Car Loans – do you know enough?

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Car Loans – do you know enough? April 17, 2019

Car Loans

At Long Property, we know that the single largest purchase anyone will ever make is likely their home. After that, it is probably paying for a wedding or buying a car. Maybe you’ve had your eye on a special car for a while, or its time to upgrade your current model. So what’s involved?

The first things to check is what you can afford. This isn’t limited to loan repayments. It is important to consider all the costs of owning and operating a car, e.g. registration fees, insurance, roadside assistance, petrol, repairs, maintenance, road tolls, etc. Don’t get distracted by any special deals offered at the showroom – accessories and extra insurance products might be interesting, but they may not add value and can increase the end cost.

As important as getting the best price on a car is getting the best credit deal. Unless you are cash rich, you’re likely to need finance. You can get this from a traditional lender (bank, etc.) or the Car Dealer might conveniently be able to arrange this for you when buying the car. A car loan credit contract specifies the terms (e.g. loan amount, rate, term and repayment arrangements) of the finance. The maximum loan period tends to be 5 years, and the loan is either repayable in full in equal monthly instalments over this term or with a final lump sum payment at maturity. Shop around to make sure you have the right finance.

Security for new car loans tends to be the car itself. If you don’t make repayments, the car can be repossessed. If the sale price isn’t enough to pay the outstanding debt or any other costs, the borrower is still liable for the difference (beware of depreciation). Second hand cars tend to be financed by unsecured loans, for which the rate might be higher (bigger risk) and you may not be able to borrow as much. To recover any debts unpaid, Lenders may involve the courts.

If you are considering a second-hand car, make sure to check the condition and roadworthiness. It is also recommended to do an ownership check before you buy – the cost can be as little as $2, using the Australian Government’s Personal Property Securities Register (PPSR), but will check whether the current owner still owes money on it (otherwise, it could be repossessed if not repaid).

Many credit providers will give you ‘approval in principle’ for a loan, so you know how much you can borrow (avoiding temptation). As a finance broker, we are happy to assist and refer you to the right people, whether buying a car for personal use or as a business asset.


Long Property blog content 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. Nothing on the Long Property website constitutes legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances.

Credit Representative Number 493530 authorised under Australian Credit Licence 389328

DANIEL GOLD

Dan runs Long Property and has been recognised by Mortgage Professional Australia as being one of the top 5 mortgage brokers nationally.  Email dan@longproperty.com.au

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