1. Calculate your repayments before taking out a loan. Before applying, check with an online calculator or speak with a broker to determine how much your monthly financial responsibility will be.
Keep in mind that most online calculators do not include the fees and charges that could be associated with the loan so always best to speak with a broker
2. Buy a car with your means
Financing a car is a great option, but care should be taken when looking at repayments alone. Car dealers can advertise repayments based on long terms or higher residual payments which would make the repayment seem attractive, but the amount paid back in total can be quite high
3. Consider a loan on a shorter term
The longer the term, the more interest that is paid back. Although the repayments are higher on a short term, the total cost of the loan can be significantly less. Your circumstances can change during the period you have the loan, so always allow for a buffer.
4. Pay a deposit
Reducing the LVR (loan to Value Ratio) can help your chances of approval and also reduce the total borrowed amount
5. allow for the total cost in your budget
On top of the monthly loan repayments, there are many other car-related expenses that you need to pay for. These include fuel, insurance, maintenance and repair as needed.
6. Always pay on time
Aside from late payment fees that may incur, you could also impact your credit history and credit score if you neglect to make payments on time. It could also affect your future borrowing power as future lenders will be looking at your ability to pay on time.
To avoid being late or missing out your repayment obligation, set up a direct debit for your car loan repayments. You can also ask your lender to schedule your repayments at a more convenient time such as when your pay is deposited
