Buying a car means investing thousands of dollars. Most people opt for car loans to purchase a car 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 by cash is one of the options to finance your purchase. It is the simplest way to buy a vehicle. Also, it is cost-effective as you don’t have to pay interest. You have to 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 at disposal to purchase a car, and you have to put off the purchase until you can save such an amount. Hence, you may look at other financing options if you’re falling short of cash.
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 a new or used car without having to save 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 customised as per your needs, and you can ask the lender for a lower down payment, longer loan repayment tenure, and lower interest rate. Most lenders would be happy to 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.
Many car dealers also offer financing options for cars. Dealer finance is convenient as you don’t have to approach lenders with your loan application. If you choose dealer finance as the way to finance your purchase, you can ask the dealer to find various financing options.
Like the banks and private lenders, the car dealer will also run a check on your credit history before approving the car loan and offering attractive loan schemes.
A Novated lease is a financial agreement with your salary packaging. In this lease, your employer pays for the car lease and the running costs. Your employer’s costs are recovered from your salary package through a combination of pre-tax and post-tax salary deductions.
A Novated lease is an excellent option of 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.
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 a car purchase. The lender takes the car as “mortgage,” and when you pay the loan entirely, you will own the vehicle outright.
These are the different car finance options available in Australia. It will help you make an informed decision when it comes to buying a new or used automobile.