Top 3 tips on choosing the right car finance

Here are our top tips help you get the best value

Thinking of buying a new car? Not all car finance is the same. Here’s our top 3 tips on choosing the right car finance to help you get the best value.
Situation: The comparison rate on offer is extremely low. 
Tip: Negotiating a price on a car is likely to be more effective when you have independent finance arranged. This is because the dealer may have to pay fees to the company that provides the finance that they’ll want to pass on, or if they own the finance arm, they may offer a lower interest rate but less of a discount on the car. 
You may also be required to repay the loan in a shorter period of time than you were planning. If you’re aiming to keep your repayments low, car loan options such as Community First’s new car loan enable you to repay the loan up to 7 years. This could help you get in to the car you want while keeping your repayments low.
Situation: You use a car finance broker to find the best price.
Tip: The more layers to the transaction, the more fees likely to be passed on. Application fees for car loans through brokers include application and broker fees – sometimes costing more than a mortgage application. The application fee is added to the loan and you pay interest on it so if the fee is high, you will pay more in interest. 
You should also beware of other hidden fees such as early termination or payout fees as this can represent a hidden expense when it comes time to sell your car. A car loan such as Community First’s new car loan has no early repayment penalties and you can redraw payments made in advance if you need them, for example to cover the ongoing costs of your car.
Remember too that brokers don’t compare all loans on the market as not all car loans are available through brokers. Do your own research and you’re likely to find great value on your own.
Situation: You are so focused on getting that new car, you don’t consider the future
Tip: When buying a car, you really need to consider how long you plan on keeping the car, how fast it might depreciate, how many kilometres you are likely to do and whether or not your circumstances may change.
If you buy a car that doesn’t hold its value well, you do a lot of kilometres on the car, and borrow over 7 years, you could be faced with a situation where the value of the car is less than the payout figure a few years in. This is why it’s really important to consider what the future may hold and whether or not the loan has the features you need. If you are the type of person who keeps a car for 10 years and runs it in to the ground, then this may never be an issue for you.
If you are planning a family, and it is likely you may need to sell the car in the next couple of years, then choosing a loan with a high early termination fee may not be wise. Alternatively though, just because you take a loan over a long term, doesn’t mean you have to make the minimum repayments. You can still make higher repayments,* and if your circumstances did change, because you or your partner went on maternity leave for example, then you can minimise your repayments while you’re off work.
*Some lenders may apply a limit on additional repayments
Credit eligibility criteria, terms & conditions, fees & charges apply. 
This information is general advice only and does not take into account your objectives, financial situation or needs (your "personal circumstances"). Before deciding whether to buy any product you should consider your personal circumstances. You should read and consider the Terms and Conditions when deciding to use any product (terms and conditions, fees and charges may apply). Community First’s product Conditions of Use are available at 

Last updated: 12 August 2019

The information contained in this article is only correct at the point of time of publication. It is general information and has been prepared without taking into account your personal circumstances, objectives or needs. Please consider if this information is right for you before making a decision to acquire any product.

Community First Credit Union LimitedABN 80 087 649 938 | AFSL and Australian credit licence 231204 | BSB 512-170