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Financing your family car

You may have seen the last couple of posts I have written about buying a new family car. In this post, I am going to look at financing your family car.

A new car loan application form for financing you new family car

Financing your family car can be a mixed experience. [source: http://mannerlaw.com/2012/07/ftc-warns-of-car-loan-modification-scams/]

The next step for most people is finding a good finance deal that isn’t going to leave you flat broke. Some people may not be in the position to finance a new car, after all you don’t want to live on two minute noodles for the next 3 to 7 years!There are heaps of options when it comes to financing a car, car loan, secured personal loan, unsecured personal loan or you could even borrow off your mortgage.

I don’t want to be in debt forever (although with three daughters that means three weddings. I’m already broke forever), so I am going to have a look at a few different loan types and try and do my best at putting it in simple Dad language. Not that our language is different to any one else’s, just no bull crap finance terms!

Firstly, I’ll take look at car loans. At the moment, I am looking at Westralian Auto Finance. On the plus side, not only do they do offer car loans, they also offer business truck finance solutions for those business owners looking for a new vehicle. A car loan can be used for just that, a car,but there are a couple of different options when to comes to the car loan. You can either have a secured or unsecured car loan and I’ll try my best to explain those next.

A secured car loan is when you put the car up for collateral against the loan. This means if you can’t repay the loan because you’ve gone out and bought the newest iPad,well kiss that car bye bye. A plus side to this type of loan though, is that the interest rate tends to be a little lower. This is because the bank can take away your shiny new car if you fail to pay them. So just triple check that budget and make sure you can afford the repayments for the entirety of the loan.

An unsecured car loan doesn’t require you to use the car as security against the loan unlike the secured loan. You can expect, seeing as the bank can’t repossess your newest purchase, that the interest rate on this loan will typically be higher than a secured loan. Also, expect that the lender will ask for evidence that you can afford a new car. They will use this evidence to assess the risk of lending you money.

When I have purchased a car in the past, I have financed it using an unsecured personal loan. This allowed me to use a bit of extra money for some things, like furniture. Looking back on it, probably not the best move but everyone needs to learn a lesson at some point, don’t they?

Okay, we’ve figured out the different types of car loans, what’s next?

Well when we purchase our new car, we will be financing it. Yes, this is not an ideal situation however in order to pay it off quicker and get back on track with our goal of saving for a house, I wanted to look at ways to pay the loan out quicker.

(Please do not consider anything in this blog post as financial advice and it is important that you consider your own circumstances before making any decisions. Also, speak to your lender about any penalties that may be applied for paying off your loan early.)

A great way of paying your loan out quicker is to pay your loan repayments more frequently. By this I mean, paying repayments weekly or fortnightly instead of monthly. This will lower the amount of interested that is accumulated on the loan because your payment frequency is higher.

Pay extra. Duhhh James, I hear you saying, but how many of us practice what we preach? Especially when we could be out enjoying life! I try to pay an extra $10 each fortnight and when we can spare it, we will make an additional payment. Every little bit counts and you have to think long term here. Sure you are sacrificing play money but in the long run, you’ll most likely be better off financially.

Use additional money to make extra payments. Kids out grown some of their toys? Sell them on eBay! Got at a hobby? Maybe you like taking photos? Why not offer your services on the weekend for money towards the loan! What about that tax refund? Instead of spending it on a new TV or computer (like I do) pay extra on your car loan. You could shave months, if not a year, off your loan. Putting you that one step closer to debt free living!

Finance can be good and bad but as long as you don’t let money rule your life you should be okay! From our perspective, living debt free is a goal that we are striving to achieve! Well apart from owning a house…and paying for 3 university degrees…and 3 weddings…and 3 of everything else…

Have you had a bad experience with financing a car? I’d love to hear about your experiences in the comments below. Also if you have any other good tips on debt free living, share those too!

[This was a sponsored post]

[Part One] Buying the perfect family car

This is a two part series, the first of which I will have a look at factors affecting purchasing a car for your family and the second will examine several options that fit the bill.

A picture of a family buying a new car

Buying a new family car is a big task. Lots of different factors to consider. [source: dreamstime.com]

In Australia, there are currently 6 million families with school aged children. Families need to get to places therefore, they need a car. At the moment, we are a two car family however Christine’s car has been riddled with problems and it’s worth two fifths of stuff all, so there isn’t any reason to fix it.

As some people would put it, I drive a woman’s car.  I bought my Ford from John Hughes in Perth, (second hand, which would normally mean it would be a horrible experience) however, it was actually an amazing buying experience. Not only was the buying experience awesome, but so is the Focus. It is small and with three growing girls, it won’t be long before we need a larger car.

Picture this.

You decide to not once, not twice, but three times drive across the country in a car that is made for midgets. Not only is it tiny and when you have 5 people in it, it’s insanely tight and the close proximity of three girls who love to have a whinge (more than the English cricket team), it well…  it drives you up the wall.

So why not sell “Fanny Focus” and buy a bigger car? Good point, except I still owe money on it and we are not in the position to borrow money for a car just yet. Why doesn’t Christine drive it then? Well good citizen, she is as stubborn as a rock and refuses to learn how to drive a manual. Many an argument has been had over this topic. She always wins.

Okay, so what makes a perfect family car then James?

Well first off, it needs to be practical. Practical enough that I can take a sleeping bag and sleep in it if the kids drive me up the wall, or if I’m in the doghouse! I’ve never wanted a family van before, until recently when we hired a Kia Grand Carnival. We had 5 adults and three kids in it and we still had enough room to kick the footy. It’s huge! Drives like a bus but it sat beautifully on the road and was comfortable.

So we’ve got practical as the first requirement. Next in my list of requirements is, budget friendly. Like a lot of families, we are a one income family so we can’t afford to spend $90,000 on a Land Cruiser. I’m not talking just budget friendly in the price tag, but in fuel consumption and service costs as well. Last thing we need is to have a beautiful new car and no money to fill the bugger up!

Practical, budget friendly are the first two requirements in my list and for the third I am going to say, future proof. By future proof I mean that if you choose to/accidentally have more kids in the future, there is room or if you are playing car pool, you can fit other brats in the car. Also, if your kids are getting close to that age where you’ll have the lovely experience of teaching them how to drive, you want a car that is going to be good for them to learn in.

– Practical,

– Budget friendly, and

– Future proof.

As a family man, safety is top priority. So when looking for a suitable family car, a good safety rating is a must. Here in Australia, we use the ANCAP (Australiasian New Car Assessment Program) ratingwhich is determined by an independent vehicle safety advocate. Boldly on their website, ANCAP states “ANCAP recommends 5 star rated vehicles. Accept nothing less”. So I’m going to add the ANCAP safety rating as one of my requirements because when it comes to those little devils, you can never be too safe.

– Practical,

– Budget friendly,

– Future proof, and,

– 5 star ANCAP safety rating.

With these four requirements I am going to begin my search! But before I do, these are a few nice ‘must haves’ in my opinion.

– Cruise control,

– Tow ball,

– Bluetooth, and,

– A proper spare tyre not a space saver.

Now, I also asked my Twitter followers the following question to see if they had similar views when buying a car as me.

 

A couple of my wonderful followers took some time out to answer the question, some seriously and some not so much. Amongst their answers were, bullet proof panels (never know when you’ll find yourself in the hood having a shoot out), boot size (for stuffing bodies in from said shoot out), how easy it is to get the kids in/out and how easy it is getting a double pram in and out (won’t need this when you’re in a shoot out). All relevant answers in my opinion, especially the bullet proof panels! You never know what’ll happen in the future or in the hood.

Everyone is going to have their own requirements when buying a car and that is dependent on their family situation. Obviously a single bloke like Justin Bieber could drive a lambo, hopefully whilst not hyped up on cough syrup.Where as a the Brady bunch would probably need a 12 seater bus. So don’t take my requirements as gospel, adjust them as you see fit to your family’s situation.

But come back next week, where I’ll examine a few cars that I think will fit the bill (for my family) and tick all my boxes . In the mean time, I’d love it if you would sign up to join the Raising3daughters.com family where you’ll receive emails from me each week detailing my top posts and in the future, I’ll work to bring you exclusive content and giveaways.

You can sign up here!

What is something you look for when buying a new car? Let me know in the comments below!