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What You Need to Know if you Plan to Buy a Car Before The End of Financial Year

What You Need to Know if you Plan to Buy a Car Before The End of Financial Year

Julian Parsons - Sydney

Did you know that now is the perfect time to buy a car?

The end of the financial year is right around the corner and it couldn’t be a better time to buy a new car. If you’re after a good bargain, there’s quite a bit to consider when purchasing a car.

With different financing methods and competing sales rates, there are a lot of possibilities to ensure that you get the best deal. And the good news is that both small-time car dealers and big brands are keen to sell cars at hefty discounts before the end of the financial year.

End of year financial sales is an opportunity to obtain a car at a great price. The financing experts at Credit Capital explain why, saying “by the end of the financial year, car importers and distributors are after minimal old stock and plenty of cash in hand. As a result, they are more likely to give dealers wholesale incentives to move stock that’s been sitting inactive at length.”

If you bargain right, you could potentially knock thousands off the price of a new car. However, as a buyer, you should know which car you want prior to shopping for it. This includes looking at a number of deals and buying as close to the end of the financial year as possible. It’s important to note that if buyers agree to a particular deal before the end of the financial year, they do not need to register it before the end of June – they can do that in July or August.

Before you start bargaining for a car, you’ll need to be aware of your auto financing options.

Car Loans

This is when you obtain a loan to purchase a car – usually from the bank or a smaller lender. In this option, you can either obtain a secured or an unsecured car loan. A secure car loan is when you use your car as security against the loan.

In many cases, you are able to obtain a lower loan rate if you obtain a secured loan. Car loans from banks usually range from one to seven years while there are a lot of competitive car loan schemas available for you to choose from.

The key here is to explore your options and research the different car loans offered by different banks and lenders to assess which plan suits you the best.

Dealership Financing

Dealership finance refers to the finance options offered by a car dealership, such as Toyota Finance, Nissan Finance or Esanda, which secures the funds through a lender.

One of the advantages of dealership financing is that this option offers you lower rates and as of 2018, dealers can no longer increase the interest rate secured with the lender when offering finance to a buyer. The length of this financing option is usually shorter than that of a car loan too, ranging between 3-4 years.

As a buyer, you’ll need to have a good credit record to be eligible to obtain dealership financing as this type of financing is more likely to be available only for the new cars.

According to bookkeeping experts at Metro Bookkeeping, good credit records go hand in hand with good financial record keeping, saying “bad credit can often come as a result of mismanaged finances. When you don’t know where your money is coming from, and more importantly where it needs to go, it’s easy to fall behind and suffer a poor credit score as a result.”

 

What Should I Know Before I Buy a New Car?

As illustrated above, there are a couple of financing options available to you if you do not have the money for a car upfront. ASIC provides comprehensive advice on auto financing and encourages potential buyers to keep the following in mind:

  1. Make sure you can afford to pay the instalments to the loan you’re seeking to obtain.
  2. Explore your options and try to find the best deal for you before you make a commitment.
  3. Keep up with your loan instalments and get help if you cannot keep up

In addition to knowing what you want and ensuring you have the funds to pay for the car in question, you will need to consider the marketing dealers are employing to secure their sales.

Nothing demonstrates this better than the 0-1% finance offers – with many advisory websites like finder.com.au warning buyers that these offers are nothing more than marketing ploys. The reason for this is that the price of the car is often inflated when it is under a 0-1% offer and you could end up paying more than you would normally.

Instead of the money being spread over a series of repayments, the interest cost is factored into the upfront sales price of the car. As a result, you are less likely to be able to negotiate the price with the dealers. These offers create a sense of urgency because they’re available for limited times.

The team at Smart and Fast Electrical rely on their cars to deliver their service and provide the following exclusive insight into the importance of getting the right deal, saying “take the time to conduct research before you commit to a vehicle. This will ensure you get the best deal possible, and use competing lenders and dealers against each other to leverage the best result possible.”

The key here is to do the calculations. If you’re shopping around for a car and encounter dealers that are offering 1% finance on cars, spend some time comparing other offers and calculate whether you’ll be paying more on the 0-1% or the other offers. Another important factor to consider is that you won’t have as much negotiation power on 0-1% finance cars.

At the end of the day, just like being flexible with your finances you want to know that you’re buying your car at the best price available. If you spend some time shopping around, calculating the amount of money you’ll be paying in total and over the whole duration, you’ll be able to do that.

The key is to take your time and consider all your options, both in payment and financing offers.

 Author Bio:

Julian Parsons is an Australian writer and a business administration student living in Sydney. He is passionate about financial data and project management. Julian enjoys photography and when he’s not studying or writing, you’ll find him outdoors capturing shots of nature.

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