News and Reviews

Preparing Your Finances For a New or Used Vehicle

January, 2015

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Being given the keys to your new or used vehicle and driving fresh off the showroom floor is only one aspect of buying a new vehicle. One of the most important steps to buying is organising the right kind of finance for your needs. So before you drive away, it’s important to prepare your finances first.

Understanding vehicle finance

Like most people, you may need to take our finance to purchase your new or used vehicle. The process can be complex and to find a great deal most people spend a lot of time shopping around.

The most important thing you need to remember is that the best vehicle finance practices focus on getting you into the vehicle most suited to your needs, whilst requiring you to repay the least amount of money, as soon as realistically possible.

We believe that the finance process doesn’t need to be complex. Our experienced finance consultants will do the hard work for you and find a deal that is best for you.

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Choose a finance approach that suits you

With so many different types of options available, it’s good to know where you can begin. There are two common approaches you can take.

If you require a specific vehicle (type of vehicle, make or number of seats) you can select a range of options and figure out how much money you will need to buy that vehicle. If your vehicle costs $20,000 and you work out you can afford to pay back $300 a week, factor in other fees and you’ll have an understanding of how long your loan term will ideally be.

Another approach is to decide how much you can afford to repay and then decide on a repayment schedule. Based on an interest rate of 7.9% , if you can afford $300 a fortnight and are willing to commit to a 5 year term, your budget for your new vehicle will be in the vicinity of $31,200.
Of course, this is only a rough guide to help get you started and not a finance calculator.

A good way to determine what kind of loan you’ll need is to write down a list of your needs.
What are you using the vehicle for?
What is your budget?
How often could you make repayments (weekly/fortnightly/monthly)?
How long do you think you will keep the vehicle?

You can take this with you when you visit a John Hughes dealership and our team can help you find a vehicle that ticks all the boxes.

Couple buying car at dealership and negotiating price with sales

Finance Terminology

If you don’t know the ins and outs of vehicle finance, then here are some short answers to a few words that might pop up during the process.

Finance Broker: A professional in the finance industry that has access to a variety of lenders and knows the ins and outs of finance.
Interest Rate: The calculated amount of the loan that is charged on top of the initial amount. Your interest rate will be determined by the term of the loan, the amount, your personal credit history and credit score.
Comparison Rate: This is seen as the true cost of a loan. This rate includes the interest rate, fees and charges.
Pre-Approval: Initial approval process which provides an estimate of how much someone could borrow, based on the information provided to the bank.
Guarantee/Guarantor: A promise by a third party to meet a borrower’s payment obligations if they are unable to pay. The third party who is providing the guarantee for the borrower.
Term: The length of the loan in months. You could pay less interest if your repayment period is shorter, however it will mean your repayments instalments will be larger.
Secured or unsecured: This is when a lender has the rights over your vehicle, should you not meet your agreed repayments. Typically secured vehicle loans have lower interest rates because this represents a lower risk.
Novated Lease: Where an employer will assume the financial obligations of a lease, so reducing the employee’s taxable income.
Fixed or variable: At John Hughes, we only offer fixed rate loans, this is so you are able to forecast your repayments at a fixed rate. Variable rate loans can change and this could affect your repayments on a monthly basis.

Types of Vehicle Finance

Some accounts reveal that there are over 400 personal loan products on the Australian market, so knowing which type of finance you might require will speed up how long it takes to prepare your documents and submit your application.

Whether you’re are individual or business owner looking for vehicle finance, we can help you determine what your options are.

Checking Your Credit File

Your credit history is that are maintained by credit bureaus. Lenders can identify risk in borrowers by cross checking your credit file. Better interest rates are available to individuals with better credit scores.

If you’re unsure of your credit score, then it’s a good idea to obtain a copy of your credit file. You can request your file from any credit reporting agency, but one of the largest is Veda.

If you score above 680 you can expect typical interest rates from good lenders. That is, you are unlikely to encounter consistently unfavourable terms from multiple lenders.

Happy couple getting car keys from a car seller

Financing through John Hughes

Our team of experienced finance brokers take into consideration everything that we’ve covered here and zero in on finding the best deal on your behalf. We can talk to you in detail about the risks and benefits involved in selecting a specific kind of vehicle finance and will always keep your satisfaction at the top of our minds.
For more information about how to prepare finance for your first vehicle drop into a showroom or call 1300 799 060 today.

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