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Buying a car before the end of the financial year

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Buying a car before EOFY

Shopping around to finance a new or used car is a smart move, especially leading up to 30 June when car dealerships put on some great ‘End Of Financial Year’ sales. Today we take a closer look at whether dealership finance or shopping around for a car loan is right for you – let’s see what really puts you in the driver’s seat.

What is car finance (aka a car loan)?

Buying a car will be one of your biggest life purchases (next to buying a house) and if you don’t have the cash upfront, you may be considering finance options or a car loan.

A car loan is a personal loan issued for the specific purpose of buying a new or used car. Interest rates may be fixed or variable. The car can be used as security against the loan, or the loan may be approved as unsecured. The difference is secured loans may have a lower interest rate, but if you fall behind on your payments, the credit provider has the right to sell your car to get their money back.

Getting the best credit deal is just as important as the price of buying a car, so read on for our tips on dealership finance and shopping around for the right loan.

Dealership finance

If you buy a car from a car yard, the dealer may offer to arrange finance for you. Car dealers often have attractive car finance rates towards the end of the financial year. However, what do these enticingly low interest rates really mean?

Sometimes the ‘no interest rate’ or ‘low rate car loans’ can mean higher fees, charges or a surprise ’balloon payment’ at the end of your contract. Essentially this means you may end up paying more.

A good starting point to find out if one of these EOFY finance options is right for you is to confirm the applicable interest rate and exactly what the repayments, fees and term of the loan will be. You should always ask about:

  • ‘Balloon payments’ – does one apply? When would it be payable? And what is the total amount? A ‘balloon payment’ is usually a lump sum payable at the end of the loan term
  • The terms of any insurances pitched to you. Question how they may benefit you and whether you really need them. Also, consider whether you already have those types of insurances included in other policies you may have. Examples of likely insurances being offered could be consumer credit insurance and/or gap and shortfall insurance)
  • The pros and cons of taking out any extended warranty (also known as mechanical breakdown cover) offered to you. Weigh it up against its cost and the warranty that comes as standard with the car, as well as standard coverage under the Australian Consumer Law
  • The details behind all fees and costs associated with the finance. Ask about what sort of dealer referral fees or commission the dealer is receiving for selling you this finance option

Take the time to consider these questions and don’t feel pressured to decide on the spot. Getting outside the dealership environment (and away from those sweet-talking car dealers) will provide clearer head space to evaluate whether the dealership loan is as good as it sounds, or whether you’re best to shop around.

Remember, while dealer finance can seem more convenient, it may be cheaper to get a loan elsewhere.

Consider your finance options

ASIC has provided some handy tips for approaching the overwhelming number of personal loan product offers on the market:

  • Budget for the full costs of the car – while you might have looked at the purchase price and loan costs, always factor in ongoing costs like registration, maintenance and insurances
  • Work out if you can afford to borrow – use a budget planner to work out your repayments and remember a larger deposit could mean savings on interest in the long run
  • Compare products – use online calculators and comparison tools to compare interest rates, product features and fees and charges – a small difference in rates can make a big difference over the life of the loan
  • Be careful of add-ons and only pay for what you need – consumer credit insurances like loan protection, gap cover and extended warranties (noted above) should be looked into carefully. Consider that if they’re rolled into your credit contract, this will increase your repayments and the overall interest paid
  • Know who you’re dealing with – companies that engage in credit activities in Australia (including brokers) must be licensed with ASIC and provide you with a Credit Guide, setting out their licensing details. If in doubt, visit

Tackling your car loan from the point of view of ‘how much can I afford to borrow?’, rather than ‘how can I get enough to buy this particular car?’ is the wise choice. We love ASIC’s MoneySmart Cars app as a super handy research tool.

Use our Qudos Bank Personal Loan calculator to get an idea of what your borrowing capacity and repayments could be. Or, call us on 1300 747 747 so we can take you through it. This means you’ll know upfront whether the loan structure, fees and repayments will be able to fit your budget and circumstances.

For more information about our personal loans and what we can do for you, see our Personal Loans page.


  Important Information

The information in this article is of a general nature and does not constitute advice in relation to any product or purchase. It has been produced without considering your personal financial circumstances, objectives or needs. Before making any decision you should conduct your own investigation and analysis of any benefits or costs and speak to your legal or financial advisor.

Our personal loans are subject to approval. Normal lending criteria, terms and conditions, fees and charges apply and are available upon request. Before acquiring any of our products or services, you should read our Financial Services Guide available on our website or by calling 1300 747 747. Qudos Mutual Limited trading as Qudos Bank ABN 53 087 650 557 AFSL/Australian Credit Licence 238305.


Article published May 2017