Car finance options

The pros and cons of using a personal loan, home loan redraw, car dealer finance, or car manufacturer finance to buy a car.
 
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01.Your finance options

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There are essentially four different ways to pay for a car:

  • Car manufacturers' deals such as zero per cent interest, for instance, can lure in even the wariest of car buyers - but check the fine print. Large (up to 50% or more of the RRP of the car) lump sum payments can apply after the loan period is up.
  • Personal loans are often a great way to finance a car, holiday, or other major expense. They’re available for periods between one and seven years and usually have minimum amounts between $1000 and $10,000. The longer the period and the less you borrow, the lower the repayments.
  • Car dealer finance is used by a third of people who buy a car at a dealership with interest rates comparable to personal loans. But there are traps, such as large commissions or unnecessary insurance added on to the loan.
  • Home loan redraws are usually a much less expensive way to finance a car than a personal loan, as long as you pay the redraw back over the same period.

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