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5 Questions You Need To Ask When Financing a Car

So, you’ve decided it’s time to purchase a new car and you’re thinking about taking out a loan – congratulations! 

Embarking on the journey of car ownership is an exciting prospect, and car loans are a great way to turn that dream into reality as they enable you to secure a vehicle today, while managing your budget effectively over the long term. 

However, to truly unlock the full spectrum of rewards that the right car loan can offer, it’s important to navigate the complexities of car financing wisely.  

The most important rule to remember is that when it comes to car financing your car, there is no such thing as a bad question.

In fact, the key to making informed car loan decisions lies in asking several simple yet important questions.  

To guide you, we’ve put together a list of the 5 crucial questions you must ask when beginning your car financing journey. By following this guide you’ll be able to drive away confident that you secured the best possible deal. 

1. “What are my fees on my loan?” 

Most people understand the initial value of their loan, but did you know that your finance arrangement may come with other hidden fees and charges?  

Considering these fees aren’t included in the principal or the interest of the initial loan, they can significantly impact the affordability of your finance arrangement. As such, it’s crucial to ask your financial provider if any fees exist and try to minimise them where possible. 

Whether it’s origination fees, service charges, or other miscellaneous costs, a comprehensive understanding of these additional costs empowers you to make informed decisions and prevent unexpected financial burdens. 

2. “What does it cost to get out of my loan early?” 

A car loan may be a fantastic idea today, but unfortunately, it’s impossible to know what the future holds. 

To ensure you are not caught off guard in the case of unforeseen circumstances, it’s a good idea to ask your financial provider how much it may cost you to terminate a loan early or even how paying out the loan early may impact the terms of the agreement. 

This question, although simple offers flexibility and opens many doors to potential exit strategies. 

3. “What Are My Monthly Payments? 

Determining your monthly payment obligations is the most important step toward accurate financial planning and budgeting when purchasing a car through finance. 

With so much financial jargon surrounding your car loan, it is best to get a transparent understanding of what is expected from you each month. To do this, ask in no uncertain terms “What are my monthly payments?” and more importantly “How will they change in the future?” 

Knowing the exact figure you’ll be allocating each month to repay your loan now and in the future is key to a smoother financial journey allowing you to truly enjoy that new car smell with peace of mind and clarity about what’s expected. 

4. “Is My Interest Rate Fixed or Variable? 

That’s right. It isn’t only important to decide between a loan and other payment alternatives, but it’s also vital to consider the types of car loans you have available to you. Asking whether your rate is fixed or variable in nature will help you secure stability or flexibility, depending on what you would prefer from your car loan.  

On one hand, a fixed interest rate provides a steady course of action moving forward, offering predictable monthly commitments. 

By contrast, a variable interest rate opens the door to rate adjustments and allows you to respond to market fluctuations.  

In the end, asking this question is about ensuring that your loan resonates with both your temperament and financial objectives. 

5. “What Happens in Case of Late Payments?”  

Of course, everybody intends to repay their loan according to the terms of the agreement, but sometimes, life gets in the way so it’s important to understand the consequences of failing to make a payment. 

While the chances that you will ever need to make a late payment are unlikely, it is still ideal to take a proactive approach so that you aren’t caught off guard and so you can navigate your financial obligations with foresight and clarity. 

Now you know the questions to ask when financing a car! 

These are some of the most important questions to ask during the car financing process to ensure you avoid common mistakes and get the best possible deal.  

However, this is general information only. The right finance option for you must take into account your unique circumstances and your goals for your car purchase – so always check with your trusted financial professional. 

If you find that you still have some questions of your own about car financing, our team at Private Fleet will be happy to answer your concerns and help you find the best deals for your car purchase. 

Simply reach out to us and we can have a chat about your options. 

Find the right (and affordable) vehicle for you with Private Fleet. 

Private Fleet empowers you to gain all the benefits of a fleet purchase but as a private buyer. 

Backed by decades of vehicle industry experience, fleet buying power and a network of car dealers across Australia, we are here to ensure that buying your next vehicle will be as straightforward as possible for you. 

Shopping for a car is an enjoyable process – let us make it hassle-free, too. 

Reach out to us today for a seamless and simple car-buying experience. 

What To Do With Your Old Car?

Unless you’re in the market for your very first car, it’s more likely than not that you already have a trusty old car sitting in your garage.

When it comes to forking out for another car, we all know your odds of being able to finance a new set of wheels will be greatly enhanced if you have accumulated some savings. More often than not, that might mean parting ways with your old car.

Now if you choose to go towards a dealership, that could be convenient as far as lining up your next purchase. On the other hand, knowing you’re more likely to sell your car for a higher price on the private market, you might consider that route instead.

If you do, here’s a handful of potential sale avenues at your disposal.

salecare

Online marketplaces

If exposure is what you’re looking for, online car marketplaces are the place to go. Yes, you’ll generally have to pay a listing fee or some sort of commission on the sale, however, your car will be right up there among all the others on the second-hand market for buyers to consider.

And given these sites have an established name that attracts thousands of car buyers, you know you’re guaranteed an audience, it just comes down to whether your car attracts the right buyer. Make sure to put up plenty of photos, a clear but appealing description and price according to the market.

Classifieds

Today it might not be as popular as it used to be, however, not everyone is tech savvy in this day and age, even though we’d like to think otherwise. An ad in the classifieds might appeal to a different demographic as well, which can suit certain vehicles, perhaps collectables.

For sale sign

A tried and trusted method of selling one’s car, however, this does work and will set you back barely any money. All you need is a marker and to write on a piece of paper or cardboard the price you’re looking for. Make sure the sign is visible to anyone who might drive past, or create more than one sign just to be sure.

Car fairs

You might get a mix of private buyers and dealer buyers at fairs, which provides you with scope to an audience of willing buyers. However, at a car fair, you are likely to face stiff negotiation as everyone is on the lookout for a bargain.

Public bulletin ads

Much like the For Sale signs that have been around for what seems like an eternity, public bulletin ads are effective. Have a look at your local supermarket or shopping centre, where you might find a spot to stick up some flyers and advertise your car. Include pictures and your contact details of course, but don’t rely on this method, because while it can be effective, the reality is most buyers have moved online.

Wreckers yard

If your old wheels have died, it might be time to seek out a wrecker’s yard and gauge whether they might be interested in buying your old car. Keep your hopes low, because the only value in the vehicle is likely to be scrap value.

Finance Lease vs. Novated Lease: which option is right for you?

So, you’re getting a car – congratulations!

No doubt you’ve had many factors to consider along the way:

  • Purpose of the car. Check!
  • Car model. Check!
  • To lease or to loan? To lease – Check!

But wait, if you’re planning to lease a car, we have a question for you.

What type of lease are you going to choose: a finance lease or a novated lease?

Since your wallet is on the line, this is one of the most important questions to ask when planning to lease a car.

In this article, we’ll break down the differences between a car finance lease versus a novated car lease to help you make an informed decision for your car lease.

What is a car lease?

Leasing is a great way to have full use of a car in your name without paying a large upfront cost. Instead of buying a car, leasing allows you to ‘rent’ a car for a longer period of time – typically 24-36 months – and make fixed monthly payments based on your leasing agreement.

As a general rule, the longer the lease is, the cheaper the monthly payments are and at the end of the lease period, you may have the option to buy out the vehicle should you decide to keep it. Otherwise, you can return it to the dealership and either start a new lease or buy a new car.

The benefits of both finance car leases and novated car leases

  1. Lower monthly paymentsSince you’re only paying for the car’s use during the specified lease term, rather than the full purchase price, leasing a car is often the ideal option for short-term savings, especially if your lease has fixed interest rates allowing repayments to be budgeted throughout the leasing term of the car.
  2. Maintenance and warranty coverageDepending on the supplier, lease agreements often include maintenance and warranty coverage, saving you from unexpected repair costs – after all, it isn’t you who owns the car.
  3. A chance to enjoy the latest car modelsIf you’re looking for a newer model that would otherwise not fit your budget or are looking to upgrade your car every few years or so, a car lease gives you this flexibility, even if you’re on a budget.

The difference between a Finance Car Lease and a Novated Car Lease

What is a car finance lease?

A car finance lease is one of the most straightforward financing options available when buying a car, and it works like a long-term rental agreement.

Basically, it allows you to drive a vehicle for an agreed-upon amount of time while you pay the dealership a monthly fixed price for the usage of the car.

What is a novated lease?

Another increasingly popular form of vehicle financing is the novated lease. It works the same way as a car finance lease, the only difference is that it’s a three-way agreement between you (the employee), your employer and the financier.

With a novated car lease agreement, the obligation to meet the repayments is with your employer. The repayments come from your income as a component of a salary sacrifice arrangement.

Take note: a car leased through a novated lease agreement is not considered a company vehicle, so you can use it for 100% private use without the need for logbooks. A novated lease can also have tax advantages since the financing of the vehicle is paid from your pre-tax remuneration package.

For more information about Novated Leases, check: Novated Leases with Private Fleet.

So, which one should you choose? Finance Lease Vs. Novated Lease

Ultimately, there is no right answer. Choosing how you pay for your car lease is still a matter of personal preference and your financial circumstances.

If you don’t want to worry about monthly repayments and you feel more secure knowing that your car lease is already taken care of every time you get your paycheck, then a novated lease may be for you.

On the other hand, if you have other sources of income that you’re using to pay for your car lease other than your monthly paycheck, then a finance lease can be a great option.

If you still have questions and want to make an informed decision about which option may be right for your unique circumstances, simply reach out to us for a chat.

Find the right car leasing option for your vehicle with Private Fleet.

Private Fleet empowers you to gain all the benefits of a fleet purchase, but as a private buyer.

Backed by decades of vehicle industry experience, fleet buying power and a network of car dealers across Australia, we are here to ensure that leasing a vehicle will be as straightforward as possible for you.

Leasing a car is a memorable experience – let us make it hassle-free, too.

Reach out to us today for a seamless and easy car leasing experience and all the guidance you need around your financing options.

NOTE: At Private Fleet, we are not car financiers, nor are we able to offer advice regarding finance leases or novated leases. As car brokers, our aim is to get you the best purchase price on any new or used car.
The information given here regarding car finance leases and novated leases is for information only. However, if you would like to contact one of our preferred car lease companies, you may reach out to us to discuss your options.

7 Tips for Negotiating Car Financing Terms

7 Tips for Negotiating Car Financing Terms

 

Buying a car is an exciting milestone – it marks the start of a new adventure.

While one of the major hurdles to owning a car has always been its price, the option to take out a loan and finance your purchase has allowed so many more people to enjoy that new car smell. However, navigating the world of car financing can be a daunting task. From interest rates to loan terms, there are various factors to consider when securing a car loan that fits both your budget and financial goals.

To help you make informed decisions and give you an added edge, here are 7 valuable tips to keep in mind when negotiating car financing terms.

 

1. Understand Your Credit Score

Before entering into negotiations, it’s crucial to know your credit score.

Your credit score plays a significant role in determining the interest rate you’ll be offered. Based on previous loan repayments, a higher credit score indicates that you are a trustworthy person to lend to, which often translates to better loan terms. So, to give you the best opportunity to secure more favourable terms, it’s important to obtain a copy of your credit report and review it for accuracy, and if there are any discrepancies, address them before applying for a loan.

Being aware of your credit standing empowers you to negotiate from a position of knowledge.

 

2. Shop Around for Car Financing Options

When looking for a vehicle loan, don’t settle for the first car financing offer that comes your way.

Instead, research and compare car financing options from various sources, including banks, credit unions, online lenders, and dealership financing. While each vehicle loan option may offer very different interest rates, terms, and incentives and some will be more favourable than others, by shopping around, you can identify the best deal that suits your needs and budget.

 

3. Get Pre-approved

Getting pre-approved for a car loan before visiting a dealership can give you far more leverage during price negotiations.

The pre-approval process involves submitting a loan application and receiving a conditional offer from a lender. Having a pre-approved car loan amount in hand gives you a clear budget and prevents you from overspending. It also shows dealerships that you’re a serious car buyer with little room for negotiation, which may lead to more favourable pricing.

 

4. Focus on the Total Cost

When negotiating car financing terms, it’s easy to get caught up in monthly payments. However, focusing solely on the monthly payment can lead to a longer loan term and higher overall costs.

 

After all, small monthly repayment amounts are only favourable if the term of the loan is likewise small.

 

That’s why it’s important to consider the total cost of the loan, including the interest over the life of the loan. For assistance, use an online loan calculator to estimate the total repayment amount based on different interest rates and terms.

 

Negotiate Car Loan Interest Rates

 

5. Negotiate Interest Rates

Interest rates significantly impact the overall cost of your car loan. What is less obvious is that there is significant wiggle room for negotiation with your lender.

As such, you should research current market rates and use that knowledge to negotiate. Furthermore, if you have a strong credit score, you may have further room to negotiate a lower interest rate. Another handy tactic is to, if possible, bring evidence of competitive offers you’ve received from other lenders, as this can strengthen your negotiation position as well.

 

6. Be Wary of Add-ons

During the car financing process, dealerships may offer various add-ons, such as extended warranties, gap insurance, and protection packages. While some of these offerings can provide value, others may not be necessary or can be obtained at a lower cost elsewhere.

Don’t just tick the box. Instead, carefully review the details of each add-on and decide whether it aligns with your current or future needs. Remember, don’t feel pressured into purchasing extras that could inflate your loan amount.

 

7. Review and Understand the Car Loan Terms

Before signing any car financing agreement, carefully review all terms and conditions. Make sure you understand the interest rate, loan terms, monthly payments, and any additional fees. If you have any questions or concerns, don’t hesitate to ask for clarification. It’s essential to be fully aware of what you’re committing to before finalising the deal.

 

What more direct help to never regret a car loan choice?

To navigate the complexities of buying a car, it helps to have guidance from car-buying experts who can find you the best deals and make the experience seamless as you choose your dream car.

If you find that you still have general questions about car financing, our team at Private Fleet will be happy to answer your concerns and help you find the best deals for your car purchase.

Simply reach out to us and we can have a chat about your options.

 

Find the right (and affordable) vehicle for you with Private Fleet.

Private Fleet empowers you to gain all the benefits of a fleet purchase, but as a private buyer.

Backed by decades of vehicle industry experience, fleet buying power and a network of car dealers across Australia, we are here to ensure that buying your next vehicle will be as straightforward as possible for you.

Shopping for a car is an enjoyable process – let us make it hassle-free, too.

Reach out to us today for a seamless and simple car-buying experience.