So you’ve got your license and have waited almost two decades to own your first set of wheels. But before you rush in to buying a car, spend 30 minutes crunching the numbers because it may save you thousands of dollars over the next five years.
Here are our top tips to help you get the best car loan for your situation and save thousands of dollars in the process.
Take baby steps
Yes – a splashy car will impress your friends but unfortunately, now is a time for being practical. Start small, because even if you find a great car loan deal, the difference in repayments between a $30,000 loan and a $20,000 loan is huge. For example, a $30,000 loan with ANZ at 8.05% (comparison rate) will cost you $609 in monthly repayments and $6,541 in interest over the five years of the loan.
Meanwhile, a $20,000 with the same lender will cost you $406 in monthly repayments and $4,360 in interest. That’s a savings of $2,181 in interest payments, not to mention the $10,000 on the car itself.
Save for a deposit
The more you save for a deposit, the better position you’ll be in when it’s time to buy that first car – so start now and be dilligent about it. Make a goal to buy a car in 12 months time and start by putting $50 a week into a high interest savings account. By the time the year’s over, you’ll have $2,600 in the bank – plus the interest you’ll have saved as well.
Shop around and save
You may be tempted to go with the first loan you come across, but you’ll almost always benefit from shopping around to find a better deal on your car loan.
For instance, car loans start from as little as 7 per cent, but climb as high as 14 per cent.
Its also a good idea to check out personal loan options as this may be a better fit for you. Personal loans start a fraction lower than car loans at about 6 per cent but be aware they also reach great heights of almost 20 per cent.
Clearly, it pays to break down the numbers and compare car loans, because there are some real savings to be had for minimal effort. Before you sign up, it’s a good idea to also consider any fees and charges attached your car loan, because these can make a big difference to your overall savings.
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