How many times have you heard the story about somebody who spent so much on their new car they can scarcely afford the monthly repayments on the auto loan, let alone the petrol to run the darn thing?
Sadly, it’s a story that occurs all too often. You are blinded by the glare off the gleaming duco, your senses are heightened by the plush leather trim, the blast from the quad speaker system, the dashboard that looks like it was pulled straight from the cockpit of an F111, and that’s it – you’re sold.
Repayments of $2357.43 per month? Sure thing! I can do that if I give up drinking, smoking, um…eating. And if I stop taking toilet breaks, the boss might give me overtime? Yeah!
Okay, so that scenario may be a bit extreme, but car dealerships can certainly make even the most basic sedan look like a Maserati, well, maybe a Mazda, with the right lighting and a spit of polish. And who knows what can happen one year into your 5 year loan term? A change of location…a job layoff…a new baby…you just never know what’s around the corner.
So, we’ve decided to get serious and look at how you can secure the best possible auto loan for the best possible auto without going down the gurgler.
* Always do your homework before you commit yourself to any loan – particularly car loans. Ensure you are getting a premium loan package with the best possible auto loan rate. Check out all the major financial institutions first and then make a decision based on the best value for money loan.
* Don’t buy a car on impulse. Even if it’s the bargain of the century and the sales assistant tells you there are 12 people backed up behind you waiting to grab it out from under you. Chances are, he’s lying (about all the people) and if you’re meant to have it, it will still be there tomorrow. Be realistic.
* Do your sums. Don’t let the salesperson do them for you – he will have you bamboozled in no time at all. That’s his job.
Work out the total cost of the vehicle including registration, stamp duty and insurance costs and deduct your deposit – assuming you have one?
Then go online and find a car loan calculator (they are everywhere!) and input the figures to give you a rough estimate of the monthly repayments over different repayment periods, like 3 years, 5 years or 7 years.
* Look at your current family budget and factor in the loan repayment. Can you meet all basic expenses and have surplus funds to fund the repayments. Add in ‘contingencies’ of 20% over your current budget for the items you didn’t count on. Can you still meet the monthly repayments? If you can’t, scrap the idea.
* Remember: the more you borrow, the more you have to repay. And the longer the duration of the loan, the more interest you’ll be paying on the total package. In addition, the longer the loan term, the more likely it is that circumstances may change – and not always for the better.
Sure. In a worst case scenario you could sell the vehicle, but you rarely, if ever, recover the amount you originally paid; unless you bought a ’71 XY Falcon GTHO from a bloke’s back shed for $1,750 that you’ll restore and sell for $1.75million, in which case you wouldn’t need a loan and you wouldn’t be reading this article.
Now that most of the negatives have been covered, we can look at the positives.
One of the best ways to check out the best auto loan rates is to go online. Most of the major banks and lending institutions all have loan packs available with all the information you’ll need, including an application form.
Or instead, you can visit one of the quality online loan providers who use a vast panel of lenders to provide you with the best auto loans on the market, and one that is specifically tailored to suit your needs.
Once you have provided them with your personal and financial details, they will verify and confirm your financial situation and can usually get back to you within 24 hours with a response. How’s that for service?
And if you should happen to find that XY Falcon GTHO for $1,750 in the back shed, please let me know, okay?