Make sure you tick the boxes on this list before signing up…
So, it’s time to get a new car and that means an all-new car loan as well. But did you know there are big differences between the car finance options available?
No matter which way you go, there are several things you need to consider to ensure you get the right car loan for you.
Things to consider before signing up for a loan:
How much can you really afford?
Sure, we all want the best that money can buy, but how much can you really afford to pay for a car?
Talk to your prospective lenders about how much your repayments are before you sign up. Australia’s largest vehicle finance broker, stratton, work to understand your needs before comparing finance options from a panel of lenders to find a package that suits you. Learn more about your repayment options with the stratton Car Loan Calculator.
Make sure that the car you’re buying and the loan that you’re getting is well within your means and doesn’t compromise your financial security.
You also need to factor in your future car expenses such as registration, fuel, insurance, servicing and repairs into your budget before you decide.
Is there a balloon payment at the end of the loan?
Yes, some car financing options (primarily leasing options) come with lower repayments through the regular course of the loan/finance agreement but then feature a large pay-out figure at the end.
These options often work well for business car buyers, but may not be a great option for private car buyers as there could be a large discrepancy between the car value and the final payout figure.
Should I use car company ‘zero interest’ or low-interest loans?
Perhaps, but beware that there really is no such thing as a “free lunch”.
As we covered here, these finance options often look good on the surface but have conditions and terms that may not suit your needs.
There are also possible catches such as restrictions on the vehicles/models that the finance offer is available on.
How much deposit should I put down?
Yes, the larger the deposit the smaller the car loan amount, however cleaning out your savings account for a new car may not be particularly prudent.
A decent deposit is a good idea, but don’t leave yourself short of available funds to cover life’s unexpected costs.
Ask questions, get the facts and take your time:
Getting in that new car and setting off as soon as possible can be attractive, however, you should never rush when making a substantial financial decision.
Make sure you get all the figures, take notes, sleep on it and check on things like any balloon payments or early payout fees.
And finally, don’t be afraid to shop around, you might just find a finance option that much better suits your needs.