You’re a young professional, doing well in your career and you’re starting a family. Everything is going great and now, more than ever, you need the right car for you – something reliable that gets you and the family where you need to go, but also helps you portray the image you want to show. We may all tell ourselves different, but impressions count. And, what you drive does create an impression on the people you deal with.
Is it time to assess your finances to determine if your income can accommodate a weekly, fortnightly or monthly repayment? Frankly, most people don’t have to money to buy a car without some sort of financial help. So if you are to apply for a motor vehicle loan, make sure the repayments aren’t going to drain your pockets dry every payday.
Many car owners in Australia obtain their vehicles through a car or motor vehicle loan, offered by the banks, the car dealers or by independent lending institutions. Each lender has a different car loan terms and if you’re planning to buy a car, you should do some research to help you arrive at an informed and educated decision.
You should approach each loan provider – bank, car dealer or lending firm, to know the details of their car loan terms and conditions to determine which one offers the best deal. You should also research the type of vehicle you want to purchase and get a good idea of what the average asking price is in the market. By looking at all the information, you can make an accurate calculation of your repayment amount for the specific number of years of the loan term.
Motor vehicle loans are a form of secured loan in which the vehicle becomes the secured collateral to the lender for the borrowed money. There are other financial products which assist you to obtain a new car, such as a lease. You should research all the alternatives to see which one is right for you.
In some cases, the car dealer sets up their own financing facility and offers to finance the purchase of your car. In this case, you will make your monthly repayments to the car dealer who in turn will forward to their in-house financing group. Make sure that the lender holds a current Australian Credit Licence.
Depending on the type of car you want to purchase and your personal or financial circumstances, the bank or the lender will determine the loan term that is most suitable for you. Car loan terms can be negotiated for up to 7 years (depending on the lender) and with flexible repayment options.
Car loans are made available for Australian residents 18 years or older, with sufficient financial capability to repay the loan amount. The amount of loan that can be approved starts at a minimum of $1,000 to as high as $70,000, depending on the credit provider’s lending limits. Generally, the interest rate is fixed for the term of the loan, meaning your repayments (weekly, fortnightly or monthly) are also fixed and will not vary.
Make sure that you budget for the important things that go along with owing a car:
Insurance. Your lender is likely to require that you obtain full comprehensive insurance;
Ongoing running costs; such as fuel, oil and tyres; and
Maintenance and service costs. Even though you may have a warranty, you’ll most likely have to pay for regular servicing – especially if you want to keep that warranty current.