Buying a car means investing thousands of dollars. Most people opt for car loans rather than handing out cash to the dealer. When purchasing a new car, you have five different ways to finance the purchase. Here, we look at various car finance options available in Australia.

Cash (Buying It Outright)

Buying a car in cash is one option for financing your purchase. It is the simplest and most cost-effective way to buy a vehicle, as you don’t have to pay interest. You pay the agreed sum to the car dealer and then drive away in your car without worrying about monthly payments.

Unfortunately, most people don’t have a large sum to purchase a car, and you must put off the purchase until you can save such an amount. Hence, you may look at other financing options if you fall short of cash.

Car loans

This is the most preferred way to finance your car purchase – new or used. An auto loan is the fastest way to get hands-on on a new or used car without saving the full amount to buy a car. When you buy a car through a car loan, you can use it while paying for it.

The car loan can be customized according to your needs. You can ask the lender for a lower down payment, longer loan repayment tenure, and lower interest rates. Most lenders would happily offer car loans with a lower interest rate if you have a good credit score. The loan repayment tenure can be 2 to 7 years.

Dealer Finance

Many car dealers also offer financing options. Dealer finance is convenient because you don’t have to approach lenders with your loan application. If you choose dealer finance to finance your purchase, you can ask the dealer to find various financing options.

Like banks and private lenders, the car dealer will also check your credit history before approving the car loan and offering attractive loan schemes.

Novated Lease

A Novated lease is a financial agreement with your salary packaging. Your employer pays for the car lease and the running costs in this lease. Your employer’s costs are recovered from your salary package through pre-tax and post-tax salary deductions.

A Novated lease is an excellent option for a car lease, which allows you to drive any car or model you want without changing your preferences. This option can save thousands of dollars on the price of a new or used car and help save money on running costs. A Novated lease is also an excellent example of cashless motoring.

Chattel Mortgage

A chattel mortgage is similar to a secured loan. If you want to finance the car purchase through a chattel mortgage, you can easily do it. When you approach the lender for a secured car loan, the lender will provide the funds to purchase the car and take ownership of it during the purchase. The lender takes the car as a “mortgage.” You will own the vehicle outright when you pay the loan entirely.

These are the different car finance options available in Australia. They will help you decide about buying a new or used automobile.