With so many options available, financing your new car may seem daunting. Here are six common ways to meet the cost of your new vehicle.
A key benefit of paying with cash is that you won’t have any repayments to worry about, which means you can focus on saving. However, having a history of loan repayments can help build a strong credit rating for financing large purchases such as property.
A secured car loan often has a lower interest rate than an unsecured loan, and may be offered on either a variable or a fixed rate. However, this type of loan requires an asset to be committed as security. Generally, the vehicle being financed is used as security.
An unsecured loan doesn’t require security, which generally means interest rates are higher because the lender carries a greater level of risk. Applicants with a good credit history will be in a better position to apply for this type of finance.
A novated lease may allow you to able to bundle vehicle running costs. This arrangement will increase your take home pay, and you’ll pay less income tax because your tax rate will be calculated on your reduced salary after leasing costs are deducted. Be aware that you’ll need to pay a lump sum at the end of the agreement, sometimes close to 50 per cent of the original value of the vehicle.
When purchasing a car through dealer finance, the dealership brokers your finance with the debt being on-sold to a financial institution. It may seem like a seamless process, but this arrangement may come with higher interest rates and fees.
If you have the equity in your home, you may be able to add your vehicle purchase to your mortgage. This may secure a lower interest rate, but you could face a higher interest cost in the long run if you don’t boost your mortgage repayments.
Which option is right for me?
Always do your research to help find the car loan that best meets your individual needs. Shop around and make sure you investigate all the benefits and costs of each option.
Whether you’re looking for a new or used car, our car loans can turn your dream into reality! For more information, go to: www.tmbank.com.au/loans#ah_buying-a-car
Disclaimer: The information contained in this article is of a general nature only and should not be taken as financial or legal advice on any of the topics discussed. Always consult a financial adviser before making any investment decisions.
This full article can be found at: www.tmbank.com.au/thinkbank