admin September 19, 2011 No Comments

1. Be realistic when you choose your vehicle. While you might be able to get a loan for that very nippy brand new little red sports car you’ve always dreamed of, if you are buying first car or a family car, it’s best to be realistic and rein in your dreams. A little red convertible is not very practical as a family vehicle, and if this is your first car (and you’re on your first job), you’d probably be better off with something small, economical and probably second-hand. However, if you’re hunting for a second car for fun, then you can indulge your dreams a little.
2. The more you can pay upfront, the less you have to borrow and the less interest you will have to pay. Deals when you only have to pay $1 deposit or even no deposit look very attractive, but you will end up paying more in the long run. Saving up a little before you buy a car is wise for this reason and for another reason: if you have to wait a bit, you are less likely to be impulsive and get the wrong vehicle for your needs on a whim.
3. Plan your budget: before you sign on the dotted line for a car loan, make sure that you will be able to meet the monthly repayments. For many people, this may be the first time they actually set a budget. Don’t forget to leave a cushion just in case an emergency happens, and also make room in your budget for a little mad money.
4. Larger payments over a shorter period or smaller payments over a longer period? A shorter term for the loan means that you pay less interest, but your budget will be committed more heavily with less room to move. However, lower payments over a longer term may be more easily fitted into an existing budget, especially if you’re forced into buying a new car (which could mean new second hand) because your family wheels died dramatically with no hope of repair and you’re going to have to get to work somehow.
5. Ask if you are able to make additional payments on top of your regular repayments so you can pay your loan off more quickly. Some finance companies allow you to do this without any penalty; others have an early repayment fee. If the company that offers the best deal does charge an early payment fee, do the maths is the fee lower than the interest you would have otherwise paid? If being able to make additional repayments without incurring a penalty is important to you, let us know so we can find you a finance company and/or deal that permits this BEFORE you sign anything.
6. Don’t just buy the first car you see that fits your requirements. Shop around, do your research and do your homework. Consider all aspects of your purchase thoroughly, including fuel type and engine size, as well as the number of seats and the size of the car. Also think about what happens when repairs become necessary: how easy is it to get parts?

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