Whether you’re buying a new car because your family is growing, or just looking for a really cool ride, at iConnect Financial we understand that your car is an important part of your lifestyle. There are quite a few different ways that you can go about financing your new car and we’re here to guide you through the options so that you can choose the one that’s right for your particular circumstances and needs.
One thing is for certain, you don’t want to jump straight in with the off-the-shelf finance a car dealership offers without checking out your other options first. Talking to your iConnect Financial broker will ensure you get a loan that’s not only tailored to your personal circumstances and needs, but saves you the most amount of money possible. During your FREE consultation, we’ll help you fully understand your options and get pre-approval on your loan so you have more bargaining power when you go down to the dealership to get the car of your dreams.
A standard car loan is a straight forward option that’s great for most people. With a standard car loan, the money you borrow is secured against the car and you can get flexible repayment terms ranging from two to seven years. You can also enjoy the choice of a fixed or variable rate car loan that could help you budget more effectively, or save money on interest. You may also be able to trade-in your old car or use a deposit, which can considerably reduce your monthly payment amount.
We can access several different kinds of car leasing options for personal, self-employed or business uses. A lease differs to a car loan in that the lender retains actual ownership of the car. They purchase the car on your behalf and you lease it back from them, paying a fixed monthly rental for the term of the lease, usually two to five years. At the end of the lease, you can pay a ‘residual value’ final payment and take ownership of the car, trade it in, or if the residual is larger than a payment, refinance the residual and continue leasing.
The benefit of this method of buying a car is that you can reduce the size of your payments by increasing the residual amount you have to pay at the end. A lease may also have some additional tax benefits, particularly if you are a business owner, self-employed or able to organise a novated lease with your employer.
Many people have never heard of a chattel mortgage and that’s because it is usually obtained by businesses for vehicles that are primarily used for business purposes. With a chattel mortgage, the lender advances funds to purchase a car and you take ownership. Then the lender takes out a ‘mortgage’ using the car as security for the loan. This mortgage is registered with ASIC and once the contract is completed, it is removed giving you ownership of the car. You can finance the chattel mortgage over two to five years, arrange for a residual value to reduce the cost of your payments, and use a trade-in or cash as a deposit to further reduce your payments.
If you own your home, you could consider refinancing your home loan to access some of your equity to pay cash for a car. Having cash in your hand when you go out to purchase a car could help you to negotiate a better price. You also pay much less interest on a home loan than with other forms of financing, so you could also save money on interest too.