Cars & Motorbikes Car Finance Tips

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

 

Personal or business use?

 

Personal use....

 

Don't.....

 

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...

 

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.

 

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

 

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?

 

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.

 

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.

 

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 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.

 

@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 :/

 

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

Beat The Car Dealer

 

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

 

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.

 

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

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.