Hi everyone.
I'm looking to buy my first car, probably going with new or demo car at the very least. My question is how to go about getting a car loan? Any suggestions which banks/institutions offer the best rates? I'm looking to get somewhere in the range of 20k with about 10k as my personal deposit. Thanks
Sometimes… we just want that new car smell ya know?
Haha salamat.
is it halal?
Personally I think 10k on a first car is a bit much.
Keep in mind the more newer year the car is more expensive insurance especially ( with P plates, assuming you are or will be one, your probably only going to want to get 3rd party as its way cheaper. But that's more of a risk/cost with a 10K+ car ) and car rego might be more expensive too.
If you are financing you will need comprehensive insurance unless you use an unsecured loan which will have a much higher interest rate.
The actual price is not too bad - $10k can get you a very nice used car so long as you're not looking at luxury brands (or SUVs or full size sedans, etc), lets you potentially find one that's in good condition and maybe even still in warranty.
A corolla may last 15 to 20 years. Just walk into a dealership and they’ll be more than happy do the paperwork to get you driving away in one.
My Corolla is 17 years and counting! Battery has died many times, but everything else still turns on. Got it just before power windows were standard I think though, so it's a lean over and unwind after a summer's day in the car park
How does one with no mechanic experience or knowledge in cars avoid lemon when buying an older (possibly something 10 years old going by the 10k budget) second hand car? A friend of mine is in a similar boat(no knowledge in cars), he has been checking out cars and the ones he liked, he ran ppsr on them and they all seemed to be repairable write-offs.
Buying a Japanese car isn't a universal rule as we see things do go wrong with them as well. It's probably easier for them to just buy a new car from a reputable dealer, fork out a little more at the start and save on the hassles like lemon cars, high maintenance costs etc?
The steep depreciation in the first years pays for a lot of repairs.
This article suggests at least 25% and up to 40% in three years ($5k to $8k of the budget here).
https://www.canstar.com.au/car-loans/top-10-cars-depreciate-…
That cost is likely more than all the repairs a car could require in 15years of driving, and on top of that you also have to pay for the usual servicing and consumables like tyres.
Even if you know zero about cars you are likely to have a friend who knows a bit, and you can certainly avoid the obvious lemons (ones where the engine sounds wrong, the transmission goes clunk, it makes a noise when cornering or the aircon doesn't blow cold).
The motoring clubs do extensive inspections for a couple of hundred dollars, or most mechanics will do the same for about $100.
If you are finding consistent repairable write offs, you are very likely looking at vehicles cheaper than comparable ones on offer. Instead, consider private sellers, who tend to be cheaper than dealers, and offer precisely the same vehicles as dealers (albeit without the statutory 3 month warranty, assuming you are buying newer than 10yrs and fewer than 160,000km).
Your link to a 2002 Toyota that has an engine light on is hardly the end of the world. It was bought from a dealer (a mechanic who sells more than a handful a year must register with a licence) and the warranty doesn't apply due to age. And we don't know why the engine light is on - it may need a new air filter or something simple. And to be fair, it is very likely the linked car was $17000 cheaper than new, again, paying for a lot of issues with the saved money.
"he has been checking out cars and the ones he liked, he ran ppsr on them and they all seemed to be repairable write-offs."
That's likely because he's looking for:
"possibly something 10 years old going by the 10k budget"
So he's probably looking at car models above what he should be looking at at that price range. For example, if your budget is $10,000 and you want a BMW, then yeah - you're only going to find terrible examples because good ones go for much higher. On the other hand, $10,000 could get you something like a good-condition Toyota Yaris that's still in warranty.
And a few hundred dollars gets you a mechanic to look over the car.
He has been looking at Japanese cars, at normal market prices and from private dealers. So it's actually quite different from what you guys have said.
Avoid Debt, especially on a car.
Sometimes factory dealerships have promotions for very low interest rates (0-3%). These are the best, otherwise look on Canstar to compare a few.
make sure to take out a second loan for insurance and maintenance
First car, you want to buy new or demo, and you want to go into debt for it? No. Terrible idea. New cars lose around 10-40(?)% of their value the moment they leave the lot. You'd be getting into debt… and losing half the value of what you borrowed immediately.
Save up, buy a $5,000 cheap car (so no 20 year old BMW). Any cheaper and you may end up paying more in repairs. Get it checked out at a mechanics before buying. Do a REVS (name may have changed) check before you hand over the money.
Contact a broker - they will often get you a fairly good comp rate - often better than dealerships and OTC at the bank.
We use brokers (and not always the same one) in our family and the rewards are good. They will try include an additional broker fee ($300-500), but you can haggle that out as they already getting comms on the loan. Any loan will also have an establishment fee of approx the same value - this is from the lender, so no wiggle on that.
You can also use a broker for a car loan that is second hand car in the event you don’t want to buy new after all the comments above. Brokers are not just for the rich - they will help anyone as that’s their lifeline.
Not a lot of suggestions of where to borrow. So I will suggest one (that isn't so good) and others will come up with a better deal.
Citibank Ready Credit Introductory rate of 7.9% p.a. on the initial balance for the first 2 years
Why go into debt for your first car?
10k can get you a solid, safe car for navigating those first solo hours on the road(you'd be surprised how many average drivers ding or nick their first car a couple of times), and once you're off your P-plate restrictions you'll have a better selection of cars if you want to upgrade and hopefully the money saved up so you don't have to piss interest down the drain on a car loan.