Vehicle Finance

Vehicle finance guide

Buying a new car can be an exciting process.  While the purchase price is often thoroughly negotiated the financing package gets less attention.  Understandably many of us opt to sign up for the financing offered by the showroom there and then.  Prior to doing this it is definitely worthwhile comparing what rates are out there.

Four key considerations before buying your new set of wheels:

  1. Planning to pay off the loan early?  Ensure you check what the early settlement fee is.  On loans of 12 – 24 months it usually works out better to run the loan to the end rather than incurring the cost of the early settlement fee (usually a percentage of the outstanding balance).  If the loan is for 2 - 5 years and you’re in a position to clear it early this is often worthwhile considering the amount of interest you’ll ultimately be paying.
  2. Don’t forget processing fees.  While usually only 1% of the total loan amount (with a minimum and maximum amount) these can add up, factor this in when considering the cost of your next car.
  3. Used car / new car?  Rates vary according to whether you’re buying a new or used car, another factor to consider when you’re weighing up new or nearly new for example.
  4. Want a credit card also?  It can make sense to take out an additional product with a bank in order to access their best possible rate on the vehicle finance.  This requires discipline however!  See our credit card guide for more considerations.

One of the best deals at the moment is ADCB’s standard car loan offering a profit rate of just 2.99% on new cars only (4.5% on used cars).