Purchasing a new vehicle can be an incredibly costly investment. With the average price of a new car in Australia costing $103,000, such a purchase is unaffordable for many. That’s where car finance can help. By borrowing the cash for a vehicle and paying it off over time, car finance in Australia makes the previously impossible a reality.
At Fast Funding 4U, we specialise in consumer car loans to help you secure the car of your dreams without diminishing your hard-earned savings. So, if you’re wondering how to get a car loan and whether it’s the right option for you, let us explain the many benefits of buying a car on finance.
Ready to own your dream car? Contact Fast Funding 4U to discuss our range of consumer car loans with an expert car finance broker.
Benefits of Buying a Car on Finance
Car loans are a simple, accessible, and affordable way of purchasing a new or used car. But is car financing worth it? At Fast Funding 4U, we certainly think so. Read on to discover the advantages of taking out car finance in Australia.
Borrow the Full Amount
Getting a car on finance is a fantastic option if you don’t have the cash or the time to save up for your new wheels. Rather than requiring a hefty lump sum, a consumer car loan allows you to borrow 100% of the vehicle’s purchase price in exchange for fixed regular payments. If monthly car loan repayments fit your income and lifestyle, this form of finance is an excellent option.
Access to Better Vehicles
Deciding to finance rather than purchasing a car with cash can also significantly widen your choice of vehicle. New car finance helps you afford more expensive vehicles you might not otherwise have the money to buy. Car loans also open up the possibility of new electric or hybrid cars that are often more expensive initially but typically provide the benefit of lower running costs, saving you money in the long run.
Of course, you don’t have to opt for the newest vehicles. You can also apply for a used car loan to spread the cost of a second-hand vehicle; however, it’s essential to be aware that this isn’t always the most cost-effective solution long-term, as older models will usually have more mileage and are more likely to need maintenance.
Frees Up Your Cash
Crucially, borrowing funds to purchase a car helps to keep your cash where you want it: in your bank account or somewhere else earning its keep. There is no need to deplete your savings; when you finance the car instead of buying it outright, you ensure your rainy-day funds remain untouched.
Keeping your cash flow intact also allows you to take advantage of opportunity costs, such as paying off debts, buying a house, or investing.
Improves Your Credit Score
Having a car loan in Australia helps to boost your credit rating. Regular car loan repayments will build up a positive credit history, which can increase your chances of securing future loans.
Contact one of our finance brokers today if you’re concerned about your credit rating for car finance eligibility. We can help you understand your credit score and provide realistic options for bad credit car loans should you hold a poor credit rating.
Potential Tax Benefits
If you’re financing a car for business use, you may also benefit from tax advantages. Car finance options like a chattel mortgage allow businesses to claim goods and service tax (GST) on the purchase price, depreciation, and interest payments as tax deductions. This helps to reduce the overall vehicle cost compared to purchasing a car outright.
Reliable, Fixed Repayments
When you buy a car on finance, you agree to pay off the vehicle’s purchase price and interest over an agreed period. Ideal for those who love to budget and keep track of their expenses, car finance agreements provide the peace of mind that your monthly car repayments will remain the same throughout the term of your loan.
Flexible Loan Options
Loan terms can be remarkably flexible. Many lenders offer loan terms of two to five years, allowing you to borrow over a short period or reduce your monthly payments with an extended loan term. The range of finance options available also means you can tailor your loan to your needs (more on this later). Some plans also have optional balloon payments once you repay the loan, which can further reduce your repayments.
Low Interest Rates Available
The best car finance in Australia will offer competitive interest rates, especially for new vehicles. Car loan rates tend to be lower than other loan types, making car financing particularly cost-effective compared to paying cash.
Use our online monthly car payment calculator to compare car finance rates and see how much your repayments could be.
Effortless Upgrades
One of the key benefits of financing a car is how simple it is to upgrade to a newer model. Unless stipulated by the terms of your loan agreement, many new car finance options allow you to trade in your vehicle for a new car when your contract ends. With many Australians favouring newer cars, financing in this way ensures you can always have a recent model without large upfront payments.
Protects Against Depreciation
Cars depreciate rapidly. Many new vehicles will lose a significant portion of their original value within the first few years. Car financing in Australia allows you to spread the cost of the vehicle rather than tying up large amounts of cash in an asset that quickly loses its value – particularly beneficial if you intend to upgrade frequently.
What is the Best Way to Finance a Car?
There are several ways to buy a car on finance in Australia, each with its own benefits and car loan requirements. Explore the options below to find the best car loan solution for your financial situation.
Secured Car Loan
A popular means of car financing in Australia, secured car loans use the vehicle as collateral, acting as security for the lender. This type of finance often comes with lower interest rates, but you risk your car being seized if you fail to keep up regular payments.
Unsecured Can Loan
Similarly, an unsecured car loan allows you to borrow a lump sum, which you will pay back in regular instalments, plus fixed interest rates. The difference is that the car isn’t used as collateral, which typically means a higher interest rate.
Car Lease
When leasing a car, you effectively rent the vehicle for an agreed-upon period of time. Throughout the loan period, you’ll be responsible for making fixed monthly payments and any required maintenance or repairs. One of the key benefits of leasing a car is that you can either return or buy the vehicle once the lease expires.
Hire Purchase
Hire purchase loans work in a similar way to car leases. You’ll be required to pay a deposit and keep up regular monthly payments, but once you make the final payment, the lender automatically transfers the vehicle ownership to you.
Novated Lease
Commonly used for commercial vehicle finance, a novated lease is an arrangement whereby part of your pre-tax salary is deducted to pay the lender. This type of car finance often comes with tax benefits, making it particularly attractive to businesses with multiple vehicles.
Chattel Mortgage
Again, more commonly used in business finance, this option gives the borrower full ownership of the car from the day the loan agreement starts.
The Best Car Loans in Australia with Fast Funding 4U
If car finance sounds like the route for you, speak to one of our experienced brokers to discuss your options. Whether you’re looking for a brand-new, top-of-the-line model or want to explore used car financing options, our friendly and knowledgeable team is on hand to help you with all car loan applications. Call us on 1800 44 22 89 or contact us using the button below to get the wheels in motion.
Drive away happy with a Fast Funding 4U car loan.