Think money when thinking cars

  • by Vina Vicki
  • 8 Months ago
  • Comments Off

Buying a car is a big commitment, and while there are many advantages to owning your own set of wheels, the truth is that buying a car isn’t as simple as it sounds. It also comes with a lot of other responsibilities and implications, many of these financial. So aside from all the automotive considerations and choices that you need to make when buying a new car what are the financial aspects that you should be taking into account? These are important things to think about before you sign any contracts and drive the car off the sales lot, and sadly many people don’t think about these things at all. But we have compiled a list of important things that should be considered – we hope it helps.

Interest rates

Unless you are paying cash for your car you will need to get some sort of loan or financing. There are lots of companies and banks who will offer solutions but you need to shop around carefully. Just because somebody says that you have qualified for a loan doesn’t mean that you must take it. You need to shop around and find the best car finance rates Australia has available and then opt for that. And get multiple quotes so you can negotiate. The reality is that a quarter percent difference in rates might seem insignificant up front when you are hungry to sign and buy, but over the duration of the loan a quarter percent can translate to a lot of money.

Credit rating

The better your credit rating the better the deal and the interest rate that you will get from a bank. So if you know that you are going to be applying for vehicle financing and you don’t have much of a credit history, go out and get one. Mobile phone contracts, personal loans or store credit cards are all options. They are fairly easy to qualify for and as long as you make some payments and don’t fall into arrears with anything, you will come up glowing when the lending institutions check your credit rating and they will be more inclined to give you better rates and larger capital sums, safe in knowledge that you have a good risk profile.


The bigger the deposit the happier lenders will be to extend credit to you. In short, having a deposit is showing that you have skin in the game and that you are as invested as the financers who will be lending you money. It also means that the capital amount that you require from the bank will be less, which means smaller monthly repayments and, over the long-term, a whole lot less interest that you have to pay. If paying cash for the car is first prize, then having a large deposit is second prize.

Value (Trade in and depreciation)

Consider very carefully how the car which you are buying is going to hold its value. Depreciation is real and certain makes of car retain their value better than others. As much as you are buying a car to drive in the here-and-now, you also need to recognize that you are going to sell it at some point in the future and buy something else. And you need to think about this when buying as being able to use your old vehicle as a trade-in at some point in the future is very helpful – it is much like a ready-made deposit.

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