According to ASIC Household Expenditure Survey in 2009-2010, Australians spend a total of $78.4 billion a year on cars (compared to only $2.2 billion spent on public transport). For an average Australian, this is $193 per week.
However, the figure published by the Australian Automobile Association (AAA) in their first Transport Affordability Index reveals a much higher average spend in the second quarter of 2016 of $323.36 per week, or $16, 814.72 annually.
The AAA found that across Australia’s capital cities, the highest component of their transport costs was the car loan payment, followed by fuel, public transport, registration and licensing.
Transport costs Australian families around 13% of their income, when you compare this to electricity, water and telecommunications which cost around 1-3% of income it’s huge.
Here’s 9 key tips from our car finance brokers:
This may sound counterintuitive, as we know that you often get better car loan interest rates on a brand new car. Here’s why buying a used car will result in a cheaper car loan:
By the time you’ve had the car for 5 years, it will have lost around 63% of the value it had when you first purchased it.
It’s a good idea to do your car shopping in 3 phases. First, you’ll find the car that you want to buy, and that fits within your budget. Take your time to choose between models that suit your needs, and pick out the features that you want too.
Once you have a selected the car you’d like, and made sure it’s within budget, it’s time to find the best car loan. The best place to start is usually online - this way you’ll get an idea of what the loan options on the market are.
Once you have an idea, you’re in a position to negotiate with your bank to get a great loan deal, or you can talk to a finance broker about your exact personal situation - the advantage of using a broker is that they can compare a whole lot of loan options that you might not find through retail, and match you up with the best fit.
By taking your time to consider the type of vehicle that will best suit your lifestyle (heads up: this might not be your dream car!!) and then researching a model and make that has good reliability and fuel economy, you’ll be getting the best value from your cheap car loan.
While it’s tempting to rush through the process and get right into a new car - getting finance, finding a car and finalising your purchase in just a few days - if you take your time you can be confident your new wheels will go the distance, and you won’t have wasted money on things you don’t need or worse, bought a car you’re unhappy with.
If you don’t have time to shop around for a car, but you know what you need, or what you need the car for, then you might want to use a vehicle sourcer to find your car. They’ll make sure you get a great deal on a vehicle that suits you, checking it’s mechanically sound. They’ll even be able to make some recommendations if you’re not sure exactly what it is you are looking for.
Your new car will be worth a lot more to you as the owner once it’s paid off. Taking care of the $2000 or so a year for repairs is a lot cheaper than buying a whole new car, especially if the car is the right one and suits your needs well.
This means registration, insurance, fuel, maintenance, and road tolls if you live in a major city.
Don’t let price be the only thing you consider when you buy your car - you need to think about how it’s going to fit with your lifestyle, and how much it’ll cost to keep on the road.
Test driving a few cars will give you a good feel for what your options are and how the different models you’re considering feel on the inside. You’ll feel a lot more confident if you know you’ve tried out the options, with much less chance of regret once you’ve made your purchase.
Checking social media or dealer websites means you might some across a good deal that you would otherwise miss. Once you’ve been searching for your car and cheap car loan online, the ads you’ll see will show you any great deals locally.
Dealers also often have a Facebook page that gets updated when their car prices drop - you could easily save yourself a few thousand just but staying informed.
Chances are people you know have some experience with the cars that you are considering and might be able to offer insight into the quirks each model may have, or they might know of a second hand model for sale you wouldn’t have otherwise found.
Now that you have a clear idea of the process that you’ll follow to get yourself a cheap car loan for a car that you’ll love in the long term, why not start your new car journey with a pre-approval from an expert finance broker?
Getting a cheap car loan pre-approval will give you an idea of the budget you have to work with, and you’ll be set to start researching the right car.