March 10, 2014
Did you know that your local Mortgage Choice broker can help you arrange car finance? Just as you would use a mortgage broker to help you find the best home loan deal, we can also help you find a car loan that best suits your individual circumstances and budget.
‘It’s extremely important that you shop around for a car loan to ensure that you are getting a competitive interest rate. While it may seem convenient to arrange your finance through a car dealership, you are likely to get stung with significantly higher interest rates and commission fees’, Mortgage Choice broker Andrew Sawyer advises.
So what are the different options available when it comes to financing your new car purchase?
Secured Car Loan
A secured car loan uses the vehicle that you are buying as security for the loan. This type of loan is suitable for new cars as they generally have a higher asset value. Interest rates on secured car loans are usually fixed, so you know exactly what your repayments will be each month. Many lenders offer very competitive interest rates on secured car loans.
An unsecured loan (or personal loan) does not require an asset as security for the loan, therefore interest rates are typically higher for this type of loan as the lender is taking on more risk. An unsecured loan is suitable for purchasing an older used car.
A Novated lease is where an employee leases a car through their employer, usually under a salary package agreement. The employer pays the lease repayments from the employee’s pre-tax income (known as salary sacrifice).
This option is best suited to businesses, where the car being purchased is to be used primarily for business purposes. A chattel mortgage allows a business to take ownership of the car straight away. It also allows the business to claim any eligible tax benefits on the vehicle.
Refinancing / Cash Out
Talk to a mortgage broker about refinancing your existing home loan to access funds for purchasing a new car. This could include refinancing to a new lender, or increasing your current loan amount with your existing lender. This is a smart option as the interest rate on your home loan is usually much lower than car loans. Keep in mind that your lender may charge you a fee to refinance.
So if you are looking for a car loan, it definitely pays to talk to your mortgage broker first. Contact Andrew Sawyer today on 9277 9888 to find out how he can help you get the most competitive deal on your car finance.