What’s the best way to pay for your new car?

You’ve found the perfect car, negotiated to get a fair price, and you’re ready to finalise the sale. You may have even already put down a deposit. Congratulations - buying a new (or new-to-you) car is exciting, and you’re no doubt looking forward to bringing it home.

But before you do that, it’s important to consider which payment method to go for. This will depend on your situation and needs, but to simplify things here’s some information about different ways to pay for your new car.

Car financing

WIth the interest rates what they are currently, choosing to finance your new car is a good way to go. Though it’s important to remember to shop around for the best possible rate (or just call us - we’ll do all the running around for you). Be sure to read our 5 common mistakes people make when financing their car article before you begin your search, though!

There are six options that fall under the car financing umbrella:

• Finance lease
• Novated lease
• Fully-maintained novated lease
• Car loan
• Personal loan
• Chattel mortgage

You can learn more about these by calling us on 1300 787 288 or sending us an online enquiry. We’d be happy to talk you through each of the above and discuss which is best suited to your needs.

Paying with cash

In an ideal world, we’d just dive into our vaults full of money and while there, fill our pockets with cash and use that to buy a new car. In the real world, diving into Scrooge McDuck’s vault full of coins would cause a concussion or even a neck or spinal injury.

And because we live in the real world, paying for a new car with cash means either budgeting over quite a long time to save, or using existing savings and being left with a huge dent in the bank account.

Sure, paying with cash means you’re not paying any borrowing costs and don’t need to make any repayments. But if you’re taking out a chunk of savings to do it, consider any unforeseen expenses coming up in the near future - would you be covered?

It’s always a good idea to look at your current cash flow and weigh up whether paying with cash is the ideal solution for you.

Refinancing your mortgage

If you have a home loan, you have the option of refinancing your mortgage either with your current lender or switching to someone new who’s offering better rates and/or home loan features.

While this may be an attractive option to some, there are a couple of things to think about:

1. Refinancing fees: If you choose to stay with your current lender and renegotiate a more attractive rate, they may charge you fees for refinancing. Conversely, should you want to take your home loan to another lender the existing lender could charge you for leaving. Be sure to check this.
2. Home revaluing: Moving to a new lender means your home will have to be revalued, a process which can be a real pain.

Also, you’ll be paying off your ‘car loan’ (the $ added to your total loan amount) over the entire length of your home loan, which means you’ll end up paying a substantial amount in interest if you keep paying the same mortgage repayments you were. Counter this by increasing what you pay on your mortgage each month.

At the end of the day, it will depend on your circumstances whether you choose this option. If you’d like to know more about refinancing your mortgage to buy a new car, please call us on 1300 787 288.

In an ideal world, we’d just dive into our vaults full of money and while there, fill our pockets with cash and use that to buy a new car. In the real world, diving into Scrooge McDuck’s vault full of coins would cause a concussion or even a neck or spinal injury.

Using your credit card

POINTS! Yes, you’d rack up a hefty amount of reward points if you buy your new car with a credit card, but before you break out the plastic you need to do some reading. Specifically, read the terms and conditions of your credit card. You don’t want to end up paying any exorbitant fees because you missed some fine-print bullet-point.

You should also speak with the dealership and ask if there are any payment surcharges (can be up to 3%).

And let’s be honest, the 45 trillion points you’ve accumulated over the last decade-and-a-half won’t yield you much more than a left shoe (it’s double for the pair) or luggage-class from Avalon to Essendon.

With the other options available, it’s probably best to give credit card payments a miss.

Got a question about car finance or mortgage refinancing?

The team at Stratton Finance is here to provide you with the answers you’re after. We have extensive experience with vehicle financing and can assist with refinancing your mortgage.

If you’d like to know how we can help you get into your new car sooner and without hassle, please get in touch with us now on 1300 787 288.