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How to Find the Right Car and Pay for It

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the best car loan rate in australia

Having a car, for many Australians, is non-negotiable. It is an essential part of of our lives and one of our most utilised assets. 

When the time comes to replace or upgrade your car, there can be much deliberating over making the right choice.  In a saturated market with a huge range of features and prices, it can be a tad overwhelming to know where to start. The dramatic depreciation of brand new cars makes buying near-new quite appealing, but for some, an older car is the most affordable option. With end of financial year sales looming, now may just be the best time to nab a deal, but there is still much to consider. So much so, that we’ll tackle it over two blog entries. Today we’ll cover how to decide what car to buy and how best to pay for it. Next week we’ll focus on when is the best time to buy and where to get a good deal.

What Kind of Car to Buy?

It’s important to be aware that the cost of a car, over it’s lifetime, can end up being greater than its initial purchase price.  Particularly when it comes to buying an older used car.  You don’t want to score a car for a bargain and end up having to spend a small fortune to make it roadworthy.  

Before you start looking around, it's important to do some homework and figure out what kind of car is going to suit your needs, as well as your budget.  Do you need a sedan or a wagon, automatic or manual, two or four door?  What kind of car will fulfil all your needs?  What are your priorities?  Fuel economy? Space for the kids, pets, bike or mother in law?  Off-road adventures, interstate road trips or quick zips to schools and shops in the city?  What size car will fit in your car space?  Does it need to be able to carry a trailer, cavavan or boat?  Do you want petrol or diesel, storage space or style?  Functionality or flair? 

With so many cars available on the market you can be very specific about what you want. You can do plenty of research online, and get an idea of prices from sites like Red Book, but each car should be taken on its own merits.

How to Pay for your New Car:

Once you know what you want, it's time to set yourself a price limit, and get your finance pre-approved (unless of course you're buying an older model which is only a few thousand dollars, and you happen to have the savings to pay for it outright).  It’s easy enough to waste days and weeks hunting for cars, but unless you're financially prepared it means nothing because you won’t be in a position to make a decision. It’s not just the cost of the car to consider either, you also have to factor in registration, insurance, stamp duty, transfer fees, repairs and inspection costs.

Work out your budget and figure out exactly what repayments you can afford. It might be worth speaking to your lender about getting a loan pre-approved. Here’s why:

  • You’ll know how much you can afford to spend before you begin hunting for a car
  • If you look first, end up falling in love with something and put down a holding deposit, you could lose your deposit if you can’t get finance for the purchase (ie. you can’t afford it).
  • You will be in a better position to negotiate with a dealer and won’t have to resort to financing through a dealership (which often has higher fees and bigger costs long term).  At first glance car financing might seem cheaper than getting a personal or car loan, but while rates might be advertised as being lower, often the comparison rate is high and there can be hidden fees and penalties if you pay the loan off early.  Before you decide what kind of load is best for you it’s worth considering all the features offered through the lender, looking at your financing options as an entire package before committing to anything.
  • If you get a personal or car loan through Endeavour Mutual Bank you can enjoy a range of benefits* including no account keeping fees, the ability to make extra repayments without penalty, no redraw fee, approval within 24 hours**, and no early payout fee, meaning you can pay your loan out sooner with no additional cost.

Buying a car is a big financial commitment and being well informed and financially prepared is the key to ensuring you make the best choice possible.

*Terms and conditions apply **24 Hour approval subject to all required paperwork provided and necessary assessment checks performed.

Alison Gallagher is a freelance writer, resourcefulness expert and entrepreneur.  She has been featured in various publications including Stellar Magazine, Australian Health and Fitness Magazine, and Cleo Magazine. Alison is particularly passionate about sharing practical tips on how to live simply, sustainably and seasonally.