Motor vehicle finance

Information about financing a private car purchase

Motor vehicle finance refers to the range of avenues available to obtain finance to purchase a vehicle.

Arrange your finance before you go shopping. You can obtain independent car financing from a range of institutions such as banks, credit unions, on-line lenders and specialist car finance companies. You can also have a finance broker arrange finance for you.
It is best to arrange your finance beforehand so you don't run the risk of choosing a car you can't afford or being pressured into accepting the dealer's finance offer when you haven't yet considered the alternatives.
If your savings aren't enough to buy your new car outright, you will need to take out a loan, either from the dealer or elsewhere. If you can, obtain a loan that only partially covers the total cost of the car and use your savings to pay the remaining amount in order to reduce your interest bill.
Be mindful of the associated costs of purchasing a vehicle including dealer delivery, insurance, registration, regular servicing, maintenance and of course petrol and make sure they fit into your budget. Experts advise that total vehicle expenses should not be greater than 20% of your monthly net income.

Focus on reducing the price of the car rather than the monthly payment. A lower monthly repayment over a longer loan term means you will pay more in interest and own your car later. (Most car loan terms are between three to five years which works out to about 36-60 monthly repayments.)
Usually, dealers provide loans with interest rates at about 1% or more higher than loans offered by banks and other finance companies.

For more information on what you need to know about buying a vehicle, refer to Buying and Selling in the Motor Vehicles section of this website.