How do you finance a new car purchase?

A

AndrewT

Just been looking around lately and I am curious as to how everyone on the forums pays for a new vehicle purchase if it isn't through cash.

I always see the personal loans that you can get but at a interest rate of 12% or higher, it seems way too much.

I don't really know how novated leases work and so on, so any help would be great.

Cheers,
Andrew.
 
Hi Andrew

I don't know if this will help but I bought my Toyota (Hybrid) on 2.9% interest payable in 4 yrs. A great deal and I love my car as well :D
 
You can set up a small LOC against ur property to pay for the car and then repay the LOC. Interest rate same as residential property (6.5-7.5%) or as Jacque said some companys offer their own finance @ cheap rates, but im presuming the price is loaded to factor this in (buying new) and their would probably be some other costs asscociated Eg. Establishment fee's, early payment fees etc.
 
I purchased a 2yr/40000km car from the auctions for a good price, converted it to run on LPG and put it on a 4yr lease. I tax deduct and claim GST back on all outgoings related to the car and it costs very little to own and run.
 
Hi Andrew,

Borrowing for a car makes it more difficult to get finance to purchase property. But if you have to to do it and the car is a relatively low priced car $20k it may be cheaper to get a low rate credit card. There are some available at around 10.5%. I advise to keep up the repayments as if you were buying it over 5 years or less so you don't end up paying more in interest. It's always a good idea to pay off a car quickly.

You can speak to your employer about a novated lease. If they allow you to salary sacrifice the car repayments, maintenance and fuel as some employers do then this is all paid out of your gross income and therefore does not impact your net income if you did it yourself after tax.

Your employer will have an information package that they give you about the novated lease and salary sacrifice. This will include a list of financial planners that you can talk to to get financial advice to help you decide if you would like to go ahead with the novated lease.

Hope this helps.

Cheers,
Tracey
 
simple equation for me:

- never buy a brand new car

- pay cash only, never a loan...........its dead money

- never buy from a car yard

that way you can avoid huge depreciation first 12 mths and cash is king..

there is little value in buying a brand new car...i buy 12 mth old cars at govt or commercial auctions, private sales only and keep them for 12 mths and get my money back or sometimes a little more.
 
Last edited:
csc2 said:
simple equation fro me:

- never buy a brand new car

- pay cash only, never a loan...........its dead money

- never buy from a car yard

.
Click to expand...

I'm exactly the same with these three. Buying a new car during the accumulation phase of your portfolio doesn't make sense to me. There are far more financially viable options out there Andy...

Cheers,
Steve
 
csc2 said:
i buy 12 mth old cars at govt or commercial auctions
Click to expand...
That's our plan. The corolla will do us for now while we have 3 mini-people in the back. When the largest immature humanoid reaches driving age she can have the corolla. I'll even spring for cowskin seat covers, fluffy dice and a respray (it has shocking paint chips from highway driving) in pink :cool:

Incidentally, my FIL actually made a profit buying an ex-gov Hilux. He put in a stupidly low offer for one his work was selling - I think it was well under $2000 - and sold it for a couple of thousand a few years later. The FIL is one of those squirrelly scroogy old tradies with a shed full of stuff he 'might need later'.
 
BayView said:
Who was the finance through Jacque?
Click to expand...

Toyota were (maybe still are?) running a promotion for their hybrid vehicles only. Lexus had one just recently for some of their standard range, too; both at 2.9%.

The catch was that you had to own a hybrid Toyota or a Lexus :p

As for me, I just bought a new car through one of my companies, all of about two weeks ago. Went with a chattel mortgage at 9%. There are some reasonable deals out there.
 
JamesGG said:
Toyota were (maybe still are?) running a promotion for their hybrid vehicles only. Lexus had one just recently for some of their standard range, too; both at 2.9%.

The catch was that you had to own a hybrid Toyota or a Lexus :p
Click to expand...

Correct James :)
Did I mention I love the Hybrid? Great fuel economy, drives like a dream and the colour I chose (black) ensures I get extra exercise by having to wash it every week!
 
Novated Lease can work if you are on a high tax bracket and do quite a few Kms per year. I've done this in the past.

If you have to borrow money, the small LOR option is good if you have the right banking setup (ie. you do not need to pay loan est. fees etc..) as you can then bargain a good deal on your terms.

If you use the dealer loans, their 'unbelievably' low rates, then use your head... it is unbelievable because your not getting the 'best' deal up front and they have a stake in the finance deal as well. It is all shims and mirrors...

Oh, one further lot of 2 cents, if you buy at the 'end of the month' you may get a better deal from a dealer if they have had a slow month (to get their quota up) and end of FY is good timing, as is model change-over time. These considerations alone can save you the amount of interest you will pay on your loan. ;)

A final point if I may indulge. Most people don't properly consider the through life cost of their vehicle. Rego, insurance, maintenance, running costs (fuel, lubricants, type of tyres etc..), depreciation, warranty periods, etc.. are just a few things one should consider in order to determine the cost of ownership per Km. If you actually do this, you might think twice about a potential purchase. If you're concerned about your loan interest rate, then you should be more concerned about these points as well, as they can comparatively cost you far more than the loan itself.

My 2 cents....or maybe a bit more ;)
 
Thanks for the replies everyone. Really appreciate the advice that has been given.

The only reason we are currently looking at a new car is because we are able to get a considerable discount on one particular model we are looking at. Not just talking a few k here, from 42k down to 32k and that is a brand new model. Whats the saying, it's not what you know but who you know?

The new car would be the car we plan to keep for many years to come - especially when we start a family in a few years time, we also will pay extra on the loan to pay it out within 2-3 years. We have considered the consequences of buying the car then not being able to purchase another property for a while but it's one luxury we would like to have. At the end of the day, we have a property that is going to be classified as an investment property soon, although it's only one - it is a start. Either way, we have started putting away 10% of our income purely for investment and want to continue to do this.

We have considered all the running costs of this particular car, which incidentally end up being very similar to the current car we have. It won't be purchased for a while yet so we will be saving to reduce the amount we have to finance.
 
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