Buying a new car is an exciting and fulfilling decision for many. But before you make a big purchase, you must consider the financial aspects of owning that asset. So take stock of your income and savings, explore car deals and loans, and use tools like the Alex Bank – car loan calculator to understand repayment terms.
If your savings fall short, you can utilise the flexibility offered by personal loans to finance your dream car. According to the Motor Vehicle Census, there were about 20.1 million registered vehicles in Australia in January 2021. This was a 1.7% increase from 2020.
Steps to Finances for a New Car
Buying a car could be an emotional decision, but you must look at the decision from a financial perspective as well. You may have dreamt of owning a car from the day you left college, but it is important to prioritise the financial aspect over the emotional ones.
1. Understand the Cost of Running a Car
Buying a new car is not a standalone decision. Once you buy one, you will have to spend money to keep it on the road. You first need to register your car and pay stamp duty. The fees for these processes vary according to region. Then you must have compulsory third party insurance.
A car is a machine prone to wear and tear. Therefore, you will have to pay for regular maintenance and repairs. Also, there is the issue of rising fuel prices, meaning driving your car will keep getting more expensive.
2. Decide on a Budget Range
Look at your income, expenses and savings. Do you have enough savings to purchase a car? What is your credit score? If you plan on taking a loan, will you be able to meet the repayment terms comfortably? Come up with a budget range based on the answer to these questions.
3. Decide What Type of Car You Can Buy
Once you make up your mind about purchasing a car, you can start exploring brands and models within your budget range. You could also look into the possibility of getting a used car, as it is considerably less expensive.
When you shortlist a used car, you should check the car’s VIN or chassis number online at PPSR. You can make sure the car does not owe any debt or is not stolen or written off.
4. Compare Car Prices from Dealers
You can look for a car at dealerships or opt to buy a car privately. Car dealerships will offer high prices, but they will also provide a warranty and other attractive add-ons.
Making a direct purchase might be cheaper but do a thorough check on the condition of the car. If possible, get a mechanic to inspect the car to be sure. Then, test drive and negotiate a better deal.
5. Explore Financing Options
Once you have figured out the budget, savings and the car you want to buy, you can get a personal loan to make up for any shortfall. Start by researching different lenders and the financial products they offer. Interest rate is one of the critical features to consider. It is the rate that will be charged as a percentage of the principal amount. You will be paying a part of what you borrow and the additional interest amount every repayment period.
The interest rate will differ according to different lenders. Look for a lender with the best and competitive interest rates in the market.
Your credit score is a critical factor that affects the rate. For example, a good credit score indicates that you do not miss payments, manage your finances and are a responsible borrower. As a result, the lender might approve a lower interest rate for your loan.
Other repayment terms to look at are loan terms and payment frequency. You can use the Alex Bank – car loan calculator available online to get a comprehensive view of the personal loan, complete with the repayment amount, interest rate and term.
Also, compare the different types of fees charged by lenders. Look out for hidden fees and other stipulations that will result in you paying more than you were quoted in your loan papers.
When preparing finances for a new car, you must consider taking a personal loan to ensure you have sufficient funding.
First, look into the type of car you can afford and the different costs associated with it. Next, get quotes from different car dealers and compare the deals in order to choose the best one.
When choosing a personal loan, consider factors like interest rate, fees, and the application process. Make the most of the financing options available to understand how these factors work together.
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