Finance Tips for a New Car

Finance Tips for a New Car

If you’re currently in the process of buying a new car, you might also be thinking about the types of financing options available to you. In short there are two main variants – with the first being dealer finance and the second known as lender finance.

What is the difference?

Generally speaking, you’ll find dealer finance available when buying your new car from a showroom, whereas lender finance is sourced from a third party agency. Both have their benefits and it could be well-worth getting to know more about each type before deciding on one.

Tips to help you with your new purchase

If you are ready to go ahead with your purchase under a financing agreement however, then you’ll likely want to ensure that the loan that you opt for offers flexibility to pay off more at particular times (such as when you have extra cash after a bonus or tax rebate). Some options may penalise you if you repay more sooner.

But with a more flexible loan you could negate these concerns. If you suddenly come into a little extra cash, you might decide to pay off your loan in a quicker fashion or all at once; so don’t allow yourself to sign up to a lending option that will punish you for your eagerness.

Another tip relating to loans is deciding on whether a fixed or variable rate solution could be more beneficial to you. On one hand, a fixed rate will ensure that you pay off a specific amount each month. A variable rate can fluctuate however, so some months you might pay less, but others you may be expected to repay more.

There’s also the concept of a secured verses an unsecured loan. The former will often use assets such as the vehicle as collateral should you default on your payments (which can result in the asset being seized to cover any additional costs that you owe). The latter is unsecured in the sense that you do not have to use collateral, such as your new vehicle, to secure the loan. In this case, the interest rate may be slightly higher to cover the potential risk.

What about comprehensive insurance?

In Victoria, it is a requirement when registering your car, that you have CTP insurance. CTP stands for Compulsory Third Party and it is a is type of insurance that covers a third party that is injured as a result of an accident that has involved your vehicle. This insurance is paid as a premium when you pay your annual registration renewal fee. When you purchase a new vehicle with the aid of finance, however, you will also be required to pay for comprehensive car insurance. Comprehensive car insurance helps to pay to repair or replace your vehicle in the event that it is damaged or stolen.

And what about additional insurance offers by car dealers?

Our final tip relates to the type of insurance that many car dealers offer to their clients as an additional level of service once a vehicle has been purchased. As appealing as the agencies’ representatives might make each deal seem; the reality is that the terms are often far from flexible and can sometimes result in the buyer paying more than they would, should they choose to go with another insurance provider.

Contact us today to get your application started.


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.

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