How and when to consider car finance

Plans

For most people, the car buying process starts by deciding what kind of car they’d like. It’s the most interesting part, sure, but it’s just as important to start exploring the different car financing options as soon as you can. How you choose to finance a car might influence your choice of car and whether you end up buying one through a dealer or through a private sale.

Before you start looking at cars

Paying for a car in cash just isn’t possible for a lot of people. So if you do need financing, you should consider all your options carefully.

Figure out how much you can afford to repay each month. Don’t forget about expenses such as insurance, petrol, parking, and loan fees when forming your budget. You may also want to balance the costs with how much you think you could safely get from selling or trading-in your existing car. Use a car loan calculator to figure out how much you could borrow based on a fixed monthly repayment amount.

Without knowledge of what you can afford, you may end up in a finance agreement that is beyond your budget. Also, if you walk into a dealership before looking at all the car loan options available, you won’t be as prepared to evaluate the car finance options that they will likely offer you.

Car finance available in the market

  • Secured loans – the car is security for the loan. If the borrower cannot repay the loan, then the lender can repossess it.
  • Unsecured loans – the borrower is not required to provide security for the loan, but must be able to demonstrate an ability to pay off the loan. These loans might come at a higher interest rate than secured loans.
  • Novated lease – essentially, a three-way agreement between you, the lender, and your employer where your monthly repayments are made by the employer from your salary.

Using your loan wisely

Once you’ve secured a loan, or at least received detailed information on a few possible loans, you can go into the dealership and negotiate the price you’re willing to pay.

If running around dealerships and negotiations seems like work you’d rather not do, you could consider enlisting the assistance of our car sourcing service, Macquarie Vehicle Select^. This service can offer you end-to-end support for buying a car, including negotiating a very competitive price.

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Car finance and sourcing services are provided by Macquarie Leasing Pty Ltd ABN 38 002 674 982 Australian Credit Licence No. 394925 (Macquarie Leasing). All applications are subject to the satisfaction of approval criteria. Terms, conditions, fees and charges apply.

Any information or advice contained on this website is general in nature, is not an expression of opinion or recommendation, and has been prepared without taking into account your objectives, financial situation or needs. Before acting on any information or advice on this website, you should consider the appropriateness of it (and any relevant product) having regard to your circumstances and, if a current offer document is available, read the offer document before acquiring products named on this website. You should also seek independent financial, accounting and tax advice prior to acquiring a financial product.