Australia may have recovered from its first recession in more than a quarter of a century, and the economy might be roaring, however, that doesn’t mean that many of us haven’t felt the pinch. In fact, the difference between those thriving financially and those on struggle street has never been more stark. If you’re in the market for a new car, and you’ve taken out a loan, now might be the time to take heed of some advice that will help you stay on top of your obligations.
What are you borrowing towards?
First things first, never take out a loan to purchase consumables or things that won’t last – stick to the credit card when it comes to stuff like that, and only as a last resort in any case. Loans should be applied for larger-ticket items that are likely to last a long time and retain some sort of retail value, even if that value is subject to depreciation over time.
A car falls into this category because at the end of your loan, or even in the middle of it should you have difficulties meeting your repayments, then you can always sell the car and recoup some proceeds.
Let common sense guide your vehicle choice
Taking out a loan isn’t free money – you will inevitably have to repay the loan, not to mention all the interest along the way. The longer the term of the loan, the more interest you end up paying. With this in mind, opt for a car that suits your needs and your budget. You should also make provision for operating costs, which will include petrol, maintenance, insurance and registration, plus other miscellaneous expenses.
Crunch the numbers
Make sure you run the equations on where you stand with respect to being able to pay back the loan. Determine where your budget lies by firing up a spreadsheet on your computer and establishing a weekly budget. After that, turn to one of the many loan calculation calculators you can find on the web and establish what sort of weekly repayments you are looking at, and how these fit in with your lifestyle.
Don’t forget to leave a small margin in this weekly budget for emergencies and unexpected things rather than planning precisely down to the last cent. This budget information will be really helpful when you approach financiers or even seek guidance from a car loan broker like Fincar, as it gives an idea of the sort of financial commitments you can manage, enabling us to tailor the right loan options to your circumstances.
The Fincar team is here to help you with all your financing needs. Contact us today to help arrange your next car or equipment loan.