Car Loan Options
What you need to know before applying for a car loan
There are a lot of things to consider when you buy a new car. This blog will take you through some of those considerations for this new big purchase.
What is your budget?
The first element to buying a new car is considering how much you can afford. Choose a budget and stick to it when you’re planning. Don’t just consider the price of the car – take in to account how much it’ll cost you to run, what the insurance will set you back and how much you expect to spend on maintenance. All these extra costs should be incorporated in to your budget. Try to ignore the extra accessories the dealer might try and offer you – they can just end up leaving you in a bigger debt and are possibly accessories you don’t really need.
One of the best ways to budget for a new car is to save up as much money as you can, so that the amount you borrow isn’t as high.
Another good tip is to think about purchasing a second hand car. This will save you a substantial amount of cash. However, make sure you do a Personal Property Securities Register (PPSR) check before the purchase to make sure there is no m
oney owing on the car.
What kind of loan is right for you?
There are many different car loans you can take out, but with all of them you will have a ‘term’ time, which is the period you will have to pay back the loan. Generally, the term time can vary between 1 to 7 years.
Variable and fixed rate loans
Loan that has a fixed rate provides certainty as your repayments will be a set figure and you’ll have a set repayment every month. The interest rate will remain the same for the loan’s entirety – and at the moment interest rates are at historic lows. The downside to
this is that if you make extra repayments and finish paying off the vehicle early, you might have to pay an early termination fee or other charges.
Secured loans involve offering up an asset as loan security. This means that if you don’t make the repayments, your creditor can repossess and sell the asset to get their money back.
Many lenders and banks will try to arrange an unsecured loan. As the loan is unsecured the interest rates are almost always much higher. Yes – the car you buy may not be repossessed if you default, but it is generally an expensive option.
Purchasing a car is a big financial decision. Make sure your loan choice is well researched so that you’re not left in the lurch and forced to make repayments you can’t afford.
For more information on selecting the right loan, contact finance brokers in Perth here.
Contact Alan on 0424 185 442 or Gayle on 0411 494 800.