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A Guide to Financing a New Car in Australia

posted by Chris Valentine

Image: http://www.thegreenguide.com/wp-content/uploads/2013/03/Car-Buying-Guide.jpg

Finance a new car with Latitude Finance and you’ll be driving it off the lot without hassle or worry. A car loan is the most effective and simplest way to own a new car without “breaking the bank,” with a large upfront payment.

There are many ways to get a loan for a new car, including adding it to your mortgage, using a credit card, borrowing money from family, or using up all of your savings. However, all of these ways are not as efficient or positive for your finances as it is applying for a car loan from a financial institution. Borrowing money from family can cause unwanted tension in the relationship. Credit cards should be used more for lower cost expenses, not a large purchase such as a new car. Adding to a mortgage does not make much sense, as it is usually a longer term loan versus a shorter term car loan. It is better to get a car loan on its own for the most ideal interest rate and terms.

Let’s take a look at our guide on financing a new car in Australia and get you on the right path.

Shop Around

Just like with home mortgages, there are many banks, credit unions, and financial institutions that want your business. Shop around and research what different rates and terms are on offer from various sources. Know your credit score and then dig into online and in-store numbers to find the best deal for your situation.

Another part of shopping around is to look into the many, many car brands and models available. Do you need something that is very safe for family? Sporty and compact because it’s just for you? Economical because you’re on a tight budget? A mix of spacious and economical? After you’ve narrowed down your search to a few options, then test drive those cars. Remember, there is no obligation to go to a car dealership and try a car. Doing a test drive can make all the difference on knowing which type of car you would prefer. Buying a new car means you’ll have the car for at least several years, so take your time and make a measured decision on your purchase.

Terms

While it is important to get a low interest rate, there are other details that should be read and deciphered from a car loan before you sign on the dotted line. Is the loan fixed term, or flexible? A fixed term loan means that you are locked into one payment amount, for the term that you have agreed on with the bank. A loan with flexible terms will allow you to pay more when you can, and reduce the length of the loan if you are able to increase payment amounts.

Some loans have annual fees, so make sure you’ve read the fine print. Ask about length of loans, many financial institutions offer several options, not just a five-year car loan, maybe they offer a 1, 2, or 3-year loan, or 7 years, although that is quite a long time to have a car loan.

Financial institutions want your business. Any time you ask for information, they will want to sell you their product. Use your power as a consumer to do cost comparisons. Then when   get you a very good deal.

Bottom Line

Do your research on the various types of car loans available to you. Then you’ll also want to research the type of car that will be best for your lifestyle, whether you want something economical, sporty, or need extra space for kids or dogs, or a certain type of hobby like skiing. All of this research will allow you to get the best deal for you and your family, which is the end goal, along with a shiny new car to drive!

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