With the current high demand for pre-owned cars, contributed partly by the shortage of new vehicles, it makes sense to get yours as soon as possible as this is expected to continue for some time.
Used cars are an excellent opportunity to buy the car of your dreams at a reasonable price and escape the steep depreciation that new car owners face in the first three years of ownership. According to Customer Reports, a car’s average lifespan can be around eight years or 240,000 kilometers. However, many well-built cars last much longer when properly maintained. New vehicles depreciate much faster than used ones. When you drive your dream car off the dealer’s parking lot, you should know that it instantly loses 9 to 11% of its value. By the end of a year, the car would have lost about 20% of its purchase value. After that, you would have to factor in a depreciation value of 15 to 25% every year till the vehicle is around five years old. Depreciation is lower after that.
Buying a 2 to 3 years old car means that you will be purchasing a nearly new vehicle and dodging the depreciation bullet. To illustrate, a car that might have cost you $30,000 new would be available second-hand at around $16,000 to $20,000 if you buy it after 2 to 3 years. Considering this, it’s natural that many Australian consumers opt for lower-cost pre-owned cars rather than buying a more expensive new one.
Another factor contributing to the popularity of second-hand cars is that makers have begun to bundle their vehicles with extended warranty packages that can last 5 to 10 years. Therefore If you buy a three-year-old second-hand vehicle, it will still have at least two years of warranty coverage and possibly more. This makes going used a good option.
Now that we have worked out why buying a pre-owned car makes sense. Let us proceed to the next step; we can begin dissecting the concept of obtaining a loan to purchase a used car and learn about some of the lesser-known aspects of doing so. Before doing so, let us check something important out.
Is it Possible to Get a Loan for a Used Car?
Contrary to common assumption, obtaining used car finance in Australia is feasible, with the application process closely resembling that of a new car loan.
Australian purchasers may apply for a loan and buy a used car as they would for a new car. The basic process is identical to getting a loan for a new automobile. Lenders are ready to lend you money to buy a used car if you match their lending criteria and can show that you’re in a good enough financial position to repay the loan. Used car dealerships like My Car Choice have in-house used car finance, making life easier for car buyers to get finance.
How to get prepared?
First of all, identify how much you can afford to spend on the car. You need to figure out your budget before you start looking at cars. There is no point in looking at some luxury car that is way above your financial capabilities at that instant in time.
Once you have fixed the amount you can afford for the car, you can start looking around to identify which car and how you are figuring to pay for it. Now you are ready to go shopping!
How to get finance for a used car?
Given the demand for cars and the scarcity of new vehicles, looking at pre-owned vehicles for your transportation needs makes sense. My Car Choice has made things simple for you. We have broken down the process into three steps so you can try to make use of the low-interest rates on your dream car. This is the best time to look for finance.
Know your financial capacity
The most important thing to know before you start looking for a 4-wheeler vehicle to buy or even arrange finance for it is how much you can spend. Your finances might not let you buy a luxury car, but the great thing is that you can afford a pre-owned car if you have a steady income stream.
Once you have a good idea of how much finance you are eligible for and how long your payment term is, you can take the call on how much you want to spend on the car. Once you have decided all that, you can start the process of buying. My car choice, a premium used car dealership, knows that buying a car should be a stress-free experience. We have made it easy for you to buy quality used vehicles from brands like Audi, BMW, Land Rover, and Mercedes-Benz, popular brands like Ford and Jeep, and more at low prices. My Car Choice is a boutique car dealership stocking a range of excellent quality, well-priced pre-owned prestige and luxury cars for sale. Our unsurpassed customer service has made our customers rate us as the top-rated used prestige and luxury car dealer in Sydney (according to Google ratings). We stand out from the rest with warranty and used car finance options available on site. Getting finance for your used vehicle purchase has never been easier. It is as simple as filling up a form.
It does not take much to get you behind the wheel of a budget car that’s only a few years old. Look at the examples below, where a 2012 Hyundai ix35 can be had for just over $100 per week at My Car Choice.
If you’re looking for something bigger like a sedan, you can consider a 2015 Audi S3, which would set you back around $200 per week. There are multiple good options, and with My Car Choice, you are assured that our experts can take care of all the paperwork for you.
If you’re thinking about exploring the beautiful spots New South Wales offers off the beaten track, you will need a 4×4, of which we have many. It would cost you around $220 per week for a 2016 BMW X3 Pre-Owned at our store.
Introducing Click and Drive, online shopping, and contactless pickup at our store. Selecting, financing, and buying a four-wheeler was never easier than buying it online from this prestige used car dealership. Browse through the hundreds of vehicles in our catalog, view the detailed photographs from every angle, go through the description, and book a test drive of the vehicle you like, all online. If you have a trade-in, you can get that valued too online. All the paperwork is taken care of, and once completed, you get stress-free delivery of your car to your home without worrying about anything.
4 Tips to get a used car loan
A car will be one of the most expensive things you will buy. In fact, for most people, a car would rank right up there with the most expensive thing they have bought. It would be right after a house in terms of the money spent! So if you are in the market, used or new, it is better to have a clear-cut idea of how you will be paying for the car! You should not be working out the finance part of it after you have finalized things with the dealers. Here are four smart ways you can finance.
Review your credit score before you set foot in the dealership
Being aware of your credit score can help you improve it. Having a good credit score ensures that you pay a lower interest rate on your loans. Paying off debts and making payments on time helps bring up your credit score. Your credit score influences the type of car loans you can get. A good credit score ensures that you are eligible for upper-tier loans and a higher loan amount along with the most favorable loan terms, including lower interest rates, the option for longer repayment terms, and lower down-payment requirements.
Keep the loan term as short as you can afford to
To put things simply, the longer the loan term, the more interest you pay. A shorter-term loan means higher repayments. But that is precisely what you should be looking at! If you can afford to pay higher repayments, always opt for it. Admittedly, it is tempting to opt for the longer terms of loans with lower repayments, but you should be aware that you would be paying a significantly higher interest. Also, you are paying this interest on a depreciating asset. When the loan term is shorter, the lender can offer you a better interest rate because shorter loans tend to come with a lower risk of default by the borrower.
Pay taxes/fees/’extras’ in cash
Ideally, when you are buying a car, you should pay the many miscellaneous costs that come with it, like registration fees, sales tax, documentation fees, and any other extras you want, like extended warranties upfront in cash. If you add these fees into your financing, you’re increasing your loan amount but not the car value of securing the loan. You save money in the long run when you do this since you don’t have to pay interest on these fees.
Compare dealer finance against lender rates
Before signing on the dotted line, you should know how you pay. Will you be opting for dealer finance, or will you take a loan from a lender? Let us have a clear-cut idea of what these two imply.
Dealer finance means that the dealer sets up your finance through their bank or lender of choice. In short, the dealer will do the legwork and the paperwork, and you have that much less of a burden. A good dealer like My Car Choice will have a dedicated team experienced in car financing and will know precisely how to go about it. Also, they can probably get you a better loan than your credit rating might make you eligible for when applying directly to the bank—again saving your time and effort.
The other option for you as the buyer is to apply for a loan from a lender like loans.com.au. or your bank. You apply for the loan by yourself, do all the paperwork and leg work, and use the money to buy the car from the dealer when you get the loan. In addition, banks tend to be rigid in their loan terms, meaning that you might have a lower amount and/or a higher interest rate based on your credit score.