I should probably start by saying that car finance is not an absolutely necessary thing. Some people could buy a whole showroom of new cars, in cash, and not even think about… good for them. For the rest of us, getting the funds together for a new or used car purchase can be a nuisance at the very least. As with anything related to money, you have to be careful who you are giving it to, and it is always easier if you can avoid problems before they happen by researching thoroughly ahead of time.
Personal Loans
Depending on whether you get a secured or unsecured personal loan, you could be paying a lot or just a little. A secured loan is one that requires an asset to be put against it, such as a car, and these almost always have lower interest rates. Unsecured loans don’t require any assets but have higher interest rates. You may end up paying a lot and it may seem like never ending installments as the interest rates are very high with Personal Loans.
There are many sites which help you to compare interest rates and fees from different lenders, such as InfoChoice, so you should start your research with something like that if your existing bank isn’t offering anything you like.
Car Loans
Much like a secured personal loan, if you take out a car loan you will be putting your car up as security and it will be seized if you forfeit the loan. RACV and other reputable names are a good place to start, but no doubt you will run into some shady-looking businesses too.
Credit cards
It is very uncommon to buy a car by swiping your Credit Card. Not many carry that much credit on their card to buy a new car. Some people may say that you’re crazy to even think about using a credit card to buy a car, and they would be right in some cases, but for the most part I think the fear of credit cards is a little outdated and blown out of proportion. There has been a lot of competition among the seemingly unlimited number of companies offering credit cards, and that has pushed down the interest rates enough to make them a better choice than other financing options for some people.
You may want or need to take out a separate credit card than the one you already have, for the purpose of using it to buy a car. That doesn’t mean you need to use the same issuing bank though, as it is not always the cheapest option. I would recommend checking your own bank first, where you keep your savings account, to see what they can offer you in terms of rates and fees before moving on to research the competition.
The car financing options and companies above are not listed in any particular order. As always you must consider your own financial situation and do further research to determine what will be right for you. Buying a car is a must in this fast paced world but not at the stake of your finance and routine lifestyle compromises. As a final thought, I would just advise you to remain calm while looking through your financing options, and by that I mean try to avoid getting lured in by a lot of marketing talk and hype, and let all of your research settle in a bit before you make the move.
Read more interesting articles on buying and selling cars and financing options at the Private Fleet Blog.