What To Look For In A Reputable Car Loan Lender

Taking on any debt is risky, especially if the loan amount is sizable. Interest rates can eat into a car payment, and if the car buyer is not careful in guaranteeing his/her payments are received on time, late payments add up. More importantly, finding a loan that meets your budget can be a way to establish credit while providing you with the convenience of owning a vehicle.

In today’s financing market, car loan lenders have flooded the market with all types of programs. While this is great for giving consumers a variety of financing options, it can be quite problematic for first-time buyers and other consumers not well-versed in financing. With the number of fly-by-night operations online, consumers can get pulled into financing through a disreputable lender only to be disappointed, and in many cases, ripped off simply because they are unaware of what to consider.

Keep reading to learn about what to look for in a reputable car loan lender so you can make the right choice when seeking a car loan.

Good Business Practices

A key indicator that the lending institution is a reputable one is it abides by good business practices. If the business hours posted outside the building state a specific time, then there should be someone onsite to meet potential customers when they arrive or to answer phone calls. Typically, these businesses take a professional attitude toward business, and this is reflected in their demeanour toward customers as well.

More importantly, they divulge all of the relevant information to customers. Most financial institutions have “truth in lending” information as it relates to lending policies. Additionally, loan origination officers comply with all of the standards stipulated in the loan while making the consumer aware of any relevant clauses.  

Licensed Lenders

Another big indicator of whether a lender is reputable or not is through their licencing. The two big financial licensing agencies in Australia are the Australian Prudential Regulation Authority (APRA) and Australian Securities and Investments (ASIC). Both regulating agencies furnish licenses to financial institutions based on a set of stipulations which align with safe business practices. If looking to borrow from a lender, consider this as another measure for determining the lender’s credibility.

Excessive Fees

Pay attention to the types of fees that are assessed. Most lending institutions do not ask for upfront fees, and when one is assessed, it is typically assessed for large loans like home financing. Some lenders might assess fees as it relates to loan origination, late payment, and early termination fees, though.

Expensive Rates

Lenders who charge interest rates that are substantially higher than others are also ones to avoid. The market typically sets the interest rates, and then lending institutions have their own guidelines. When searching online, consumers will see that the rates on many loans tend to be clustered with some being above and others being below the average.

However, stark differences where the rates are markedly high might indicate the institution is not reputable. Furthermore, these institutions tend to target borrowers who might have problems with securing a loan on their own, poor credit, no credit, or low income, for example. In any case, if you fall into any one of these categories, seek other options because consumers do have many today.  

Consumer Options

Unlike in the past when a person’s application did not measure up they were left with very few options. Today’s lenders, alternatively, have a number of options ranging from secured loans to first-time buyer programs that can help alleviate the pressure of taking on a car loan. Consumers only need ask.

Avoid Being Ripped Off

Consumers can avoid being conned simply by searching the internet. In your search, you will come across established lenders, in addition to new outfits. A simple Google search can generate much information about a lender, and if you really want to know if the lender is legit, check with Australia’s Better Business Bureau.