The cost of aussie new car loans depend highly on two things, the amount borrowed and the interest rate. Although this might seem obvious, the fact is that this information can be utilised by you to determine either your monthly repayments for you car loan, or the length of time over which you want to take the loan. Both of these will be determined by the amount you feel is feesable for you to pay each month.
The total cost of new car finance is decided by the time over which you pay and the interest rate. You are able to use a car loan calculator to uncover the cheapest way, as well as the best way according to what your affordable monthly repayments are. Some people may find the amount of each monthly repayment not of considerable importance, while others find it to be critical, and in the latter case you can pay less each month by increasing the repayment term. However the overall cost of your loan in terms of both capital repayment and interest repayments will be greater.
It is often fact that the longer period of time over which you shell out, the more interest you will have paid by the time you have completed the loan. A car loan calculator will be able to work that out for you, and let you know how much interest payable. However, you are able to ease the cost a new car loan by careful carefully selecting the financier. Not all lenders are the same, so what should you be searching for?
First seek a lender that will give you a guaranteed fixed interest rate for the time frame of the loan, whether that be one or five years. Not all do this, however it is possible to find lenders that will grant you this security. For the reason that your car is new you will be able to negotiate a secured car loan, with the car as security. Generally this will enable you a decreased interest rate, and as a result the cost will be cheaper than if your loan was unsecured.
However, hidden expenses may be encountered in buying a new car other than the actual new car loan itself. If you hold a secured loan, the lender will require the vehicle to be well looked after consistantly maintained, and will insist on you getting a fully comprehensive car insurance quote policy. This is so that, should something happen to the car, it will not lose value through you being unable to pay for repairs or even a replacement, depending on the severity of the accident.
You will discover that this is true of any secured new car loans, and it is a cost that you will have to consider of when deciding on the size of loan that you find affordable in order for you to repay. It more than uses up the benefit of the lower interest rate through the loan being secured on your motor car, and could be a terrible burden unless you are aware of it and have taken the cost into consideration in your calculations.
A car loan calculator allows you to determine the monthly repayments at a specific interest rate over a set time frame, but this will not factor auto insurance. In spite of this, there might be a another option if this means that the loan you need is not affordable. If you find that you will be in improved financial circumstances at the end of the loan term, then you could apply a balloon.
This is like paying a deposit on the car, but at the end of the loan instead of the beginning. You state a sum to be paid in cash at the end of the loan time frame, and that is taken from the amount of the loan. Your repayments are correspondingly less, and you can afford the loan you need as well as the comprehensive insurance payments. You could save up for the balloon payment at the end as you earn more money.
Many lenders offer this option, and it is a good one for those expecting to earn an increased income during the course of the loan. If you find the balloon payment to be not feesable, then you may have no option to either take out another loan to pay it or to sell the car to raise the money. However, it is a sound option worthy of consideration if you need more money than you can initially repay.
The cost of new car loans, then, is a combination of interest rate, amount you borrow and period of the loan, but you must also take the comprehensive insurance policy into consideration. Choosing the option of a ballon payment enables you to cut down your monthly repayments, however not the over cost due to the fact you are still paying interest on the entire loan, balloon included.