We’re all feeling the pressure of high interest rates and rampant inflation at the moment – but sometimes misfortune can compound when we need to replace something integral to our lives, such as our cars. Cars don’t last forever – and might be written off due to excessive age or accidents rendering them beyond repair. So, what can you do to buy a new car when times are tough? Here are some tips to help you get behind the wheel of a new car while saving as much as possible – or using alternatives to get you across the line.
Setting a budget
As with any major purchase, you should set a strict budget when looking for a new car. What can you afford in repayments each month? Fuel? Maintenance?
Smaller, fuel-efficient cars can also help you save money on fuel, which you should also factor in. Sometimes, looking for a near-new or certified used car is just as good as buying new, but can save you a lot of money in the process. Certified used cars are fewer than three years old, are manufacturer refurbished, and come with an extended warranty. A new car will lose as much as a quarter of its value as soon as you take it home!
Saving for a deposit
Though it may feel impossible at times, setting aside even $5 or $10 a week to save for a deposit on a car over a year or so can help you afford a new or near-new vehicle in the long-term. Lowering your amount borrowed means lower repayments and less interest paid overall. It can really help you save for the future!
Timing your purchase
If you have a bit of time on your side, timing your purchase can mean the difference between a bargain and paying far too much. If you approach dealers at the end of a month, you have a bit more bargaining power as they’ll be scrambling to meet their end of month quotas or sales targets. You can ask for – and usually get – significant discounts if you buy your car at the end of financial year sales or at the end of year. Dealers will want to make room for newer models and are prepared to bend over backwards to accommodate reasonable offers.
Buying off the lot
Whether you elect to buy new or certified used – even used in some cases – cars that are taking up space on a dealer lot means they’ve been bought and paid for by the dealer, which means it’s costing them money to keep them there. If you time your purchase and opt for a car that’s already in the showroom, you could drive a really deep bargain. Just be prepared to accept a few compromises in the process.
Bad credit loans and guarantor loans
If you’ve checked your credit for free at a reporting agency and it’s come back saying it’s below average, you may only be eligible for what’s known as bad credit car loans. It’s a step in the right direction in terms of getting your car, but you will be paying higher than average interest rates.
However, you can ask a trusted family member or friend to guarantee your loan instead. This means you’re “piggybacking” on to their good credit as they underwrite the loan with a promise to take over the loan repayments if you cannot – but only as a last resort. Guarantor loans also have a higher interest rate compared with mainstream consumer car loans but enhance the trust between broker and borrower. If you can demonstrate you are a good borrower your credit score will improve, which means future cars or other major loans are well within reach!