Financing your dream car
Apart from buying your home, your car will be one of the next biggest assets you will likely purchase. It is important to find out what you can afford and if you looking to finance the purchase, what repayment will suit your budget. If you are unsure of what you have afford in your current finance situation, we at Your Welcome Finance can provide you with a ‘Pre-approval’ for the loan so you will have an idea on what you can borrow and won’t be tempted to spend beyond your means.
Typical car loans are taken over terms of 3 to 7 years and can be secured or unsecured against the vehicle. Borrowers need to be aware that the interest applied to unsecured car loans will generally much higher.
Use our loan repayments calculator and see what the repayments will be when financing your dream car. Balloon payments option is also available.
What is a Balloon Payment or Residual Value?
A Balloon payment is a lump sum owed to the lender at the end of a loan term after all regular monthly repayments have been made. This will allow you to repay only a part of the principal value over agreed term.
How will a Balloon payment benefit you?
Having a Balloon payment on your loan will increase its affordability as it reduces the size of monthly repayments throughout the term of the car loan. In addition, having a residual value on the loan will also maximum the loan size you may be eligible for as it increases your borrowing capacity.
For example: A new car buyer borrows $50,000 over 5 years and chooses to have a $10,000 (20%) Residual Value on their loan. Their monthly repayments will be lower than if they had no Residual Value/Balloon Payment, however they will still owe the financier $10,000 at the end of the 5 year loan.
The residual amount remaining at the end of the loan term may be refinanced or paid out if the vehicle will be sold. Speak to one of our finance consultant to see what is the best option for you.
If you are looking to buy a second hand car, have a read of the article below to find some tips when shopping for used cars.