For most Australians, a car is probably the second-biggest purchase they will make throughout their lives, only behind stepping into Australia’s ever-increasing housing market. For some fortunate motorists, salary packages provide employees with a novated lease on a vehicle. In most instances, however, new car buyers need to find some alternative form of finance when setting out to buy a car.
Because car repayments can be such a big commitment, it pays to think carefully before you head out into the car yards. It can be difficult to keep your head and make wise decisions about repayments, loans and financing when you’re confronted by an alluring new car and a very persuasive salesperson. The really important thing is to stop yourself from getting in over your head.
Here are five simple tips that will help you manage your car loan by making wise decisions before you begin the process of shopping around for a new set of wheels. After all, they say preparation is the key to success, so making a head start is all the more important.
Managing Your Car Loan
- Set a budget. Work out how much you can afford per week or per fortnight and stick to it. Don’t commit yourself down to the last dollar of your payslip because there are always some unexpected expenses that pop up when we least expect it
- Remember to include things like car maintenance, insurance, registration and fuel in your budget. If your previous car ran lean and efficient and now you’re upgrading to an SUV – like most Australians – then you may well be faced with the prospect of paying more for fuel as well as your monthly repayments. If you haven’t budgeted for this, you could put yourself in financial trouble.
- Shop around. Don’t just settle for the first deal or finance package offered to you by the car salesperson. Take the time to find the best deal that works for you and your situation or get us to do the hard yards for you. Things to take into consideration include repayment amounts, interest rates, loan terms and whether or not you can make extra lump-sum repayments. If you already have a good credit history with a particular lender (e.g. a bank or credit union) then you may be able to get a better deal with these people, as they already know what you’re like.
- Use debt calculator tools to find out how much interest you will end up paying. You may be surprised at how much more you will end up paying in the long run across the term of the loan.
- The greater the deposit you are able to scrape together for the car, the less you will have to borrow, which means that you’ll pay less interest in the long run. This means the total cost of the car will also be reduced. Don’t forget to ask a car dealer, ideally over the phone or via email, about the possibility of trading in your old vehicle to cover part of the payment. You can ask face-to-face too, but beware there is likely to be greater pressure put on you.
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.