When you’re ready to purchase a car, one of the decisions you’ll need to make is whether to choose your car before securing car finance or to get your financing sorted first. While securing financing upfront offers several benefits, there are also clear advantages to choosing your car first before moving on to the finance application. Let’s explore why this approach might work best for some buyers.
💡 Advantages of Choosing Your Car First
Choosing your car first before locking in finance can provide a more flexible and streamlined car-buying experience. Here are several reasons why this approach might be the right choice for you:
| 🔑 Advantage | How It Helps You |
|---|---|
| 🔍 Full Control of Your Decision | You can evaluate all cars that meet your preferences without being limited by a pre-approved loan amount. |
| ⚖️ Flexibility | Choosing the car first allows you to have more flexibility in negotiating your financing terms. |
| 📊 Better Understanding of the Loan | Knowing the car you want helps you calculate the exact loan amount you need, ensuring the financing fits your specific situation. |
🏦 Flexibility in Financing Options
Choosing your car before securing finance gives you the flexibility to explore all financing options based on the car you’ve chosen. Unlike pre-approval, where you might be limited by a loan amount, selecting your car first ensures that you have a clear understanding of the exact amount you need to finance. This can give you more room to negotiate better loan terms or shop around for the best interest rates and monthly payments.
With a clear car price in mind, you can approach lenders to obtain an accurate loan offer tailored to your exact needs. You’re not constrained by a pre-set loan amount that may not match the price of your dream car.
💡 Tip: If you are purchasing a used car, ensure you know its market value. This helps you negotiate better and ensures you’re not overpaying.
📊 Clear Understanding of Your Loan Needs
When you choose the car first, you know exactly how much you need to borrow. This makes it easier to calculate monthly payments and ensure they fit your budget. You can also avoid the risk of underestimating the loan amount you’ll need, which can cause complications later in the financing process.
For example, if you’re pre-approved for a loan based on an estimated amount and then choose a car that exceeds that amount, you may need to renegotiate your financing or apply for an additional loan, causing delays. By choosing your car first, you reduce the chance of these issues and make the loan application process more straightforward.
💡 Tip: It’s always a good idea to get an estimate of your monthly payments using online loan calculators based on the car’s price, interest rate, and loan term.
🛠️ Easier Negotiation and Budgeting
By securing the loan after choosing your car, you have a better sense of your budget and the financial commitment involved. Dealerships are more likely to work with you when you’ve already selected the car, as they know you’re serious about buying and have a clearer understanding of your financial limits.
Choosing your car first also helps you stay within your budget. It’s easy to fall in love with a more expensive model, but knowing exactly what you can afford ensures that you won’t be swayed into purchasing a car that exceeds your financial capacity.
💡 Tip: Use an online loan calculator to estimate how much car finance you’ll need and check whether the car you want fits within your budget.
🧑💼 Why Work with a Finance Broker?
Working with a finance broker is a great way to ensure that you get the best loan terms, whether you choose your car first or secure finance before shopping. A finance broker can help you evaluate your options, compare loan offers, and ensure you get a financing deal that works with your budget and the car you’ve chosen.
Finance brokers have relationships with multiple lenders, meaning they can help you secure competitive interest rates and terms based on the car price and your financial situation. They can also guide you through the process of negotiating with the dealership’s financing department to ensure that you get the best possible deal.
💡 Tip: A finance broker can save you time by negotiating on your behalf and ensuring you get the most favorable terms, whether you're choosing a car or securing finance.
🔑 Final Thoughts
Choosing your car first before securing finance offers flexibility, a better understanding of your budget, and a smoother process when applying for a car loan. It allows you to focus on finding the right car that fits your needs and financial situation, without being constrained by pre-approved loan amounts. Once you’ve chosen your car, you can move forward with securing financing that meets your exact needs.
Whether you choose to finance through the dealership or work with a broker, knowing your budget and having a clear understanding of your loan needs will ensure that you can make an informed decision and get the best possible deal.
DISCLAIMER
The information provided on this website is general in nature only and has been prepared without considering your financial needs, circumstances and objectives and should NOT be construed as financial, taxation or legal advice. For more information, get in touch with our experienced partner brokers today.
