15k Car Loan for 6 Months

Larchieduh on 23/05/2021 - 15:01
Last edited 23/05/2021 - 15:49

I am looking to buy a $25k car and plan to get a $15k loan for it. I am confident of saving up 15k in 5 months but don't want to wait and want to get the car at EOFY price now.
Any suggestions or tips for loans? Any 1 year car loans that have no or low prepayment charge? Or in case there are new short term (6months) loan products that I can consider?

My partner has a Good credit rating and mine seems to have dipped to Average (I assume due to a missed card payment as I got my due date wrong but paid in full within days). Hoping in the next Equifax update my rating should improve (and hopefully move from Average to Good, if not will request a credit report as I don't know why it's so low).

Thanks for your time.

Ps: Used car prices have risen so high, it seems more sensible to buy a new car in stock to be cleared at EOFY deal.
https://www.drive.com.au/caradvice/the-inflated-used-car-pri…

Financial Car Loan Loan

Comments

  • gmail92 on 23/05/2021 - 15:15
    +7

    Don't be dumb; get a 10k car and not lose twice over interest and depreciation

    • archieduh on 23/05/2021 - 15:42
      +2

      There are no good used cars due to the pandemic demand. Used prices through the roof.

      • Quantumcat on 23/05/2021 - 16:24

        Then why not wait and save up. Cars will get cheaper again and you can avoid paying interest and fees.

        • archieduh on 23/05/2021 - 16:36

          I have been waiting 1 year for the car prices to improve but they haven't and will not for months. Getting couple of EOFY offers that I don't want to miss out.
          Hence I am happy to pay interest of a 6 month tenure as I will be able to use that car.
          My enquiry is about loans with no/low prepayment as I am confident of paying off it in months.

          • Quantumcat on 23/05/2021 - 16:48
            +5

            @archieduh: I don't think you will find any genuinely good deals for new cars anyway due to the demand. There have been people here asking how they can negotiate a discount at the dealer and the answer is usually that they can't as there is enough demand that they don't need to in order to make sales. You should post the deal you have found and people can tell you whether it is actually good or not.

            You should really just buy the cheapest car you can with rego and drive it until it needs such an expensive repair that you decide to scrap it. If you buy new now you are losing out on the markup from the pandemic as well as fees and interest. Not a good financial decision.

            • archieduh on 23/05/2021 - 17:02
              +1

              @Quantumcat: Thanks for taking the time, will keep looking for used cars. Not planning to buy until end of June. Let's see how things pan out.

  • Drakesy on 23/05/2021 - 15:15
    +7

    No,
    No car loan is worth it.
    Buy a cheaper car you can buy with cash and wait a year or two.

    • archieduh on 23/05/2021 - 15:43
      +1

      There are no good used cars due to the pandemic demand. Used car prices through the roof when U started looking.

      • Drakesy on 23/05/2021 - 15:52

        There are no good used cars due to the pandemic demand. Used car prices through the roof when U started looking.

        There are plenty of good used cars out there, just adjust your expectations and price range to match your earnings
        No car is worth putting yourself into debt for.

        Admittedly the covid tax is pushing them up, but as new cars trickle back into the economy the supply of trade-ins will recover, it may take 6 months but it'll get back. You can minimise your exposure by buying a cheaper car.
        The more you spend now, the more you'll lose in the future.

        • archieduh on 23/05/2021 - 16:37

          Ha. Easier said than done. Haven't been able to find one good used car. Just follow news coverage on see car prices 2020 on.

          I agree on the theory of it, but losing $500 is not a make or break decision for me as I will be able to negotiate a price to offset it

          • Drakesy on 23/05/2021 - 17:08
            +4

            @archieduh: I think you may need to re-evaluate your needs and wants.

            • archieduh on 23/05/2021 - 17:12
              -5

              @Drakesy: Apologies but I honestly don't feel buying a 5 year+ old car is something I will be comfortable with and anything under is just too high. Not sure how much you've been looking at user cars lately.

              • Drakesy on 23/05/2021 - 23:16

                @archieduh: I'm currently looking at them as we speak.
                Yes prices are hectic
                But manage your expectations, yes I want to go out and buy a brand new vw touareg, but will my life be changed for the better if I did knowing I'd be burning 10k a year in depreciation? No, if anything it'll be negatively affected.

                I'm of the belief that your car should never cost more than 20% of your annual salary.

                I still get by with my 2007 kia sportage, 14 years old and never skipped a beat.

                Just a note a lot of those that buy expensive cars to look rich are living outside their means.

    • snooksy on 24/05/2021 - 10:38

      Not always true. I found a few year old car with low km. New this car was $75k. I paid $18k and it had less than 60k on the clock. I had to act quick so I borrowed $10k and paid $8k cash. I paid off the loan in 12 months so paid $1k interest. The car hasn’t driven much due to the pandemic and I expect it to hold its value for a few years. Even if I sell it for $10k after 3 years of ownership then it’s cost me $9k in total which is only $3k a year lost. I doubt I’ll sell it for that cheap anyway. If I keep it longer then the depreciation cost per year will also reduce down to $2k. This is better depreciation than most new cars costing way more than $18k. Any comparable new car costing $50k+ you would be looking at $5k+ depreciation per year. Had a service and nothing to do except an oil change. Car loans can be useful for short term finance purposes when a good deal comes along which is what the OP is asking about.

  • Pluto88 on 23/05/2021 - 15:31
    +2

    add to the current inflated prices when you go to sell it in a few years you will lose out even more

    • archieduh on 23/05/2021 - 15:45
      -4

      So what's your suggestion? Buy an overpriced used car and then have no buyers at all
      Or buy a new car that hasn't had a price increase compared to 2019 price?

      • Pluto88 on 23/05/2021 - 16:07
        +4

        ask yourself if you really need a new car it's just a terrible time to be in the market and adding to your loan payments isn't going to help

        • archieduh on 23/05/2021 - 16:18
          -3

          Hmmm actually I do need. So much so I don't feel like waiting 6 months as there are no signs of market improving on chip shortage.

          • gmail92 on 23/05/2021 - 16:21
            +3

            @archieduh: That's clearly a want and not a need. A need is a necessity.

            If your job/duties is reliant on having a car, then it is a need.
            A new car is never a necessity.

            • archieduh on 23/05/2021 - 16:31
              -3

              @gmail92: Ummm.. thanks for your time.
              I will not engage further on this tangent as I don't think it's as objective as you make it out to be. It's subjective.

              • gmail92 on 23/05/2021 - 17:23
                +1

                @archieduh: Can you justify why you need a new car then?

                • archieduh on 23/05/2021 - 17:32

                  @gmail92: New = Better tech, safer and more reliable
                  and some models have an acceptable EOFY price.
                  Used = Unreliable, older, mad price increase now making it financially no "bargain", limited availability.

                  My benchmark is
                  COST = Buying Price Today - Selling price in 2026.
                  By my calculations new car is making much more sense as ther is a 10% higher cost but then I am happy and can afford that 10% as I am already being sensible by limiting myself to 25k range.

                  • Quantumcat on 23/05/2021 - 21:15
                    +1

                    @archieduh: Spending way more just to get better tech is a waste of money assuming you are not needing to transport small children. Get a $1000 bomb and scrap it when it dies (or resell if it is still going and only lost a hundred or two). Re-evaluate in a year or so. Is it really worth $10k in interest and inflated prices to get a new car right now as opposed to in a year?

                    • archieduh on 23/05/2021 - 22:07

                      @Quantumcat: Not sure if you're serious or trolling now. Cars for $1000? And $10k interest?
                      As I said I am looking to repay soon and by my calculation an ordinary loan with $200 prepayment will cost me around $800 for 6 months.

                      • spackbace on 23/05/2021 - 22:20
                        +1

                        @archieduh: Plus early termination fees if, for example, you go for a 1yr loan and pay it off in 6 months.

                        Also depends on the establishment fee cost

                      • Quantumcat on 24/05/2021 - 05:38

                        @archieduh: Here are some possible fees and ways you will lose money if you have the loan for a year:
                        Establishment fee $1k
                        Early termination $300
                        Annual fee $100
                        Interest say 7%: $2450
                        Depreciation: $35k-$29k=$6

                        =$9850

                        • archieduh on 24/05/2021 - 08:47

                          @Quantumcat: Thanks.
                          That's why the post. Asking if anyone has any idea if there and any loans that don't have such high fees.
                          Ps: A 15k loan @7% for 1 yr is around $600 interest.

                          • Quantumcat on 24/05/2021 - 09:25
                            +1

                            @archieduh: Oh yeah fair enough I forgot you were going to pay a large deposit (of course otherwise a second hand car for cash wouldn't have been a possibility)

                          • snooksy on 24/05/2021 - 10:40

                            @archieduh: Our money market has fees of about $500 but the interest rate will be about 10%. Perfect if you want to pay it off quickly.

                  • gmail92 on 23/05/2021 - 23:42

                    @archieduh: Hmm, those are the same reasons I need a Ferrari in my life right now…

                    • archieduh on 24/05/2021 - 08:48

                      @gmail92: Unfortunately don't think you know used car prices right now.
                      This isn't helping.

  • Master Bates on 23/05/2021 - 15:36
    +4

    For everything else there's MasterCard It's a Visa actually, but who remembers the iconic slogan?

    Dealership will likely sting you an few % for CC payment.

    • archieduh on 23/05/2021 - 15:47

      You can pay by credit card at dealerships? Will they charge like 1% extra? That's not bad (and maybe I can negotiate them to waive off that 1%)
      If dealerships do take credit cards I can pay 5k at least that I do accept to be able to repay in 45 days interest free period.

      • Master Bates on 23/05/2021 - 15:49
        +3

        The linked card gives you 17 months interest free. Good luck convincing you partner to open it in their name.

        • archieduh on 23/05/2021 - 15:49

          Ah. Got you.

        • archieduh on 23/05/2021 - 16:20

          Thanks for sharing. Did they charge a fee?
          Would be good to use it for 5-10k payment from it.

        • Mechz on 23/05/2021 - 21:01
          +1

          I cash advanced 7500 on a credit card to buy a car back before they were charging compound interest and the intro rate was like 11% so it was much better than a loan.

  • Marcsie on 23/05/2021 - 17:27
    +3

    Never borrow money to buy a CAR, you will regret later on !

    • archieduh on 23/05/2021 - 17:34

      Totally agree. That's why asking if there are options for short term finance and if there is no option so be it.
      But if say a 15k loan costs me 500 extra for 5 months (interest + prepayment) I will be happy to pay it as I am positive car prices are not going down in next 5 months.

      • SF3 on 23/05/2021 - 17:50

        I am positive car prices are not going down in next 5 months.

        🤞

        Buy what you can afford, don’t borrow money to buy a car, period.

        • archieduh on 23/05/2021 - 18:38

          If the interest offsets price increase then surely this statement isn't universal.
          The statement above is Fair but there are situations where it will make sense for a short term low interest loan.

    • meowsers on 23/05/2021 - 20:32

      We borrow money to buy vehicles all the time for our business.

      Why pay when the taxpayer will do it for you? Thanks for the 45% contribution to our vehicles OzB!! And the interest is deductible too! :D

  • NimNim on 23/05/2021 - 19:46
    +4

    Currently I'm in the market like you and can say used car prices are over the roof. For Toyota Corolla, 2012/13 models cost over $13,000. They are almost 9 years old now and no warranty except what dealer gives you. Then you look at MY16+ models, they'll cost $20k-25k and excluding gov charges. Same apply for other brands like Kia Cerato, again not much cheap maybe ~$2000 less than Corollas. Can get decades old models for around $12k and that's without factor in maintenance cost, which you may probably have to face it sooner than expected if you buy a decade old vehicle. Based on dealers' online sites, reliable cars (MY16/17/18) are close to 20k whilst brand new or demos are around 30k.

    • archieduh on 23/05/2021 - 19:56
      +1

      Thank you Thank you (for sharing and validating what I have been experiencing).
      Best of luck to you too. I too budgeted for a nice used car but feel better stretching a bit for a decent new one.
      Even now I started looking at random used cars, in my case MY17/18 are all 24-26k and new 30k.

      • NimNim on 23/05/2021 - 20:15
        +4

        Yeah you are right. Low mileage MY17/18 are all 24-26k. People here saying get a ~10k car, but you see that they all are more than 10 years old and have ~150k mileage. Can't wait for the next post saying I bought a decade old car for >10k 3 months ago and now it has xyz problem/s and cost xyz to repair it. And the replies say yep that's what you are gonna get if you purchase an old one, should have spent extra and bought a decent one. We are bit unfortunate to buy one at this time. Can't say how long it will last, my guess is another year.

        • archieduh on 23/05/2021 - 22:18

          I hear you :). Could have bought a car in 2019 but thought let me save and buy in 2020. LOL.

  • negger on 23/05/2021 - 19:55
    +2

    time to sell my second car by the sound of it.

    • archieduh on 23/05/2021 - 20:12

      Surely. Just have a look at any website like carsales to get a feel.

  • Screamingeagle on 23/05/2021 - 19:55
    +1

    There is probably something better out there but it might be worth considering.

    It is not a car loan per se but ING offer a personal loan. If you have an account (or open one at the time of application) there is no establishment fee (otherwise it is $100). Regardless as to whether you bank with them or not there is no monthly fee and no early payout fee. It might be something to consider. https://www.ing.com.au/personal-loans.html

  • spackbace on 23/05/2021 - 20:51
    +3

    EOFY sales?

    Bullshit

    No reputable brand has stock to sell, let alone needing to put them on special. Toyota, for example, is running the same finance offers they have all year

    Unless it's some MG POS

    • archieduh on 23/05/2021 - 22:15

      Some dealers have 1 or 2 in stock items they want to get rid off that are Feb 2021 MY.
      Overall yes there are no offers but going showroom to showroom I am able to find 3-4 cars where I may be able to get a minor discount - enough to offset interest.
      Not saying there are 10% discounts or anything.

      • spackbace on 23/05/2021 - 22:18
        +1

        But that's the thing, that's just negotiable prices. You'd get the same deal at the end of the year (when you've saved the cash) as you would now.

        There's no brand-wide EOFY sales, and dealers don't care if you're negotiating in June or November/December

        • archieduh on 23/05/2021 - 22:21

          Will look into a bit more then.. I didn't even bother EOFY as something but on my 3rd or 4th visit they did mention that they can "try and look for something" to get an EOFY sale going, so I thought some do care bout the FY. The plot thickens.

          • spackbace on 23/05/2021 - 22:22
            +1

            @archieduh: The lesser selling brands will have stock on hand, and be wanting to move it

            In fact I purposely wouldn't buy something that a dealer has 5+ in stock of, unless there's a bloody good reason. Anything popular right now should be 3+ waits

            • archieduh on 24/05/2021 - 13:04
              +1

              @spackbace: Thanks for the tip below to check past activity of people (Flagged for accusation)

        • niffy on 24/05/2021 - 15:01

          I have seen Mazda EOFY deal ads on my Facebook feed but honestly I think that's about it

      • NimNim on 23/05/2021 - 22:57

        "going showroom to showroom I am able to find 3-4 cars where I may be able to get a minor discount …".
        How much of that discount? Is that for brand new, demo or other used ones?

        • archieduh on 24/05/2021 - 10:29

          Nothing much. Just 500-1000 enough for me to believe it offsets the interest on loan.

    • archieduh on 23/05/2021 - 22:16

      What's MG POS btw?

      • spackbace on 23/05/2021 - 22:16
        +2

        MG (the brand) piece of shit…

        • archieduh on 23/05/2021 - 22:21

          Ah LOL. I saw one with a sunroof at a mall the other day and just googled after your comment and its just 25k WOW.

          • spackbace on 23/05/2021 - 22:23

            @archieduh: Chinese bucket of crap lol

            They bought the mg brand to try to make ppl think it was the mg brand of old… It's not

            • [Deactivated] on 23/05/2021 - 23:00
              -2

              @spackbace: There was an old MG brand before this Chinese crap?

    • Big Lenny on 24/05/2021 - 14:22

      who hurt you spackbace?

  • FaheemAU on 24/05/2021 - 10:50
    +1

    Just get GemVisa card. For any transaction over $250 you get 6 months interest free. After six months if you haven’t cleared whole balance then for big ticket items, i.e. car registration or rent, pay the money to the card and make the payment through GemVisa. This will give you another six months for the money that you recycle. You can go this repeatedly until the balance is clear.

    • archieduh on 24/05/2021 - 11:13

      Thanks will look into it

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