Car owners can expect to pay tens of thousands of dollars for a car they bought online from a dealership.
The difference in costs between buying online and in-store means car buyers will need to negotiate a contract with their car’s dealer.
“We’ve seen it on both sides,” said Mark Lacey, managing director of the automotive consultancy AutoNation.
“Buying online will take a lot longer to negotiate and there’s no guarantee that the dealer will pay a deposit upfront.”
How do you negotiate a car loan?
In Australia, car loans are made using a formula that is similar to those used by banks.
For example, the minimum deposit is a standard 3.5 per cent deposit that can rise to 5 per cent if the loan is extended.
The lender will then negotiate with the car buyer for the amount of the loan they need to pay off.
The loan will then be paid off in full, usually within 12 months of the car loan expiring.
The average loan terms are 10 to 12 years.
If the buyer is a first-time buyer, the cost of the purchase could run as high as $14,000.
In some cases, a car purchase could also involve a lease or other type of loan.
Some people also get loans that have a fixed monthly payment and other types of loans that are available at a fixed rate.
These loans are known as flexible loans.
“It’s all a bit of a confusing way of doing things,” said Lacey.
You’re not just looking at the price you pay upfront and a monthly payment, you’re looking at other costs.” “
But with an online loan, it’s not so straightforward.
You’re not just looking at the price you pay upfront and a monthly payment, you’re looking at other costs.”
Here’s how to negotiate for a loan with your local car dealer.
Read more: How to negotiate car loan terms in Australia The typical terms vary widely.
In Sydney, the average interest rate is 1.5 to 2 per cent, while in Melbourne it is around 3 per cent.
The Australian Competition and Consumer Commission has a list of popular finance services that car dealers can offer to car buyers.
Car loan rates vary depending on the finance company, so it’s worth researching what type of financing options are available.
“The best finance deals will give you an insight into what you might be able to get,” said Chris Ritchie, an economist at the Australian Institute of Financial Management.
“I’d recommend getting a good credit report.”
Read more about car finance and finance options in Australia Car loans can be offered for as little as $2,000 to $6,000 per loan.
In the case of a mortgage, the borrower is not guaranteed a down payment.
For most home loans, the lender is required to repay the principal amount of your loan in full within 30 days of the date of purchase.
In a few cases, the principal is automatically extended.
If you buy a car from a third party, the car’s lender will typically extend the loan.
For a small deposit, a loan from a local car lender can be a good option for first-timers.
It can be cheaper than buying directly from the dealership, but there may be fees that need to be paid.
“There are a number of small finance companies in Australia that offer car loan options for small deposits,” said Ritchie.
“They’re more likely to be small loans and are likely to offer lower interest rates.”