Chances are you’ll need financing too, so we’ve put together a guide that has some information to help you source the right car, choose a finance option and budget for your repayments.
Choosing a car
As you start shopping around for the right vehicle, you’ll consider things like what you’ll be using it for, how many passengers you’ll likely need to cater for, and whether you need extra space for tools or equipment.
You may then look into buying via private sale, through a dealership, or at an auction. Each option has its advantages, so you should consider the best way for you to find your car.
- Start online – Start researching car models, reviews, and car specs and shortlist possible vehicles that match your needs and budget. Consider the maintenance and upkeep costs when you’re listing prospective models. Larger cars tend to take more to maintain, so if you’re mainly driving solo, you might decide to go with a smaller car to save on running and maintenance costs.
- Do checks and inspections – Always do a test drive. For used vehicles, make sure you do a check on the Personal Properties Security Register for any outstanding finance owing on the car. Other checks to consider doing include vehicle history reports, roadworthy certificates, and mechanical check-ups by professionals. Note that checks can vary depending on your state or territory.
- Take your time – Your new car is a long-term purchase, so don’t rush into an emotional decision. Instead, take time to think things through before you sign on the dotted line.
How much can you afford to borrow?
As you’re researching cars, take time to work out a realistic budget. Consider how much you can spend and/or borrow for your car. Don’t forget to budget for running costs such as petrol, maintenance, registration, and insurance.
Do research online to estimate how much your dream car could cost to own, and use a tool like MoneySmart’s car cost app to work out the real running costs.
By working out your budget, you’ll get a good idea of the type of car you can afford to buy, and this can help you with your vehicle shortlist.
Choosing a financing option
Unless you’ve got the cash to pay upfront, you’ll need to finance your purchase. Your car financing options include traditional car loans provided by a bank, finance company or a peer-to-peer lender, as well as other options like novated leases and hire-purchase.
To arrange a car loan you can approach a bank or finance company directly or you can speak to a broker like Money Now. The advantage of speaking with a broker is that they usually have a panel of lenders, so they can help you identify a loan from various options.
Car loans can be secured or unsecured and typically have a fixed interest rate. Repayment terms can vary, but they’re typically between 12 months and five years.
Keep in mind that the longer your repayment term, the more interest you’ll probably end up paying. If you’re buying a used car, your loan might be unsecured, and you’ll probably be paying a higher interest rate. To get an idea of how much your repayments will be, use our car loan calculator here.
Getting the best deal on your loan
Shopping around for the right financing is almost as important as shopping around for the right car. What’s the best deal for you might be different to another person, so consider your key priorities for financing before you talk to a lender.
A competitive interest rate, low loan fees, and low early repayment and exit fees are things you might want to look out for, as are loans that allow you to keep up with your repayments while minimising the total interest you pay.
Going through a loan broker who can offer customised recommendations may help you keep the process simple and ensure payments are tailored to your needs.
Money Now offers car buyers access to customised lending solutions from different lenders. To find out more about how we can help you find the right financing option for your car, contact us today.
Disclaimer: There may be more information that you need before you decide to buy a car. Be sure to do your own research before making a decision.