Another post that is a bit off topic, but we thought we\nwould put it together anyway to help anyone chasing a few basic answers to car\nfinance and how it works in Australia. With that being said however, if you\nhave specific issues relating to car finance, the best thing you can do is\nconsult a professional. We are not financial planners, and this article is not\nto be treated as financial advice.<\/p>\n\n\n\n
Many people have been in a situation where they have\nconsidered finance to purchase a new or used car. The world of finance tends to\nbe quite confusing (almost on purpose, some would say) with jargon terms and\nsmoke and mirrors to mask what should be a relatively straight forward\ntransaction: The bank gives you the money to buy a car and you pay back a\ncertain amount each weak till the debt is paid off. Unfortunately it never\nseems to be that simple, however this article hopes to make the world of car\nfinance in Australia a little easier to navigate.<\/p>\n\n\n\n
Here we go:<\/p>\n\n\n\n
Basically, a car loan is a personal loan for the purpose of\nbuying a car. You agree to pay back the money within a specified term, usually 5\nyears or less. You will end up paying back the loan plus interest. Repayments\nare usually made either weekly, fortnightly or monthly.<\/p>\n\n\n\n
The loan will either be taken from the bank (Car Loan) or\nfrom the car yard (Dealer Finance). There are pros and cons to each of these 2\nfinance types. It is best you handle this on a case by case basis and do your\nresearch by reading the contracts in full and asking questions.<\/p>\n\n\n\n
For the interest, you will either pay a variable or fixed\nrate of interest. Variable means that the interest payments will change\ndepending on the interest rates. Fixed means that you will pay the same\ninterest rate regardless of what the variable interest rates are.<\/p>\n\n\n\n
The pros for the variable rate are that the interest rate\ncould drop during the duration of the loan, meaning you pay less. On the\nflipside, the rates could go up and you may end up paying more. For fixed, you\nknow exactly how much you will have to pay each time. The downside is that the\nfixed rate usually starts out higher than the variable and you do not benefit\nfrom any reduction in the interest rate.<\/p>\n\n\n\n
The loan will either be known as secured, or unsecured. In\nthe case of a secured loan, the car you will be purchasing is frequently used\nas collateral to back the loan. This usually results in a lower interest rate.\nThe downside of this is that if you fall behind on your repayments, the bank or\ncar yard reserves the right to sell the item of security in order to recoup its\nlosses. In the case of an unsecured loan the interest rate will be higher,\nhowever they will have to win a court case, in order to recoup their money via\nthe sale of the car.<\/p>\n\n\n\n
A few tips for financing a car purchase:<\/p>\n\n\n\n
Get the finance sorted before the car. In conducting\nyourself in this order, it can prevent you from taking out finance that does\nnot work for you because you rush into something so you don\u2019t miss out on that\ncar. A good tip is to go to the bank first and get your finance sorted. Get a\ndeal that you are happy with and then go looking for a car. If you find a car\nyou like and you are offered finance from a car yard, you have something to\ncompare it with and you have a bargaining tool to negotiate with.<\/p>\n\n\n\n
Make sure you read the fine print in the contracts. Some of\nthem have clauses in there that can take you by surprise. Beware of things such\nas balloon payments and extra account keeping fees. Also watch out for add-ons\nand extras that you don\u2019t need.<\/p>\n\n\n\n
Sort out your credit score. Make sure you know your credit\nscore and get it as high as possible before you go get finance sorted. This\nwill get you the best rate possible and can save you a lot of money. <\/p>\n\n\n\n
Know what you do and don\u2019t need from a car loan. If you\ndon\u2019t need another credit card, don\u2019t accept one. If you want a fixed rate,\ndon\u2019t accept a variable. Know what you do and do not need and ask for it. I\nknow it sounds basic but knowing what you require in advance will prevent you\nfrom paying for stuff you don\u2019t need and getting a loan on terms that you would\nhave preferred to be different.<\/p>\n\n\n\n
Work out how much you can afford to borrow and how much you\ncan afford to repay. If in doubt, you should speak to a financial planner.\nGoing in over your head for a car loan is not a smart idea.<\/p>\n\n\n\n
Get everything in writing. All the terms and conditions, any\nchanges, all statements. Get it all in writing so you know exactly where you\nstand.<\/p>\n\n\n\n
If you have a complaint, let it be heard. If you feel you\nwere overcharged, short changed or the conditions of the contract were\nviolated, speak up. Let it be known. <\/p>\n\n\n\n
Gathering the facts, being prepared and acting rationally\nrather than emotionally are some of the key ways in which to overcome a lot of\nthe uncertainty that seems to hang over the car finance market. By being\ninformed, you can put yourself in the drivers seat when it comes to financing a\ncar purchase.<\/p>\n","protected":false},"excerpt":{"rendered":"
Another post that is a bit off topic, but we thought we would put it together anyway to help anyone chasing a few basic answers to car finance and how it works in Australia. With that being said however, if you have specific issues relating to car finance, the best thing you can do is […]<\/p>\n","protected":false},"author":1,"featured_media":1030,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-452","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"yoast_head":"\n