Many Australians opt to buy used cars rather than new ones for various reasons the main one being they are much more affordable. As much as they are affordable, securing the amount needed to finance the car can be a challenge. We understand that sometimes, life has its ups and downs and finances are not always readily available. Luckily, if this is your situation, you might be eligible for used car financing and this is where Braid Finance comes in. We will help you find the perfect financing option for you that will match your circumstances and meet your needs. But before that, let’s dive into more details on what used car finance is and how to go about it.
What is used car finance?
Used car finance is when you take out a loan to purchase a used car. Used car financing comes in two ways, either secured or unsecured. A secured car loan is where the car you purchased using the loan is used as security/collateral for the loan whereas an unsecured car loan is a personal loan that doesn’t use your car as collateral meaning that the financier won’t necessarily repossess the car. You can choose whether to buy the used car from a private seller or a car dealership. When it comes to the age of the car, unlike new car loans, different lenders have different preferences plus it depends on the type of loan you are taking out. Most will require that the car being purchased is under seven years old. Generally, by the end of the loan period lenders tend to be looking for the car to be no older than 12 years. For the car requirements, the used car can be Australian made or manufacture imported and should not have been written off in the past.
How does financing a used car work?
As a buyer, you have three financing options. Firstly, you could opt for a secured loan. For this loan, there are certain vehicles that are a few years old that can be purchased and qualify for this kind of loan. Your second option is an unsecured loan. This option has higher interest rates but comes with few restrictions. Lastly, you have the dealership finance. A dealer finance is when the dealer contacts their preferred bank or financing institution and helps you arrange a loan for a car via them. They make all the arrangements and you end up doing little. Note that sometimes these agreements normally have high deposits and may include balloon payment hence increasing your final payments in the end.
What to consider when shopping for a used car
Shopping around for a used car can be challenging and confusing especially if it’s your first time. To make things easier for you, we share a couple of things you should be on the lookout for. Firstly, vehicle criteria. Each lender has their own criteria and requirements so ensure that you pick a lender that can offer you a loan for the age and model of the vehicle you want. Secondly, check out the interest rates. It’s advisable to go for a lower interest rate as it will save you more money.
Thirdly, keep an eye out for payment flexibility. It will definitely be an advantage if a loan fits within your budget. You can opt to go for weekly, fortnightly or monthly payments. Just make sure whatever option you choose, it doesn’t strain you financially. Additionally, if you would like to pay your used car finance early, inquire whether you will be charged an early payment fee. Last but not least, the loan term. The longer you borrow the money for the more you will spend in interest but the repayments will be smaller because the cost is spread over a longer period. So deciding how long to take out a loan depends on affordability and its expenses.
Bonus Tip: When buying a used car, if possible ensure that one of the things you do is conduct an extensive inspection of the car you want to purchase and bring your mechanic along as well. Check the exterior and interior of the car, engine, oil leaks, tyres and also go for a test drive. This way you save yourself from disappointments and spending money on a car that’s in poor condition.
Feel free to give us a quick call for further assistance.