What Is The Cheapest Way to Buy/Finance a Used $10k Car

Lraunak21 on 23/04/2018 - 17:51
Last edited 23/04/2018 - 18:06

I am going to buy my first car in Australia soon and I'm looking at around $10k for a used sedan or SUV.

Since I am new to the country, I do not know much about the different finance options and their interest rates. However, I have seen car loans being offered at 9-10% whereas a friend recently bought a car on a secured loan at around 5.2%. How are these different?

Another friend bought a cheap car using his credit card and did balance transfer and essentially used it as a 0% finance option. Even though this looked like a smart hack, I may not be able to do that since my credit card's limit is only $5k and it doesn't have balance transfer facility.

For the $10K car, I am planning to pay 3K as a down payment and borrow pay the remaining $7k from the finance company.

I understand Novated lease is also a good option and my company does offer it but I don't want to remain tied to the same company for that long.

I intend to pay off the loan in 6-12 months.

Hoping to get some good ideas and knowledge on the subject here. Thanks!!

Automotive

Comments

  • Godric on 23/04/2018 - 17:58
    +8

    Saving for your car and not going with finance is a cheaper method

    • raunak21 on 23/04/2018 - 18:05

      Technically you are right, but I do need a car now and I can't/don't want to wait until I've saved for a $10k car. And I don't want to buy a $3k car either.

  • whooah1979 on 23/04/2018 - 18:08
    +1

    a Used $10k Car

    you should budget an additional ~$1000 for the transfer, stamp duty and insurance.

    • raunak21 on 23/04/2018 - 18:12

      That's a good point - will keep that in mind. I will try to buy a $9k car + $1k for the transfer and stuff.

  • blonky on 23/04/2018 - 18:13
    +1

    Novated leases are usually only good for brand new cars and if you do a lot of kms per year, more so if it's also used for business purposes

    You'll find most vehicle loans will be 10-15% and will be secured (ie the vehicle is used as security if you default on the loan), where as an unsecured loan would likely be around 20%

    Make sure to check the Comparison Rate - which is the effective rate you're paying after any hidden fees are taken into account - I suspect your friend's loan has high establishment and annual fees which offset the lower interest rate. Most terms will be 24/36 months, so since you want to pay it off early watch out for early payout fees

  • RyanMK on 23/04/2018 - 18:17
    +2

    Also bear in mind that for secured loans, interest rates for older/used cars are generally higher in comparison to a brand new car.

  • John on 23/04/2018 - 18:23
    +2

    If your current credit card has high interest, try and apply for a low interest credit card. If its low interest then ask for limit increase. If you can't get more than $5000 credit limit then maybe you don't really need a $10k car yet.

    If you can fork extra few grand, at $5k mark you could still get some decent old Civic or Corollas in the 100,000-130,000 kms range.

    The good thing about old used cars, is that the value has dropped significantly enough that you won't lose much money when you sell it again in few years time.

  • [Deactivated] on 23/04/2018 - 19:01

    citibank credit card
    cheque to self

    • raunak21 on 23/04/2018 - 23:10

      Can you elaborate on what you mean by citibank credit card? And by cheque to self, I'm assuming you mean to not go the finance route?

  • Caped Baldy on 23/04/2018 - 19:27

    Something something high yield car.

    Can't really comment on financing as I bought mine(3rd hand) outright. Just wanted to say get a ppsr report. Only costs a few dollars from the official website.

    So public transport is not an option at all?

    • raunak21 on 23/04/2018 - 23:16

      The PPSR is definitely a good idea - will keep that in mind.

      I'm in Perth and public transport here is just okay. It is fine for me to go to work and come back but not good enough when me and my wife want to go to a farmer's market on the weekend or the beach or a nearby town to enjoy the weather.

      Have been using the public transport since 6 months here but I have had my own car for more than 10 years so I'm quite used to one and I really miss the freedom it offers.

  • Findo on 23/04/2018 - 21:26
    +2

    Don’t forget the cost of insuring your new wheels and servicing costs. Owning a car ain’t cheap, I probably wouldn’t be able to afford to run a car without using 30% of my pitiful full time student, part time work wages on a depreciating asset if my parents didn’t pay for turd 2.0 and its running costs.

    • Euphemistic on 23/04/2018 - 22:17
      +1

      Plus one. Do not drive it without insurance. Either comprehensive or third party property. If in Nsw do not confuse CTP (green slip) it only insured against injury to people, not other vehicles or property.

    • raunak21 on 23/04/2018 - 23:18
      +1

      Lol, I agree. I understand the costs that come along with owning and maintaining a car and I have budgeted for it.

  • raunak21 on 23/04/2018 - 23:25

    So as I said in some of the comments, I do understand the costs involved in owning a car. This is not my first car; it is just my first car in Australia. I looked at some cheap cars in the range of five thousand to seven thousand dollars but I don't like any of them.

    I do not have any debt and am on a full time job so do not worry - I am not going to go bankrupt anytime soon. And even if I do, I won't blame any of you :D

    What I'm trying to say is that I honestly appreciate the ideas but my mind is mostly made up and I am only looking for ideas / hacks on a cheap way to get finance (or something similar) for the $10k car I wish to buy.

    Any suggestions and thoughts are welcome.

  • nephilim on 23/04/2018 - 23:37

    Just buy a modern lemon noone wants, a Holden Cruise or Nissan tiida for 4-5k
    6-7 year old car under 100,000km, will last a few years (hopefully).

    • raunak21 on 23/04/2018 - 23:39
      -1

      Well, I don't want them either :)

    • Lockster on 24/04/2018 - 02:32

      Just a quick question what's so bad about the cruises or tiidas?

      • Euphemistic on 24/04/2018 - 09:17

        Cruise have a bad reliability reputation. Tiida was an ugly duckling that no one loved, but don’t know about mechanical, it was a bad marketing mistake that should have been a pulsar.

  • Findo on 24/04/2018 - 00:28
    +1

    You could always try financing through family and friends, I’m sure they would like a tax free 6% yield on their investment.

  • Vancomycin 1000mg on 25/04/2018 - 12:51

    Get a Mazda 3 2009 - 2013

    The entry level(neo) is the best and cheapest cars. Although if you are tall it would be a problem.

    • raunak21 on 25/04/2018 - 13:54

      Thanks buddy, but yes, I am 190 cm so I may have trouble fitting in it…

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