Top 5 Ways To Finance A New Car

Purchasing a new car is a major decision that you’ll make in your life and deciding on financing it will never be easy but we can surely try. Today, we break down the 5 best ways to finance a new car so that you can hit the open roads sooner!

1. Buying the Car Outright 

The most straightforward method to pay for a brand-new car is to purchase it outright. Make sure you have plenty of cash available once you buy the car to cover any operating costs or any unexpected expenses, such as registration fees, insurance fees, maintenance and repairs.

In case this isn't a viable financial option for you, there are several other ways you can finance a new car. 

2. Secured Car Loan 

This type of car loan permits you to take out a loan based on the value of your car. Since your car is being used as collateral against the loan, lenders are confident they will recoup any losses by repossessing the car in the event you default on your loan payments. Secured car loans typically offer greater loan rates and more flexible conditions since lenders view borrowers as less risky. For many lenders, one of the major deciding factors when pricing a loan for borrowers is their credit score; the higher the credit score, the lower the rate they will give.

Also Read: Avoid These 6 Common Mistakes When Getting A Car Lease In Melbourne

3. Hire Purchase

Car hire is a good way for financing a new vehicle if you’re short of cash and wish to purchase it for business reasons. With a hire purchase, you'll have to put down a deposit and pay off the loan in instalments. Once you've paid the total you will be the owner of the automobile. A hire purchase agreement can be beneficial for purchasing a new car, as the interest rates are typically greater for used vehicles.

Using hire payments spreads the expense of the car over several. Additionally, depending on the loan provider you choose, you may have some amount of flexibility over the repayment terms which could include the length of your loan and whether you make weekly or monthly repayments.

4. Credit Card

This is another option for financing your new car. Given that you have a high enough credit card limit, it can be a great alternative for buying a car that costs not much and does not qualify for a loan. Make sure that you check the interest rate you'll be paying on your card, in addition to other financing options like a car loan or personal loan to make sure that you are getting the best deal.

5. Chattel Mortgage

Business owners and operators often prefer chattel mortgages. Chattel refers to the car you want to finance and the mortgage is the loan.  It has a structure similar to fixed-rate traditional mortgages. The lender will use your brand-new car as the guarantee for your loan, and you will be the owner of the car immediately. You will then pay off the loan from the income that this asset generates in your company. But understand that, like most secured financial products, your car will be repossessed if you fall behind on your payments. 

One of the primary reasons for the increasing popularity of chattel mortgages is that it offers several tax benefits. For example, tax deductions may be claimed for interest payments and depreciation, and it's also possible to claim the GST paid on the vehicle as an Input Tax Credit.

If you have decided on new car finance, Finance Brokers Victoria can help you find your ideal loan. To get started, you'll just need to tell us a few details about yourself and the car that you are looking to finance. You can choose from a panel of over 40 lenders and we’ll be with you at every step. Call us at 0482 078 000 or drop a mail at gary@fbvic.com.au to book an appointment.