Planning to buy a car or business vehicle before year-end? Understand deposits, repayments, loan terms and vehicle finance options.
Planning a New Vehicle Before the End of the Year? What to Know About Vehicle Finance
Planning a vehicle purchase before the end of the year? Start with your total budget, then consider the deposit, loan term, repayments and whether the vehicle will be used personally or for business.
Look beyond the purchase price
The cost of a vehicle isn’t just the advertised price.
Depending on the vehicle, you may also need to allow for:
- registration
- insurance
- servicing and maintenance
- accessories or modifications
- fuel or charging costs.
For a business vehicle, additional fit-out or equipment costs may also apply.
Understanding the overall cost can help you set a realistic finance budget.
How does car finance work?
A car loan allows you to borrow money to purchase a vehicle and repay the amount over an agreed period.
A secured car loan uses the vehicle as security for the finance. Other lending structures may also be available depending on the circumstances and vehicle.
The important thing is to understand the loan amount, repayment structure, fees and total amount payable — not just the regular repayment.
How much should you borrow?
Your maximum finance amount isn’t necessarily the amount you should borrow.
Consider the proposed vehicle repayment alongside your:
- mortgage or rent
- household expenses
- existing loans
- insurance
- other financial commitments.
A longer loan term may reduce the regular repayment, but it can also mean paying interest for longer.
Does a deposit help?
A deposit reduces the amount you need to finance.
For example, a $50,000 vehicle with a $10,000 deposit would leave $40,000 to finance, before any other applicable costs.
However, using savings for a deposit also reduces the cash you have available for other needs. For a business, retaining working capital may also be important.
Personal or business vehicle finance?
The intended use of the vehicle can influence the finance structure.
A family car used privately can have different requirements from a ute used by a trades business or vehicles being added to a company fleet.
Before applying, consider who will own the vehicle, how it will be used and whether the purchase is personal or business-related.
For vehicles with mixed personal and business use, it may also be worth discussing the tax treatment with a qualified tax professional.
Should you arrange finance before choosing the vehicle?
Understanding your likely finance budget before shopping can help you focus on vehicles within a realistic price range.
Once you’ve selected a vehicle, the final finance application can be based on the actual asset and purchase price.
This can be particularly useful for business owners purchasing specialist vehicles or equipment.
Planning ahead
October is a good time to start planning if you’d like a vehicle on the road before the end of the year.
Getting your budget, deposit and finance requirements organised early can make the purchasing process more straightforward.
Get in touch
Whether you’re buying a family car, replacing an older vehicle or adding to a business fleet, understanding the finance before you buy can help you make a more informed decision.
We can discuss your circumstances and help you explore car loan, vehicle finance or business vehicle finance options that may suit your situation. To request a no-obligation quote, get in touch today.