If you’re on the lookout for a new car and have seen an ad or an example of a machine you like, then you probably want to take out a personal car loan to buy one. However, when you’re in the process of shopping around, you may have noticed that not all cars with the same name are equal, and some are cheaper than others. What’s going on?

What’s going on is that manufacturers often make different variants within a model. This is a way of increasing their sales potential. Usually, there are three main variants. Here, we’re not talking about sedan versus station wagon variants, or short wheelbase versus long wheelbase, although this is another way that manufacturers create more variants and increase their market share. Equally common is the trend of having three variants with different levels of luxury.Usually, the differences are indicated by a set of letters and/or numbers or even a subspecies name attached onto the main name.

You have to be a wee bit informed to know which one is the luxury version and which one is the basic version (if basic is a word that you can actually use about new cars these days). Most of the differences are inside either under the bonnet or in the interior. Occasionally, the luxury variant has some exterior touches that make it look a bit different from the others. If you’re unsure, then have a look at the manufacturer’s website or brochures, or visit a good car review website like Private Fleet, which will let you know.

Now, if you are on the hunt for a new car, the difference between the variants usually means a difference in price. This means that if the weekly repayments for the high-end variant are beyond you, you may be able to afford the weekly repayments for the cheaper version, putting the make and model of car you like within your reach.

So what sorts of things usually make the difference between basic and luxury variants? Here are a handful of differences that you can expect:

  • The interior trim. The basic variants usually have a cloth finish while the luxury ones get leather or a better type of cloth.
  • Bells and whistles: The luxury ones usually have a few more gadgets and conveniences (e.g. electrically adjustable mirrors, cruise control, voice control) that the basic ones don’t. This is the biggie, and this is the main way that the luxury and the basic variants differ.
  • Sound system: While the basic model will have a sound system, it won’t have as many speakers or as powerful speakers as the posher version.
  • Engine: Often, the more powerful engine is only available in the luxury variant. The good news here is that the basic versions are often more frugal.

It’s slowly phasing out, but some marques have differences in the safety features as a way of making the basic model cheaper than the luxury version. This isn’t to say that the basic variants are unsafe but they can have fewer airbags and fewer active safety features. Do your homework. If safety is important to you and the luxury variant has the better safety level, you might have to scrimp and pinch a little more to save up the deposit for that one or to manage the weekly payments. And shop around for loans  you might be able to find one that you can manage, so talk to us.

A Cautionary Tale

Some people who are in the process of buying a new car might be a bit sceptical about the whole thing. They might be coming from the angle that you pay less if you can buy a car for cash and if you don’t have a whole lot of money saved up, you have to be content with buying yourself a more humble car rather than some flash new thing. Well, this idea does have some merit to it. It is certainly that the less you borrow, the less interest you’ll have to pay. And it is also true that if you aren’t rolling in bucks, you are wise not to buy the new flashest car in the sales yard.

But you can go too far in this direction. Sometimes, what you’ll pay in interest when repaying a personal car loan turns out to be less than what you can end up paying if you buy a car that’s too cheap and a bit dodgy. Here is a true cautionary tale that happened to someone this writer knows. Names of people and a few identifying details, such as the make of car, have been changed for privacy reasons, but apart from that, this is a fair dinkum story.

Tony had managed to land a regular job in the building industry and was getting a steady income. Nothing stellar but enough to pay the bills and have a bit left over to pop in the bank. At this point, Tony didn’t have a car but used the good old pushbike to get to work. So far, so good. But Tony wanted to get himself a car, as it was getting a bit much to bike to work and then slog away all day doing physical manual labour and then bike back again when he was tired. Winter was approaching, too, and although biking on a sunny day makes you feel virtuous, healthy and financially savvy, biking in the rain is pretty miserable and sets you up for being soaking wet all day unless you have somewhere to change. So it was time to head down to the second-hand car yards.

Now, Tony could have used the money he had saved up as a deposit and then found a loan package that let him pay off a manageable amount per week. But Tony thought he was far too smart for that and decided to use the amount he had in the bank as his maximum price limit. Now, this would have been OK if he had a bit more tucked away in the bank  you can pick up a reasonable and reliable car for a four-digit price if you shop around. However, Tony didn’t have that much tucked away. It was four digits, but it was in the lower end of the four-digit figures.That was the first snag. The second snag was that Tony had a particular fancy for one particular make of car and wanted to get that sort and no other.

Tony found a car of the type he wanted for the price he wanted and felt very smug for a while. But then the problems started. Now, the sort of car that Tony loved wasn’t a sports car or anything of that sort but good examples of that car tend to cost a bit more than Tony wanted to pay. If you pay what Tony paid for his, you can expect problems. And the problems certainly came. What’s more, the cost of labour and parts at the local garage to fix the darn thing were well beyond what Tony could manage comfortably, and the mechanic wasn’t as flexible about weekly repayments as a loan company would have been. So it was DIY time.

At the time of writing, Tony’s car is up on blocks in his garage getting worked on during the weekend. All the spare money is going towards buying spare parts, and probably costs him as much as the loan repayments would have done if he had taken out a loan and got a better car. And Tony’s still biking to work every morning!

The moral? If you’re on a budget, it sometimes can be wiser in the long run to buy a slightly more expensive car and get a loan out for it than to buy a cheap old banger that falls to bits and costs you more in the long run. Either that or put up with the pushbike for longer until you have the funds to pay cash for it.

Three Rules Of Financial Common Sense

According to the financial whizzes, the global recession is officially over. However, most of us are likely to tell the whizzes to go and pull the other one, as a lot of us are still having to tighten our belts and all rest of it to make our dollars stretch further  which is one of the reasons you’re probably considering taking out a loan to buy your next car rather than paying for it outright. Who’s got the money for a new car just lying around, anyway?

However, don’t think that a loan is the answer to all your money problems when times are tight. Even though a loan seems like a simple solution, you could end up getting yourself into a worse mess than you started with, especially if you don’t do your homework.

At least if you’re considering taking out a car loan, you’re sticking to the first rule of financial common sense when it comes to loans. This first rule is that you should never borrow money, not even a small amount, to purchase consumables or things that won’t last. Loans should be applied for only for larger things that are likely to last a long time and have some sort of retail value. A car (and, for that matter, a motorbike or a boat) certainly falls into that category. Think about it like this: if things turn to custard, you can at least sell the car to pay off the amount outstanding on the loan. (We’re talking here about loans you apply for rather than smaller credit card stuff. While it’s not a good idea to buy your groceries or pay for a family outing using a credit card as a general principle, this is a bit of a grey area, especially if the purchase involves online shopping where a credit card is a bit of a must  but that’s another story.)

Secondly, you need to keep your head on when it comes to choosing a car. Sure, it’s possible to get out a loan to buy some flash sports car as your one and only set of wheels, but common sense should tell you that champagne on a beer budget (or Alfa Romeos on a Toyota budget) are a bad idea. Don’t forget that you still will have to pay back that loan, and the longer the loan is running for, the more interest you end up paying. Choose a car that suits your needs and your budget  and don’t forget to factor fuel and other running costs into the equation.

Equations are part of the third good principle: set a budget and work out what you can afford. Get out the calculator or fire up a spreadsheet on the computer and use this to work out the weekly repayments that suit your needs and lifestyle best. Don’t forget to leave a small margin in this weekly budget for emergencies and unexpected things rather than planning things down to the last cent. This budget information will be really helpful when you come to talk to us, as it gives us an idea of the sort of weekly repayments you can manage, and we can help you find something that suits.

Bad credit?

So you think that because you blew it once upon a time that you’re never going to be accepted for a loan again? And now you’re in need of a new set of wheels? What are you going to do? Do you have to sell nearly everything in your house that isn’t nailed down, including the cat, so you can raise the funds you need to get from A to B without hassle, or live on baked beans for a month?

Well, maybe, although your friends might object to some of the results if you do live on baked beans. Every little bit helps, especially when you’re trying to collect the funds for a deposit. But don’t sell the cat just yet  you might be able to get a loan in spite of having a less than stellar credit history.

However, as always, let the buyer beware. This doesn’t mean taking all the precautions that everybody should to avoid buying a right dunger of a car. You also need to be cautious before you sign on the dotted line for any loan. Don’t rush into anything, even if you think that this is your only chance. Trust on this  you’ll be better off taking the bus or biking for a few weeks than letting yourself in for years of financial misery.

One thing that you have to be prepared to put up with if you have got a bad credit history is that you are likely to pay interest at a higher rate than your friends with better histories. However, this rate shouldn’t be excruciatingly higher than the good rate  if the good rate is about 9%, then the naughty person rate should be around the 1112% mark, not 20+%. Ask the questions if you have to (or get us to do it).

And regarding questions, be sure to ask about anything that you’re not sure about.Clarify anything and everything  there’s no such thing as a dumb question when you’re trying to understand a loan, and if the person you’re dealing with disrespects your question or doesn’t answer it, walk away and take your business elsewhere. To take one example, if there’s something about the money going from your account to theirs when making repayments on the 30th of the month, what happens on February? Are you going to cop a penalty for being late if the payment comes through on the 1st of March?

One thing that you should never do is to agree to anything that involves a loan approval fee. This means that you have to pay to submit the loan application, whether if it’s successful or not. Guess how these companies make their money!Sure, most companies have a loan processing fee (paying the pen-pusher who does all the paperwork) if a loan is accepted, but a fee just to apply? Get real  and go somewhere else.

If you haven’t got the best credit history, don’t despair. There’s always hope and you can get a loan. Talk to us if you have any questions or if you want a bit of help. We’re here to help you get the best deal for a car loan.

More Loan Ads Investigated

A few posts ago, we investigated a range of car advertisements and had a look at the loan packages offered when you bought through these dealers. However, car companies and the finance packages aren’t the only options when it comes to taking out a car loan. Sure, the loan packages you can get through car dealers are often very simple but if you’re smart, you probably want to shop around to find the best loan package which is why you’ve come this site so we can do all the legwork for you. You may have seen ads offering loans in other places.’ Let’s have a look at some of these and decide whether they’re a good idea or not.

From the very start, we can dismiss the sort of ad that landed in my email inbox this morning (oddly, the spam filter missed this one). This email simply said I am Mr XXXX the advertising agent of (name loan firm and the brackets were in the original). This company is a registered loan company that give out fund to those who need financial support in their businesses or other activities. Our offer is with a very low interest rate. For one to apply he/she must be above the age of 18.You have to take advantage of this as preference will be given to first seven applicant. All interested persons should contact us Via Email and then proceeded to ask for a bunch of personal details. We’ve probably all seen emails like this ‘ some are even briefer like yesterday’s beauty (which was caught by the spam filter): Do you need loan contact us now with: Name, Amount, Duration, Phone, Country.

No matter how badly you need a loan or whatever your history is, IGNORE THESE EMAILS. They are out to nick your personal information and even if they do give you a loan, the terms are likely to be absolutely vicious. Never trust any offer of a loan that comes to you  you should be the one to approach the company, not the other way around. And never trust a loan company that has an ad in bad English  if they’re good enough and they’re genuine, they should be able to hire a decent writer to do the job for them.

But what about other ads? Can you trust them? As usual, the age-old advice of caveat emptor (let the buyer beware) applies, and you want to keep your wits about you so you don’t end up wishing you lived back in the Renaissance or the Middle Ages when charging exorbitant interest was considered to be among the most disgusting of sins, on a par with perversion.

Let’s take a look such loan ad in my local freebie newspaper: this one offers hassle free cash loans and instant cash. It all sounds very easy but I, for one, would ask a lot of questions before hopping on their website and applying and would ask even more (probably over the phone) before calling out one of their mobile managers to come round and give me the hard sell. Frankly, the ad on the same page that offers cash for scrap metal looks a lot more trustworthy and attractive. Some of the ads you see in the paper might be for decent companies, but always do your homework and ask thoroughly about terms and conditions before signing anything.

Or, even easier, you could get us to do the homework for you. We don’t like nasty loan sharks any more than you do, and we want to help you get the wheels you need without getting in over your head.