How Car Financing Works

When financing a car you will most definitely need the cash to do so! However, there are a lot of people who don’t have the cash needed in hand to finance a car. With that being said, you will need to apply for a loan so that you will have the money to put down on the car. Now, there are various different car loans that are available to apply for. The car loan that you choose or that you are able to get approved for will depend upon your personal situation. 

How the finance process works

The applications for car loan financing are typically the same with few differences depending on the institute that you apply with.

You will first need to fill out the application. In most cases nowadays, people do this online. You will need to add some details about your finances, such as your monthly income, rent/mortgage payments, etc. All of this is needed to determine whether you qualify for the finance loan. Some documents will also be required of you in order for you to be considered for the loan. You will need to provide a driver’s license that is valid and up to date, bank statements, and proof of where you reside at will also be required to present to the institute.

After you have provided all that is needed you will need to wait a couple of days in order for the application to process so that you will know whether or not you have been approved.

Options for financing

The bank is who most people go through when they want to finance a vehicle. You don’t have to go directly to the bank, there is also the option of having the dealership do all of the financing for you.

The repo rate that is posted for the vehicle that you buy will determine what your interest rate will be. Your credit score and how long you will be paying on the loan will also have a lot to do in determining the interest rate that you will be paying. The interest is basically the percentage that the bank adds to your monthly repo rate so that they will earn revenue off of your payments for the car. Good credit will allow you to have the benefit of getting a prime or minus prime. All banks have their own personal interest rates and loan periods, so it is would be wise to choose the bank that you know will be cheapest and most convenient for you with financing.

Leasing instead of financing

Another option that you can go with if you decide that you want an easier route of obtaining a vehicle is leasing one. Even though you would own your vehicle through financing it, it would be much easier and cheaper with monthly payments to lease a vehicle. If you want to learn more about vehicle leasing you can check out some options here at this link by clicking here. Compare the low leasing rates to how much you’d pay to financing a vehicle.

How Does a Novated Lease Work?

A novated lease is a type of car lease that an employer gets on behalf of the employee. The employee, in turn, pays for this lease with their income before taxes are taken out. Novated leases are incredibly beneficial for both the employee and employer, though of course there are certain disadvantages there as well. For jobs that need a lot of on the job travel, a novated car lease is likely the best way that the payments can be handled. 

How Does A Novated Lease Help The Employee?

With a novated lease, the employee never has to worry about making their car payments. The car payments are automatically deducted from their paycheque pre-tax. Not only does this mean they don't have to track the lease payments, but it also means that they can get a better car for less money because they don't have to pay tax on the amount. Employers also tend to have deals with automobile companies to lease cars by volume. That means that the employee has more savings because of the company's better rates.

Rather than other types of employer lease, the employee does keep certain rights over the car because the employee is making the lease payments. The employee gets more choices of car than in a traditional employee lease agreement, and the employee gets use of the car when they are outside of work. The employee can even keep their vehicle if they leave the company by transferring it to another company. 

How Does The Novated Lease Help The Employer?

On the employer's behalf, though the lease is financed through the company the employee still makes the payments. This means very little out-of-pocket cost for the employer. All the employer has to do is secure the lease, and manage the payments from the employee's paycheques. Because the employee is saving money on the lease, the employer can consider the lease a perk that the employee gets, and so save money on salaries.

Employers that need to have their employees travel during office hours save significant funds over providing company cars. Company cars would need to be purchased and retained by the company and not leased, or leased at a higher amount. The novated lease, by contrast, incurs no more cost on the behalf of the business. 

What Are The Drawbacks To A Novated Lease?

Because a novated lease is still a lease, the standard problems with this type of lease still applies; at the end, neither party will own the vehicle, which means that the employees are purely paying an expense and not gaining an asset. This said most novated lease companies will offer easy paths to ownership which will still work out as more cost effective for the vast majority of customers. This normally involves paying a fee at the end of the lease to purchase the vehicle outright

This article was written by the team at Novated by Fleetcare, independent Australian novated lease providers with offices all around the country.

What are Your Car Finance Options?

With the new year in, many people will be looking to make some changes in their lives, and for some this might mean buying a new car. It can be one of the most expensive purchases you make, which is why you have to give it a lot of thought. If choosing the car wasn't hard enough, you've then also got to decide how to pay for it. There can be many different options, and finding the right one can save you quite a lot of money.

Outright Purchase – This is of course one of the best ways to buy a car. If you can afford to buy it without finance, then you won’t be paying any interest at all, making the vehicle cheaper. It might also be possible to negotiate discounts or extras on the car if the dealer knows you can pay there and then in cash.

Leasing – Leasing can be great value with relatively low costs, but the key is that you never actually own the car, unless you decide to pay a lump sum at the end of the agreement. There are lots of different options, depending on the length of the lease, the deposit you put down, and a variety of other factors. This is one of the best ways of combating depreciation however, so it’s worth a look.

Dealer Finance – Dealers often offer good rates of interest, and will have special deals from time to time. If you can take advantage of them, then do so, but be aware that you’ll often have to pay a large deposit.

Personal Loan – If you don’t want to pay a deposit, then a loan is likely to be your best option, depending on circumstances. A personal loan is likely to cost the most in terms of interest, but offers the least risk. There are of course limits to personal loans, and in some cases it will be difficult to get a loan for an expensive vehicle without a deposit.

Secured Loan – Secured Nemo homeowner loans also offer another option. The minimum term is usually over 3 years, so this isn’t really a good option if you don’t plan on keeping the car for a long time, but otherwise it could save you a considerable amount of money in interest. However, because the cost is often spread over a longer term you might end up paying more in interest.

Why Choose Seat Car Leasing?

If you are looking into car leasing then there are a huge number of different options available to you and it can be hard to decide which type of car is best for you. Well, many people would agree that it is certainly worth checking out Seat car leasing as this manufacturer has really started capitalising on car leasing and has established itself as a great brand that offers some fantastically competitive lease options which could see you driving a brand new car in the class that you’re looking for at a fraction of the price you would have expected. 

The great thing about Seat car leasing is that they have a range to choose from that will cover pretty much any need, for any person. Whether you are simply looking for a small and economical city car to nip around town in or whether you are looking for a quality people carrier for the growing family, Seat have it covered.

One of the most popular cars in Seat’s range is the Seat Ibiza. This fantastic little car has been with us for many years and has evolved to be trendy, safe, economical and a great little looker. It also comes in a number of different engine options and even an estate option, allowing you to find the perfect model for you.

The Ibiza’s bigger brother is the Seat Leon which is ideal for anyone looking for a bit more power and loads of style. The Seat Leon really is a class act that manages to deliver a thrilling drive while also being great around town and has plenty of room for the shopping and the kids.

It’s not all about small cars though as Seat has a range of larger vehicles that still offer amazing pricing. Take the Seat Alhambra for example. This is a large and sturdily built people carrier that has the option of their ecomotive diesel engine to give a great mileage per gallon yet still plenty of power and torque to get the family around in style. Or, if you’re looking for something more on the executive travel side of things then the Seat Exeo (which also comes as an estate) is an incredibly stylish and luxurious vehicle that boasts all the modern upgrades and creature comforts that you could hope for from names such as BMW and Mercedes but at a fraction of the price! 

Related articles

• How to Avoid Extra Costs at the End of Your Lease (50plusfinance.com)
• Buy or Lease? Which is Best? (50plusfinance.com)
• 5 Tips to Choosing a Car With Low Cost Insurance (50plusfinance.com)
• Car Loans Were Never Easy - Until Now (50plusfinance.com)