Hi, I don't have the money to buy a car outright. But looking to upgrade car for family reasons.
Which type of finance is the best? Novated loan through salary sacrifice or car companies car loans usually low rates or loan through a home loan?
Cheers
The value of novated leasing depends on so many factors related to your income and finances that it is impossible to provide any advice but generally you will want to be in a higher tax bracket to make it better than consumer credit.
They cram all the extra costs into the lease so you end up paying through the nose for it. Double crunch the numbers before signing any lease BS IMO.
Taking out less finance/debt and getting a reliable older vehicle will save you more money than shopping around for the best loan on an expensive new vehicle.
The safety features in a newer vehicle could very well ensure OP is capable of earning money for a much longer period of time in the event of an accident.
The risk of injury is lower, some families prioritise safety and increased chances of survival over a few missing dollars each week.
As with all risks in life, driving risks can never be fully eliminated, only reduced, using technology and other methods.
I believe high level driving skills and a maintaining good spatial awareness are key to safe driving.
Often people trust technology too much, and can put themselves and others at more risk by always assuming technological safety features will overcome their bad driving practises. Spending more money won't always result in a better outcome.
But I suppose if someone knows they have poor driving skills, and is accident prone, a newer vehicle would be a better choice.
I believe high level driving skills and a maintaining good spatial awareness are key to safe driving.
They do play an important part, and until automation can deliver truly consistent driving, not subject to emotional and irrational decisions, impairment and distractions, we have a long way to go.
Modern safety features don’t just protect the occupants. Newer cars enhance the safety for pedestrians with pre collision braking and research and design into reducing injury, for example.
Some newer cars also provide vastly superior lighting at night with high beams that can dip around an oncoming vehicle, allowing the sides of the road to remain fully lit in high beam while the oncoming car isn’t being blasted with light.
There are a multitude of small advances with modern cars, which all add up, and yes it is all about managing risk, whether to one’s financial well being or physical well being.
there was a thread on ausfinance from a paramedic who said that most of the time, the people who were involved in crashes who drove older cars were more likely to be seriously hurt while the drivers in newer cars usually got out with little to no injury. Take that how you will…
@skidexa: It’s obvious to me - safety isn’t going backwards.
People are free to chose to invest in their bank account or invest in a better chance of survival for their family.
do you have a mortgage?
The finance from the car dealer is always best. Especially when they throw in free floor mats. That is the best deal.
And a full tank of petrol
And discount paint protection.
Would love to know what the real price of that is
window tinting is the one which gets my $ every time….
Not sure if anyone actually took my comment seriously lol
My mum always felt like she was getting a deal with the car mats. It is nice to have car mats made for your car tho.
How much does floor mats usually cost
Depends what brand. But typically, they're around $100-200.
Especially when they only charge a small snow protection fee up here in Queensland.
Buy a second hand car that you can afford.
None.
if it's an EV and you're on say more than $150k then go for a novated lease
most recent car I purchased …
$12,000 cash/upfront - rest I did through a loan.
used Plenti Loans.
Only downside - no APP - everything is done through website (guess they had to cut corners/costs somewhere.)
But they offered me the best rates I could get.
When I got a loan during Covid it was cheaper than the current mortgage rates. Glad I paid it off already though.
Worse than no app was no website or log in. For everything I had to call or email.
Only downside - no APP - everything is done through website
Honestly thats a dream. I refuse to deal with companies that require i install an app.
op's next post: "what second hand car should I get with $xxxxx budget?"
If you are Gen Y/Z then Bank of mum and dad is the usual way.
We usually call it BoP, Bank of Parents.
Nobody calls it that. Everyone calls it the bank of mum and dad
Heteronormative much?
Just sell what you have and try to buy something as close in price but with the necessary upgrades needed.
Back in my day mum, dad and the three kids crammed into a small sedan. If we went on holiday we took a trailer. Builds character! I still wonder how much we traumatised my youngest brother who was stuck in the middle of the back seat for hours on end.
brother who was stuck in the middle
seven kids under 11yo in the back seat and a bassinette with baby on the bench front seat in between mum and dad.
1958 Chev. kids in the back sat "one forward, one back" so they would fit.
4 years later. baby is now 4. hat is getting thrown around the back seat.
dad "whose hat is that?"
kids "baby's name"
dad "well put it on his head"
kids "he's not here"
they had left him at the park.
One time i drove my corolla from Dandenong to Frankston carrying 6 adults. 1 was in the boot, one sitting in a toddler seat. Surely you can make do with what you've got until you can afford another car.
I bet you could fit three babies and toddlers in a boot, easily.
I prefer them in someone else's boot to save on cleaning costs.
take the bus
In BrisVegas only $0.50 a ride
Car Finance? Literally your mileage may vary….
Yes, you need to crunch the numbers. Novatec Lease con for me is the penalty you need to pay if you move company before the lease ends. I prefer a car loan with an extra repayment feature, so if you have some extra money, you can pay faster, hence less interest to be paid. Also, personally, the car has to be less than 35% of gross annual income. Also, use a 20% down payment, no more than 4 years loan, and the repayment of no more than 10% of your gross monthly income.
Loan on a depreciating asset? Just don't do it. If you go with regular auto finance, you're charged through the nose for interest (which is font-loaded in car loans, so you can't even pay it off faster to save on costs). If you go with capitalising it into your mortgage, you end up paying a ton more interest over remaining life of the loan. In some cases it would cheaper to just rent a car ala goget and save up for a more affordable option. Of all of your listed options, a novated lease has the most potential, but even then it's highly dependent on your circumstances and would only work out if you buy an EV, which then opens another can of worms…
I bought a new car this year and chose to redraw my extra repayments from the home loan. I was parking extra funds in the mortgage while saving up for the car. No one offers a fee free car loan for 6% or less, so the decision to redraw from the home loan was simple.
Of course, I am building that buffer back up as quickly as I can. Just blowing out a mortgage and making minimum repayments would see me paying more than a shorter duration higher interest loan.
The best is probably through redraw on home loan and getting a second hand car.
Lowish rates and you don't get the depreciation of a new car.
Recently used IMB Bank for a new car loan up to four year old so can buy a lightly used vehicle. Rates in the low 6% which is better than most property loans and no penalty for early repayments, application fee $250. If you want Ozbargain cred like the helpful people here just buy a 2007 Camry with 250,000k for 6k.
Crunch the numbers and find out what works for you. There's pros and cons to each approach, no one size fits all.