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How can I repay my loan faster and therefore pay less interest?
One simple way to get ahead is to pay your loan fortnightly or weekly instead of monthly. In effect, you make the equivalent of 13 monthly payments a year instead of 12. If we look at a car loan for $25,000 at an interest rate of 9.95% over a 5yr term your monthly repayments will be $531.00. If you simply divide that payment by 4 and pay $133.00 per week you will pay $718 in interest and repay your loan 6 months earlier.
When I’m shopping around for a car loan or a personal loan what should I look out for?
Before you take out a loan ask these questions:
- Is there an application fee – and how much is it?
- Will I be penalised if I pay out the loan early?
- Are there any ongoing fees such as monthly account keeping fees on the loan?
- Is the rate fixed or variable?
- How does the interest rate compare with other institutions?
Do I need to find a car first and then make an appointment to see one of your Lending Consultants?
It is better if you see a Lending Consultant first who can have your loan approved in principal for an amount that you nominate. Then you know exactly what price range you can look at. When you find the vehicle you want you simply inform the Consultant of the vehicle details (by providing the Bill of Sale) and then loan contract can be prepared.
If you see the car that you want and you haven’t got finance in order that’s okay too – however do not sign the bill of sale until you have organized your finance.
What is the difference between Secured and Unsecured Loans?
Secured personal loans generally have lower interest rates and require you to use assets to secure the loan.
For example - If you are purchasing a car, or if you have an existing car you can use it as security against the loan, providing that the car is less than 5 years old.
This means that if for some reason you can’t make the repayments on your loan, you may have to give up the asset (e.g. car) to help cover the outstanding balance on the loan.
Unsecured loans don’t require assets as security however they have higher interest rates and stricter requirements in order to qualify.
Existing Hume home loan members get special unsecured rates. Please talk to your Hume lending consultant for further information.
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