6 Ways to Manage Your Car Loan

6 Ways to Manage Your Car Loan

When it comes to buying your own car, it’s no secret that obtaining finance in the form of a loan can be an attractive option. Having the cash to hand without having to save up or deplete your resources (as well as having the ability to choose the car you really want without having to settle depending on your budget) can be a major benefit – and having options such as selecting a repayment tenure to suit you can ensure that you never go out of pocket. With all this in mind, it may be worth considering car finance, so let’s take a look at how best to manage this kind of loan option.

Set a budget

While you might not think that you need to set a budget for a loan, the reality is that doing so may help you to manage your debt into the future. Investing in a new vehicle is going to cost you money however you purchase, so making sure that a loan works for your financial situation before you sign up is important.

It may be a good idea to set out your current outgoings (daily expenditure, existing debts and even savings) and then factor in any new expenses that may occur as a result of your investment. Car insurance, petrol and maintenance will all mount up, so don’t forget that these additions will be coming out regularly. Remember that your Equated Monthly Installments (or EMI) will also now need to be paid too – and making sure that this amount is no more than 15% of your monthly net income is a great rule of thumb to help you to stay on top of your finances.

If you can comfortably afford all of the above, then a car loan may be a worthwhile option.

Could you consolidate your existing debts to help?

Obtaining car finance can simply be adding another bill to your household, so it may be time to consider consolidating debt before taking out this kind of loan. The purpose of finance is to make use of collateral to ease the pressure (i.e. you may need a car to be able to work, but can’t afford to buy one outright), so seeking financial advice can be a good idea. If you are able to consolidate your debts, you may experience improvements in other financial areas, making the endeavour even more worthwhile.

Choose the most beneficial loan duration

Having the ability to enjoy a shorter tenure for the loan you choose can offer a range of benefits; for example, lenders tend to offer lower interest rates for loans that possess a shorter payment duration. This can in turn increase your EMI however, so it’s important to consider exactly what you are hoping to achieve from your loan. Paying more to be debt-free sooner may  be less stressful, whereas lower outgoings could better suit your budget.

Put forward an attractive down payment

Having a considerable sum to put towards your car loan can ease pressure and secure a lesser loan; as the bigger the down payment, the lower the overall outstanding debt will be. While this endeavour can work to deplete your savings (which you may have been hoping to avoid by obtaining finance), you won’t be losing as much as you would by buying outright – and the loan is likely to be more manageable to repay.

Make payments on time, every time

One of the best ways to manage your car loan is to keep on top of your repayments. This may seem like a no-brainer; doing so can only be of benefit. Regular payment history will not only look good on your credit score, but it can also keep your repayment within your budget (as you won’t incur added interest) and ensure that the car belongs to you sooner.

Establish the lines of communication

As a borrower, it is especially important to both establish and keep open the lines of communication with your lender. If an emergency crops up that may affect your ability to pay off your loan, having a good relationship could help you to postpone payments for a short amount of time, or even lower your repayments to suit your needs until you get back on your feet. Mutual trust and financial credibility should be a financial goal for anyone borrowing money – and maintaining these can certainly be of benefit in the long run.

Overall, managing a car loan with the above points may offer a wide range of benefits and as applying for finance has never been easier, you could enjoy a new vehicle without the stresses and strains of taking on debt you don’t know how to sustain.

Start your application for finance with us today!

Disclaimer -This page/article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. Subject to lenders terms and conditions, fees and charges and eligibility criteria apply.

Credit Representative Number 496186 is authorised under Australian Credit Licence Number 389328.
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Ph. 1300 696 902
Email – info@awesomecar.loans