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5 Tips to Reduce Car Loan Repayments

Price is a major deciding factor in most car purchases. If you’re purchasing a car for your own private use, you’ll have a good idea as the price range that will suit your budget. If purchasing a vehicle for your business, you’ll likely be looking at a price range that won’t put pressure on cash flow.

But the advertised purchase price is one thing. What you are paying on car loan repayments each month is very often far more relevant to both individuals and businesses. You can use our Car Loans calculator to get a rough estimate on how a car price tag converts to monthly repayments, but that is only a ballpark.

When requesting a specific quote, many of our Jade Car Loans customers request that we arrange their loan to a certain monthly repayment figure. A figure which they have decided they can comfortably manage. But many still want to know ‘how can I reduce my repayments?’ We’re sharing our industry know-how with a selection of tips on how you can achieve lower car loan repayments.

1. Pay a Larger Deposit

This is a bit of a no-brainer but worth mentioning as there is a lot of promotion of ‘no deposit car finance’ circulating in the sector. Under some circumstances individual lenders will request that borrowers pay a larger deposit to the seller to reduce the loan amount. This may occur with Low Docs Car Loans, some personal car loans and with older-aged vehicles.

Other than for Low Docs Finance, rarely will a lender request a business pay a deposit when making a business vehicle finance offer. Most business car finance deals are for 100% of the purchase price.

But, if you do want to reduce your repayments, simply pay a larger deposit to the car dealer and that will reduce the overall amount to be borrowed and hence reduce your repayments.

2. Get a Better Trade-in

If you’re planning to trade-in or sell your current car privately, there are a few tips to assist you getter a better price.

  • Improving the condition and appearance is particularly important if selling privately but it is debatable whether it impacts a dealer’s trade-in offer significantly. While a private buyer usually wants a car in mint condition, a dealer can easily have those minor dents and scratches fixed quite inexpensively. But a dealer will likely factor any repairs including bodywork, into what they will offer you as a trade. And there’s the strategic element. A dealer will point out all flaws in your car in order to justify offering you a lower trade-in. So if you eliminate a lot of the flaws you may succeed in eliminating a lot of their arguments.
  • If you’re selling/trading just prior to rego renewal time, expect to have to allow for those costs in the price you’ll get. A private buyer will be factoring those costs into the overall cost to them. It may also cast doubt in their mind as to whether there are some issues which you don’t want to pay to fix to get the car through rego. To overcome these doubts you may choose to get a road worthiness certificate.
  • Keep a record of servicing and make a list of any major work you’ve recently done such as new tyres, battery etc. Knowing they won’t have to do pay out for major issues in the near future may enhance the price you receive.

By increasing the price you get for your trade-in you’ll reduce the price you’ll pay for the new vehicle which in turn reduces your car loan and your repayments.

3. Inflate the Balloon/Residual

Business buyers have the ability to easily reduce their repayments by increasing the balloon with the Chattel Mortgage or CHP or residual with their vehicle leasing deal. This is a percentage of the purchase price which is not included in calculating monthly repayments but due for payment as a lump sum at the end of the loan term.

You can use our calculator to see how repayments vary when the balloon is increased/decreased. Some lenders will have a maximum they will allow for balloons and your Jade consultant will advise you if that applies in your case. You may also want to consider the projected value of the vehicle at the end of the loan term to ensure the balloon and what you will need to payout won’t exceed the value of the car at that time.

4. Choice of Lender

The loan term determines the monthly repayments. A longer loan term results in a lower monthly repayment and a shorter loan term means higher repayments. But getting the loan terms you want to achieve the repayments you want may not be possible with all lenders when you source your loan yourself.

Some banks and non-bank lenders will have conditions around maximum loan terms for both personal car loans and business vehicle finance. This may be determined by details around your individual loan application or around details of the vehicle – age, condition and purchase price.

Banks have strict guidelines and are rarely in a position to negotiate on their requirements. Engaging the services of a finance broker, Jade Car Loans, to handle your car finance deal gives you a clear advantage in getting the loan terms you want. We are accredited with many lenders and we know which one will be most suited to your requirements and open to negotiating on terms. Having more choices means we can deliver a greater chance of delivering the loan term that will result in the repayment level that you are seeking.

5. Get a Lower Interest Rate

Kaching! This is the ‘money-shot’, the clincher, the big factor when it comes to getting the lowest repayments on your car loan. Get a cheaper interest rate and you’ll get lower repayments on the same loan amount over the same loan term. We pride ourselves on sourcing better interest rates so we can offer our customers cheap car loans. Our consultants have all the backing of our strong bargaining power in the motor vehicle finance sector to use when negotiating the cheapest interest rate for our customers.

A small incremental difference in the interest rate can mean a significant difference in the total amount you pay on your car finance and can reduce your monthly repayments. Use our calculator and vary the interest rate you input slightly to see how the repayment amount changes and you’ll see exactly why we go to so much effort to get the lowest rates.

If getting lower repayments on your car finance is important to you, we hope these simple tips assist with your car purchasing process.

For a cheap interest rate car loan quote with lower repayments, contact Jade Car Loans 1300 000 003.

DISCLAIMER: ALL INFORMATION WHICH IS PRESENTED IN THIS ARTICLE IS INTENDED SOLELY FOR THE PURPOSE OF PROVIDING GENERAL INFORMATION. IT IS NOT UNDER ANY CIRCUMSTANCES INTENDED AS PROVIDING FINANCIAL ADVICE. FOR SPECIFIC FINANCIAL ADVICE ON INDIVIDUAL FINANCIAL CIRCUMSTANCES, READERS ARE ADVISED TO CONSULT WITH A FINANCIAL ADVISOR. NO LIABILITY IS ACCEPTED FOR INCORRECT OR OUT OF DATE DETAILS IN REGARD TO GOODS, SERVICES, POLICIES AND PROGRAMS MENTIONED IN THE ARTICLE. THE INFORMATION AND DATA QUOTED HAS BEEN SOURCED FROM PUBLICLY AVAILABLE SOURCES INCLUDING MANUFACTURER AND GOVERNMENT WEBSITES.

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