4-Signs of Caution – See Them Before Riding Ahead With a Car Loan
Car sales are a big business in Australia, as we know getting to drive your dream car top’s the wish list of one and all. So, when you have less funds and you think of buying a car then considering a car loan that fits your budget is the most suitable option.
However, there are four signs of caution you must see before riding ahead with a car loan. They are –
- Car is a depreciating asset – When thinking of taking loan for buying a car, keep your budget in mind. Car is a depreciating asset, the moment you drive down your car out of the showroom, its value starts decreasing. Because you can avail loan easily that does not mean you can extend your budget, in that case you will end up owing a much more than your pocket permits.
- Interest rates vary significantly – It has been observed that interest rates tend to vary significantly. As per the research, interest rates ranges between 5.84% and 16.75%. So before you apply for loan, do your research work well so that you save yourself from paying hundreds or thousands of dollars over the time.
- Define a time-frame – For homebuyers, there are two options available for taking a home loan such as one with a redraw facility and another with a separate line of credit. These options allow to secure a loan at a lower interest rate. However, in case of car loan, you will typically need to stick by a set loan term such as five to ten years.
- Car Insurance – When you buy a car, it is essential to get a CTP (Compulsory Third Party) car insurance to protect you against any claims for compensation in case of an accident or you injure or hit someone. Though terms and conditions may differ from state to state. It is more like a onetime investment, so always look for a comprehensive car insurance policy.