A car loan is a big commitment and your ability to repay it needs to be your number one consideration. If you’re trying to work out how much to borrow here are a few helpful tips to help you on your way.
Is a car loan right for you?
A car means freedom and convenience for you and your family. A car loan can help you get behind the wheel faster, but consider all options before you make your final decision.
If you’ve gone through the pros and cons and decided this is the best way to purchase your car you’re ready for the next step which is working out how much you need to borrow.
Count your savings
You might consider using some savings to help reduce the size of your loan and therefore the amount of interest you’ll pay overall. But, leave some money aside to pay a deposit on the car and your immediate running costs (like registration and emergency repairs). You don’t want to use the car loan to cover the ongoing running costs of your car as you’ll pay more interest that way.
New or used car?
The type of car you buy obviously affects how much you need to borrow. Usually a newer model car is going to cost more than a used model. To make sure you’re not paying more than you should check a valuation website like redbook.com.au before you buy.
If you have a car you need to sell check how much you’d get to trade it in then see what it’d be worth through a private sale. This can help reduce the amount that you need to borrow.
How much can you afford to repay?
It’s not just about how much the car you want to buy costs you, it’s about affordability. Will the repayments fit into your car loan budget? Start with figuring out what your budget is first. There are many tools available online to help you work out your budget. One website that offers a phone application for you to use can be found by clicking here.
You’ll need to know what the car loan repayments are so you can add it to your budget. You can get an estimate by using our loan calculator that you can find on our website www.ask4finance.com.au .
If you’re not sure which type of car loan you want or which lender to use, give one of our experienced loan consultants a call or contact us online anytime. We would be happy to help you understand interest rates, fees, loan terms, repayment options and much more.
We can help you compare secured car loans with personal loans and variable rate car loans with fixed rate car loans so you’re getting a realistic comparison and can make an educated decision before going out and purchasing your car.
You can even apply online today and let us help you set up the best car loan pre-approval before you go shopping for your next dream car.
Would you like to share your car buying experience or car buying tips? Add your comments below.