FINCAR

Lending Institutions: Where to go for Your Car Loan

Tuesday, 21 October 2008 18:31

In the past, when you wanted a loan for any reason, you dressed up in your Sunday best and marched off to plead with your bank manager. Only a handful of large banks serviced the market, and unless you were planning to move your accounts you were likely to get a cool reception at any other than the bank with which you normally did business.

There have been big changes in the financial services market. Now, there are dozens of bank and non-bank lenders and specialist financiers to choose from, and all compete aggressively for your business.

Today, lenders fall into two broad categories. Some lenders collect and hold savings and investment deposits. Others act as a 'go-between', packaging funds supplied by banks to offer loans to consumers. There is also a division between savings banks and commercial banks, though the distinction is fading. Most banks now provide a full range of services to both business and private consumers.

Naturally, you still have the option to approach your bank, or another bank for a loan to buy your car. Most offer a choice of car loans, personal loans, business loans, credit cards, and overdrafts - all of which can be used to finance vehicles. Most banks also offer leasing and hire purchase deals, often through affiliated financiers. Banks are aggressive competitors in the lending market, because they are owned by shareholders and, while strictly regulated, operate for profit.

Credit unions are similar to banks except that they are formed by a group of people with a common interest and run for the benefit of members, not for profit. Many serve the specific interests of an occupational group, such as teachers, nurses, or the defence forces. Members are sometimes able to secure finance on more favourable terms than from a bank or specialist financier.

Building societies began as a type of community bank formed to help people finance the purchase of a home. Like credit unions, they are owned by their members. Today, they offer a wide range of financial services in direct competition with banks.

Specialist financiers operate in a variety of different areas, including business finance and equipment finance. Some specialise in car finance only. Some specialise in leasing and/or hire purchase. Many partner with car dealers to offer 'dealer finance' on cars.

Funds are generally supplied to the specialist financier by a major lender, but the specialist has the expertise to structure the package to maximum customer advantage, and to manage the application and contract process. Specialists may charge slightly higher rates and fees, but will generally save you money overall, because their knowledge ensures you enjoy maximum tax advantages and the best loan terms for your needs. You may be surprised to find that their rates are often actually lower than the major lenders they represent. That's because they have the buying power to negotiate excellent terms with lenders.

Fincar is an example of a specialist financier. Fincar can structure lease or hire purchase finance packages, including novated leases. Fincar also offers consumer car loans and chattel mortgages.

Like many specialist financiers, Fincar partners with major lending institutions, and specialises in packaging the right finance solution for your needs.