Dealership finance or private seller with car loan?

Hi all,
I desperately need to upgrade my car.
At the moment I feel as though I'm driving chitty-chitty bang bang.

With next to NO savings I'm being forced down the finance path.

Previously I've only purchased off private sellers for cash. I've had a few beauties & more than my fair share of lemons.

Do I trust a dealership on a used car & apply for finance with them?
Keeping in mind I will be purchasing a used car as my 'loan budget' would be a maximum of 7k..
Or do I take my chance on a private seller & go begging to the bank?

I need value for money - I can't buy another money pitt..
My car grave yard has enough skeletons already.

Also what's the best 5 seater for fuel economy & low maintenance.
Family of 4, few kms of dirt road & at least 1.5-2hrs driving on the daily?

Comments

  • +2 votes

    At the moment I feel as though I'm driving chitty-chitty bang bang.

    Hey! Don't knock the chitty-chitty bang bang - it was amphibious and could also fly! Bet your car can't do that.


    Seriously though: don't finance through dealerships. Even getting a car loan through your usual bank is usually better.

    • +1 vote

      Seriously though: don't finance through dealerships. Even getting a car loan through your usual bank is usually better.

      Both are negotiable, however the dealerships are going through a change currently and everyone is adopting a standardised 'risk based assessment' profiling structure. Margins are a lower than they used to be and a dealership can't just choose a rate to increase gross.

      Put both to the test, bank and dealership and compare the 2, then shop 1 against the other.

    •  

      OP could also be driving a classic Aston Martin as Chitty-chitty bang bang was written by James Bond author Ian Flemming.

    • +1 vote

      Nope can't fly or swim lol.
      Closest I'd say it is to amphibious is that the drivers side window falls down (currently wedged up with cardboard-bogan style) so water comes in when it rains. Sad face.

  •  

    The less work you do for the loan, the likelihood of a poor loan increases. You need to shop around to secure the best deal for yourself. Finance from a dealership is for suckers. Do your homework.

    Type of car for the money: I would look at a Toyota Corolla. I've been happy with all my Toyotas. NRMA inspection is a must.

    •  

      How do corollas go on country roads- I'm scared I might shake one apart on the gravel, pot-holes and non existant shoulder when I'm passing a milk tanker.

  • +1 vote

    no matter what please get comprehensive insurance.

    Otherwise it will be an thread asking for help and then it become a true money pitt

  •  

    Have you considered purchasing the car on a credit card and then performing a balance transfer to avoid paying interest? Depending on your income and available credit, you may be able to save some money.

    Though you should note that there are several risks associated with this strategy including but not limited to:
    -not being approved for a balance transfer card
    -not being able to transfer the entire balance
    -not being able to clear the debt prior to conclusion of interest free period.

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      And dealerships charge 1% or so extra. Not the same as loan interest, but still worth considering

    •  

      No I had never cosiderd that as an option.
      I will do some research.
      Many thanks for the suggestion.

      •  

        Bear in mind that, if it doesn't work out perfectly, you'll really be on the hook because you'll be using high risk unsecured credit (banks have a recovery rate around 50% on their credit card receivables and charge interest accordingly) instead of medium risk secured credit ( you might struggle to find a bank willing to lend to you and take a mortgage over the car after you've bought it).

  •  

    Going through this currently myself. My research is as folllws.

    A personal loan is an easy option, higher rates but a lot of flexibility with faster repayments if the product is right. And is unsecured so you don’t have to over insure a low value car.

    Dealership finance is not the end of the world, competitive rates but come with a lot of add ons and charges. Will be secured and fixed so you’re stuck with it for the term. But at your price range.you’d be shopping at independent dealerships and god knows what finance arrangements they would have and would prob avoid.

    Then there are secured car loans, not that much more cheaper than a personal loan. Needs to be fixed to get any interest value so you’ll be stuck for the term of the loan.

    For $7k your options are limited!!! But perhaps look for old model cars that have done limited kms and have been well looked after, they are the true bargains and would be more reliable than a car with mod cons that has been thrashed. My tip is that there are a lot of Mitsi 380s around that have barely been touched and they go for cheap as no one wants them. Would be a great pick up for your price range if you need size and some grunt with Japanese style reliability.

  •  

    I know you said fuel economy, but you need to fit 5, so I'd vote a Commo/Falcon, maybe even a Territory. Reliable if you pick the right ones, and spacious and can handle the country highways with ease

    If you think of increasing budget to $10k you might find much newer options.

    $7000=~$35/week
    $10,000=~$50/week (over 5yrs)

  • +4 votes

    Dealership finance or private seller with car loan?

    Neither… buy something which gets you around fine, which you can afford .
    I picked up a 94 Toyota Camry for $130 on last day of rego, probably the best car I ever owned really ie. Cost nothing on repairs or maintenance (they just seem to keep going even if you drive it like you stole it lol) I didn't even change oil on it, and got me round for about year and half with absolutely no issues whatsoever.
    I don't see why you would get yourself into thousands of dollars in debt at high interest rates, when you "have no savings" so seems you cannot really afford a 7k car.

  •  

    I’d go Camry, there’s a couple listed at 7k on carsales with full service history year 2010 ish, offer to pay cash and see if you can knock at least 1k off, not many people won’t budge at all some private sellers are not strong negotiators.

    I’ve had a similar track record a couple old cars which were lemons and money pits - go as modern as you can afford (try for less than 7k) relatively low kms and do all your due diligence and consider buying subject to satisfactory vehicle inspection.

  •  

    Look into this whilst it is 3k loan max it is a fixed 2.99 % rate paid back weekly or fortnightly
    well it was when I had it just paid it back a few years ago.

    Sold a car, had some savings, borrowed this and got very good car with no lien as this while being for a car loan is still classed as a personal loan and for insurance no finance is on the car!

    Of course you'll need some other money but it may help get you going

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