Financing a New Car in Melbourne
Everything about car finance in Melbourne
There are several ways through which you can get a vehicle. However, the most popular way is through financing the purchase of the car yourself. While there are people who can afford to buy the car with cash, it is rare to find people doing that due to the benefits that car finance presents. If you are planning to get a car, the best way for you to do it is with car finance.
Car finance is one of the most popular forms of finance out there, and there are so many lenders who offer this form of finance. Whether it is a traditional lender like the banks or a non-traditional one such as the various finance companies, car finance is available everywhere in Melbourne, and you only need to find the right lender who will give you the funding you need to get your car. Both traditional and non-traditional lenders have their pros and cons, and whichever one you go with gives you good access to car finance.
Types of car finance
There are several types of car finance, all of which operates differently to help you achieve the same goal – get a car. The form of car finance that you go with will usually be dependent on several personal factors, but this article discusses the common types of car finance.
This is no doubt the most popular form of car finance. In fact, it is what most people think of when they hear of car finance. In this type of car finance, the lender simply gives the borrowers the money they need to buy the car, and it is the borrower that buys the car themselves. Most times, car loans could be the whole amount of money needed to buy the car, or it could just be a substantial part.
Several lenders offer this form of car finance, and a borrower doesn’t have to look too far to find a lender that will give them the perfect car loan. Car loans also come in a variety. It is either a secured car loan or an unsecured car loan. A secured car loan is one that comes with security as an important condition for getting the loan. This means you have to present collateral, a property of yours that is equivalent in value to the loan you are seeking. In the case of a default, the lender will take possession of the property you have used as collateral. On the other hand, an unsecured loan is one where all you have to do is present all the necessary documents for the loan, and the lender does not ask you for collateral before giving you the loan.
Each of these has its own pros and cons. A secured car loan is not available for someone who doesn’t have the substantial property needed as collateral, but it usually comes with less strict terms and lowers interest rates. Your credit rating doesn’t even have to be exceptional for the secured car loan because the lender has your property if you default. On the other hand, an unsecured car loan is much more tricky as the terms could be stringent. The lender might also make sure they are not available to people with bad credit rating, and the interest rate is usually higher, but you don’t need a property to access it.
This form of car finance is something you will usually get from the dealership, but there are lenders who also specialise in doing it. It is generally used to finance a business vehicle purchase, and with this form of finance, the lender owns the vehicle and gives it to you on lease. You are then expected to pay a stipulated amount monthly which is spread to cover the lease and the cost of buying the car. The borrower has an obligation to buy the car under this agreement, and once you complete the terms of the agreement, the car becomes yours. Before then, you will only be in possession without ownership, but once you complete the payment, the car’s ownership transfers to you.
This is simply hiring a car for your use. It is perfect if you don’t need the car for permanent use like when you are in a new city and just need a car for your time there. Also, if you are someone who prefers to use the latest models of cars, a lease will work for you. With this, you are essentially paying for the period during which you are using the car, and in most cases, it rarely exceeds a few years. It is not the same thing as a hire purchase because you are not obligated to buy. But some leases give you the option to buy if you wish to.
This finance is specifically for businesses, so you should consider this if you are trying to get a car for your business. It is secured except that you are not exactly using your property. The car itself is used as collateral for the finance, which means you might lose the car if you default on the agreement. Other than that, it is a perfect finance option for anyone who is seeking to get a business vehicle.
Most businesses need cars for their successful operation, which explains why businesses have various finance options to get the vehicles they need. Some like ABN Car loans, Low Doc Car Loans, and No Doc car loans are specifically for new businesses and help them get a vehicle even though many lenders will not give a car loan to a company that has not spent up to two years in operation. There are also other types of business vehicle finance like hire purchase, lease, chattel mortgage, etc.
What to consider when getting car finance
The interest rate on the car you are getting is worth considering. In fact, it should be the first thing you look at because it determines the cost of the loan. Low interest is always preferable, but you should make sure that there are no hidden charges attached, which could increase the interest rate. It is always better to have a fixed interest rate, as this makes it convenient for you to calculate how much you are paying. The Reserve Bank of Australia cut the interest rates to 0.1% in 2020 as part of its efforts to help Australians cope with the pandemic and speed up the country’s economic recovery.
For someone seeking car finance, a low interest rate is a beneficial thing on many levels. It means the car finance you are getting will cost less, and by extension, the repayments will be more comfortable. As an economic policy, it is used to stimulate the economy and lower the borrowing cost so that more people can borrow and businesses and households can have more to spend.
It is always necessary that you pay serious attention to this because it works with the interest rate to determine how much you will pay. For example, if the interest rate is low, but the repayment duration is long, you might end up paying way more than someone with a higher interest rate with a shorter repayment schedule. Thus, the secret is to make sure that your car finance duration doesn’t exceed the time it will take you to comfortably repay the loan. For instance, if you can comfortably repay the loan in two years, there is absolutely no reason for you to exceed the loan duration to three because that will mean paying interest on the loan for that period. Thus, achieving a balance between the repayments and how it affects your financial stability can help you a great deal. A good way to do this is by using a car finance calculator.
A car finance calculator is an online tool for determining the financial implications of your car finance. It is the perfect tool to use when getting car finance to ensure that you have all the right information for the deal. It is quite simple to use as all you have to do is input the terms of the car finance and let the calculator crunch the numbers before showing you where you stand. You can even compare several finance deals to see which one is the right one for you. Check if the interest rate is good for you and how long it should take you to repay the loan. While it is not an alternative to financial advice, it is a good place to start. If you are seeking car finance or already have various offers and want to determine the right one for you in terms of the numbers, the car finance calculator is ideal for this purpose.