An automobile is not just a means of communication. People are passionate about it and their love for the four-wheeled beauty is eternal. If you want to buy a car of your own, here's some help. The car financing guide will provide you with information about the entire process. It will aid you in obtaining a successful finance deal. It includes a list of factors that you should consider before making a decision. So, let's start.
Be Ready
Financing a car is not like buying a new pair of shoes or a shirt. You will have to be ready with a few things.
Borrowing Capacity
Good things come to those who wait and prepare. So, don't think you can find your favorite car and the perfect loan program in a day. Before you start looking for your new or used car, you must sit and calculate your budget. Know how much you will be able to borrow. Also, ascertain your monthly payments. You can use online calculators for this purpose.
Documents
A. For PAYG Employed Applicants – Copies of recent 2 pay slips and the Group Certificate for last financial year are required
B. For Self-Employed Applicants – Copies of the last 2 years Tax Returns including full financials
Deposit
The car dealer may ask you to pay a deposit so that he can reserve the car for you. Deposit is ten to twenty per cent of the car loan amount. It is not a small amount. So, you should spend some time in getting together the money for it.
What's available?
Before you start searching for the perfect car loan package, you must have some basic knowledge of the car financing options that are available in the market. There are two main sources of car financing.
1. Car Dealer Finance (ie provided by the car dealer)
2. Alternative Car Finance (ie provided by banks, credit unions, finance companies, etc.)
After you decide on the source of financing, you will have to choose the car financing product. There are a number of car financing options to consider. To make your decision process easier, here is a list:
Personal Lease
It is an ideal option if you are using the car for personal purposes. The lease term can vary from one to five years. It is available with both fixed and variable interest rate. Its rates are lower than other car finance products. It is possible for you to select the residual value and opt for lower monthly repayment.
Car Loan
A car loan enables the lender / credit provider to take security over the car that you are buying. It helps them in protecting their investment. To get approved for a car loan, you must purchase your vehicle from a licensed car dealer. You have the benefit of choosing a long-term loan (up to seven years) as well as the residual value.
Personal Loan
These loan packages can be secured or unsecured. If you opt for a secured one, it won't be secured against the car that you are buying. The interest rates are slightly higher but, you get benefits of flexible loan terms and simpler approval requirements.
Chattel Mortgage
It is an ideal option if you are using the car for business purposes. The lender will use your car as a security. Sole traders, partnerships, companies, trusts, and ABN holders use this option.
The loan term ranges from one to five years. It has low-interest rates. The monthly payments on the chattel mortgage option are eligible for tax deduction.
So, these are the available options. Once you choose the car financing option, you can apply with a lender or dealer. But, don't be in a hurry. Take ample time in deciding on the things mentioned in the car finance guide. It will help you in choosing a profitable and beneficial financing package.
Remember that Rome was not built in a day.
