether you're looking at a new car or used car, buying your first car comes with many options, and so too does applying for your first car loan. It is normal to compare loans, but before deciding on a particular finance product, look at:

Are you able to apply for a car loan for a used car, or does the company only provide car loans for new cars?
What are the maximum loan amounts that you can apply for?
What loan term would best suit you?
What upfront fees, ongoing fees, annual fees or monthly fees could apply?
Would you be able to make extra repayments to pay off the loan early?
Is an unsecured loan or secured car loan going to be best for your financial situation?

Understandably, with so many different car loans out there on the market, it can be hard to choose. Many people want to get the best deal by looking at the comparison rate, however if this is your first time applying for a personal loan or car loan, then what a lot of people don't realise is that their interest rate may be considerably higher than what's advertised. This is because without having any loan history, your credit worthiness is yet to be proven!

Negotiating with a lender who doesn't view your financial circumstances as unique can really put a dampener on your car buying journey. At Finance One, we can provide vehicle loans to people with no credit history, who are on Government Benefits or are self employed.*

We like to look at you as an individual and will take everything into consideration to try and make your car purchase a reality.

We allow additional repayments on all consumer loans with no penalty to help our customers pay off their car loans quicker!

4. Offer your lender an incentive

What better way to sweeten a negotiation deal than by offering a down payment on your loan? If you can afford to, offering to put some money towards the loan upfront shows that you're serious about your loan commitment. Down payments can also help reduce your loan amount, which could give you a better chance of getting a pre-approval! Pre-approval means that you can shop with confidence, knowing that you have the finance to back a purchase.

5. Consider secured car loans

Secured loans can be your friend when it comes to applying for and negotiating your first car loan like a boss.

Secured loans are secured by an asset (usually the car you're buying) which means that the lender has a 'fall back' if you default and can't repay the loan. Unsecured car loans don't provide that same level of reassurance to your lender.