The purchase of a used or new vehicle is a big investment. It can be paid outright in cash, or you can get financing through a lender.
Australians receive billions of dollars each year in financing for their car purchase. 90% of car sales are done through finance. The mean car loan in 2020 was $31,738.40. This allows for easier financing and more control, but there are also limitations such as limited vehicle choices due to budget restraints and a lack of savings for emergency funds or other investments.
What’s the best way to finance a car? Or pay cash? Let’s dive into six key benefits of buying a car on finance. This will help you in your decision-making process.
Benefits Of Buying Cars On Finance
1. You Can Also Borrow The Total Amount Of The Car’s Purchase Price
A vehicle loan can be a good option if you are in urgent need of a car. Car finance Brisbane is a good option for those who can afford the monthly payment. It is possible to lower your monthly payments by increasing your loan term. However, this can mean that your loan payment will be higher over the loan life. You can drive your new vehicle in the time it takes to get finance pre-approval. The dealer must prepare your vehicle.
2. Expanded Selection Of Vehicles
You might be tempted just to purchase a vehicle used to get rid of the need to get a loan. It’s not always the most cost-effective option. Older cars are more likely to experience mechanical failures, sometimes requiring expensive repairs and more frequent maintenance.
A car loan can allow you to purchase a luxury vehicle that is more costly than you may be able to pay upfront. You might also get a brand new vehicle that will not require expensive repairs or servicing. In addition, newer cars with hybrid and electric technology can make it possible to save significant fuel costs over the long term.
3. It Helps To Build A Positive Rating On Your Credit.
Your credit history will be checked by lenders when you borrow money in any circumstances, even for a car loan. Lenders are more likely to approve your credit application if you have a successful loan application. Responsible repayments over the loan term will show lenders that there is low risk.
This has been made more obvious by comprehensive credit reporting. Your credit report previously only listed your ‘bad credit’ credit behaviour such as defaults, bankruptcies, and other credit violations. Today, lenders also look at your credit history and positive information like your repayment records. If your credit history or credit report shows that you are managing your debt well (e.g. If you have a successfully repaid car loan, it may help to build your credit rating. This is especially useful for people with small credit files, young people or those still living at the home, or those with a damaged credit record.
4. You Can Benefit From The Market’s Competition
One advantage to obtaining car financing is the many available lenders, all vying for your business. Although it may sometimes be difficult for small businesses to finance a personal loan or a business loan, car leasing or business car loans can be a more competitive option. You can get a loan at the interest rate and terms that best suit your financial situation.
Statewide Auto Group has lenders on its panel to help you find the best possible loan conditions and interest rates. There are many factors that lenders will consider when pricing your loan. The most important factor is typically your credit score. (The higher your score the lower your interest rate will be.) However, lenders often consider factors such as your employment situation, car type and living arrangements.
