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Car Finance Tips

Discussion in 'Living Room' started by Michael.Knight, 12th Aug, 2015.

  1. Michael.Knight

    Michael.Knight Member

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    Hey property-mites,

    My current car is 8 years old and Im looking to buy a new one.

    I know. Its been ingrained into my head that buying a new car is bad because its a depreciating asset. But for the first 10 years of my working life Ive put my money to work with 6 property purchases, I figure Id like to relax a bit, and drive a new car which is safer than my current one.

    Does anyone have any tips on car finance? The interest rate is higher at about 7%. And I have the option of a final balloon payment at the end of the loan term - but how much balloon? And how much deposit is the best?

    Is it really a simple answer of avoid all car loans? And if you have to have a car loan, pay it off in the shortest amount of time possible?

    If any finance-inclined members could offer their opinion, and how they finance their cars, it'd be very welcome :)
     
  2. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    Personal or business use?
     
  3. Michael.Knight

    Michael.Knight Member

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    Personal use....
     
  4. Greyghost

    Greyghost Well-Known Member

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    Don't.....
     
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  5. Bayview

    Bayview Well-Known Member

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    You answered the question yourself....do not buy brand new.

    Just select whatever car you really want to buy, and then source an 18 months or 2 year old or even 3 year old version of the exact same thing - with low KM's and buy that.

    Our current car is a Toyota Kluger. Bought at 33,000km's, 3 years old when bought. Now up to 104,000km's.

    It was and still is basically a brand new car, and we saved several thousand dollars when it was bought. Haven't spent a cent on it other than new tyres and battery.

    It was bought through the Company, under finance.

    Incidentally; an 8 year old car is no less safe than a new one. It also depends on how many miles it's done.

    But, we see folks every single day of the week in my workshop; driving dangerous cars - it largely their own fault due to lack of maintenance/laziness.

    For example; most of the population is driving around on under-inflated and seriously under-inflated tyres, and bald tyres. This is dangerous for handling and possible crashes.

    They are this way because the owner doesn't bother to check the pressures and tyre condition. They leave it until they get it serviced to get the tyre aspect addressed, but many don't get their car serviced for over a year or more...
     
    Last edited: 12th Aug, 2015
  6. AndrewTDP

    AndrewTDP Urban Planning Consultant Business Member

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    Yep, look at a 1 year old model rather than brand new.

    I did and it saved me about 10k. The fastest bit of depreciation is when you drive a brand new car away from the dealer.

    Mine is done through the business as it is mainly for business use.
     
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  7. srirang

    srirang Well-Known Member

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    And you could consider using existing equity to buy rather than get car finance which is usually a higher rate
     
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  8. Michael.Knight

    Michael.Knight Member

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    Thanks for the tips guys.

    Yeah on second thoughts its better to buy used 2-3 years. Its just that my fear is we don't know if the car was involved in an accident or not. But I guess any problems would still be covered by a 5 year warranty.

    And with used cars 1-2 years old, I always ponder why would the owner have sold it unless there were problems with it?
     
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  9. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    I believe many cars that have less than 50,000 km on the clock are usually trade ins from lease agreements or similar. They do tend to be quite well maintained during that period.
     
  10. Bayview

    Bayview Well-Known Member

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    You can get an RACV inspection done for about $200 which may uncover these sorts of things.

    We found out our Kluger had been in an accident when we had a tow-bar fitted. Big deal; still goes terrific.

    You get the balance of the warranty. But, this is only provided it is/has been serviced on time, and by the service book requirements.

    Many cars are traded in because they are company cars and the depreciation aspect decreases each year, so they off load it after approx 3 years. Some are ex-demos.

    Other folks buy a car and don't like it for various reasons, and some are straight out lemons.

    Buying through a car yard will give you some protection from the lemon.

    If you buy privately; expect the worst and hope for the best.
     
  11. drg86

    drg86 Well-Known Member

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    For years I bought cars 2-3 years old. I changed cars often, I average 2 cars per year haha. I made some good money on a few of those selling after holding for a year or so. Will agree with others this is a good strategy, get something low k's and with warranty.

    However...

    I recently bought myself a new car as the market has changed, well for the type of car I wanted anyway. I found that if you wait for deals EOFY etc the new ones can be priced very close to 2nd hand. I was faced with the decision of 2013 model or new 2015 model for 1k more, I got the new one :D The manufacturer had dropped 15% off plus added extras. Figured the 2 years extra warranty, new tyres and everything, fresh off the production line was worth it. Not to mention the good feels of having a brand spanka.

    So as you said you've had this car for 8 years and want to relax/spoil yourself a bit after all the property purchases. Do what feels right.

    As for finance, I'd never get a car loan, always pay cash. If finance is needed maybe look at LOC as that will give you negotiating power, dealer finance won't.
     
  12. The Y-man

    The Y-man Moderator Staff Member

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    So you're going from the Pontiac Firebird

    [​IMG]

    to a Ford Mustang........[​IMG] .


    Didn't know you could lease KITT, but it should definitely keep you and your family safe.

    The Y-man
     
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  13. The Y-man

    The Y-man Moderator Staff Member

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    Have you talked to the dealers? Dealer finance can be quite cheap at the moment ~ suggest you call them up (eg Lexus, Bimmer, etc)

    With your experience, you'll probably find you can invest the money you have put aside to buy the car, and the returns will pay for the finance P and I.

    The Y-man
     
  14. Michael.Knight

    Michael.Knight Member

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    @Y-Man lol KITT needs an upgraded turbo boost to hang with the younger generation hehe...

    I think I'll hold off on the purchase and buy a 2 year old car and try to minimise finance as much as possible... thanks for the help guys... its hard not to get caught up in the emotion of it all :/
     
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  15. Michael.Knight

    Michael.Knight Member

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    I found this guide to negotiating with a car dealer quite interesting...

    Beat The Car Dealer
     
  16. HomePage

    HomePage Well-Known Member

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    Your current car will drive you more quickly than a new one to the riches you seek.
     
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  17. Zos

    Zos Active Member

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    Don't buy new never seen a bigger waste of money.

    People talk about the warranty etc.. Buy 2nd hand save 15k (just a figure) and if you ever did have issues to fix it is never going to cost you what you saved in buying 2nd hand.

    I drive a 97 VS commodore bought for 5k in 2007 with 160k on the clock. In the 8 years I have had it replaced tyres, crank sensor, headliner and will need a new battery soon. So spent 750 on it in 8 years. Cheap 3rd party insurance. Will keep this car till it falls apart goes real well. Gets me from A to B the same way a Ferrari would.

    Thinking of buying a second car now for the wife. Either a Kia Sorento or Hyundai Sants Fe. Looking at something 5-7years old most likely.
     
  18. geoffw

    geoffw Moderator Staff Member

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    I got a brand new car for my wife.

    Good trade really.
     
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  19. Tillie

    Tillie Well-Known Member

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    I have this massive fear / nightmare that I am in the middle of nowhere and my car dies and it is of course middle of the night and I am stuck. That's the main reason why I have max. 3 year old car that is under warranty. Another weird reason is that I love the smell of the new car :D

    My cars are always financed, because due to my profession I am able to deduct a large portion of all cost in tax. The interest rate of my current loan is 4.99%, taken about 9 months ago.
     
  20. The Y-man

    The Y-man Moderator Staff Member

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    A bush mechanic in the middle of nowhere can probably get an old carby petrol or an old diesel engine going - but not a new you-beaut-everything-controlled-by-ECM cars - of which I have had sub-3 year vehicles just stop in the middle of nowhere for no apparent reason. RACV will basically send a flat bed to take it to a nearest authorised repairer.

    The Y-man