Top Ten Tips for Taking Car Finance

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You’ve found your dream wheels, now to get that thing! Keep a level head, take your time and follow these guidelines to make sure you get the best deal for your situation.

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2018981. Can you afford it? Write out a budget for your weekly fixed living costs including your car repayments against your net income.  Make sure you have room to move in case of unexpected life events such as having to move house or if you need to take time off work. Remember to include any existing debts and insurance. If you factor in a safety net then you won’t be over-committed and put unnecessary pressure on yourself or risk losing your vehicle https://www.moneysmart.gov.au/tools-and-resources/calculators-and-apps/budget-planner

2. Get the best deal on your loan. Shop around. Play lending institutions off against one another. You can easily obtain online- or over the phone quotes from a variety of banks and finance companies. They often have more room to move than they let on. How much deposit do they require? Are there application fees? Any annual fees? What is the interest rate? Work out how much you will actually be paying for your car including the deposit, interest and fees. Calculate this out for the duration of the loan.

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3. Look at the make and model of your desired car through a variety of outlets. If going for a second hand vehicle, look at Gumtree or carsales.com, as well as the car yards. If buying new then research different dealerships, even interstate. It may be worth getting your new car shipped to you or fly there and take a road-trip home in your new beauty!

4. Thoroughly check out the car’s warranty or if it even has one. Some warrantees insist that services and work carried out on your vehicle be done at authorised service centres only. Get quotes from these for any scheduled services, including 50,000km and 100,000km services as relevant to your car. Include these figures in your budget projection

Approved Car Finance Picture5. Look at finance contract lengths. Where do you see yourself at the end of those periods? 3 years, 5 years, 8 years? How old and what will be the value of your car at each of these stages? You can compare older similar makes and models and see what they are selling for through dealerships and privately.

6. Some finance options have a ‘balloon’ at the end of the contract. This represents a pay-out figure that concludes the finance agreement. People often think they will have ‘more money’ in the future. This is often not realistic. Make sure you can comfortably afford any ‘balloon’ payment

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7. Price insurance on your new car, get consultation from the agents at insurancerevenue.com.  Include this in your budgeting. Finance arrangements will require that you have adequate comprehensive insurance on your vehicle for the loan contract to be valid. There are two types, agreed value and market value. Make sure you understand the difference and the implications of those. Carefully check storm damage clauses including hail and flooding. In the event of your car being off the road what do the insurers offer? What are the excesses? ie the amount you have to pay out in the event of damage to your or someone else’s vehicle? www.comparethemarket.com.au

8. Do you even need finance? If you saved carefully for a year, what could you afford to buy outright? Sellers give substantial discounts for cash sales. You could put down a larger deposit and borrow less.

9. Do you use your vehicle for work and can you claim for work-related expenses? This does not usually extend to driving to and from work, but if your work requires you to be on the road then you may be able to claim money back on your tax return. Investigate if you are eligible through the ATO website or ask your accountant and work out your average kilometres travelled per year to ascertain your deduction. Include this in your budget.

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10. Take your time! Buying a car is a big commitment. If you buy something on a whim, you may have cause for regret. Carefully consider the car’s suitability for your lifestyle, how you see yourself (your car is a reflection of you!), consider size, fuel consumption, does it have all the accessories you really want (or too many?), can you garage it to protect it from the elements, along with all the financial considerations set out above.