Not all car finance is created equal.
The world of car finance can be a hugely confusing place to anyone not sporting an economics degree (or the surname Koch).
For a start, it’s like they’re all speaking some strange and alien language, with terms like comparison rate, principal, redraw and payment schedules all thrown about while we normal, non-finance folk smile politely and get more and more confused.
Plus, there are more ways to borrow money than ever before, from personal debt to secured loans and even low-rate credit cards, so it’s near impossible to know at a glance which option is best for you.
Is the lowest rate always best?
The easiest and most obvious choice, of course, is to pick the deal that offers the lowest interest rate (meaning you’ll pay the least amount of interest over the duration of the loan), but hard though it might be to believe, that’s not always the best option.
Because when it comes to car finance, the devil is in the detail. And while a rock-bottom rate is obviously appealing, most experts agree that flexibility is priceless in the car-loan process.
“If you’re in the market for a car loan, interest rates are just one component – and they are important – but equally important are the fees. They can have as much of an impact on the total cost of a loan as the interest rate,” says Mitch Watson, a research manager at financial comparison website Canstar.