Car Financing Tips for first time buyers

When financing you first car, there are some hidden costs to consider. Before deciding how much to spend on your new car, work out what you can afford.

It's important to budget for the running costs of the vehicle. A medium sized car costs about $200 per week in fuel, repairs and servicing. Other costs to watch out for include dealer delivery charge, which is set at the dealer's discretion, stamp duty, and any common extras like automatic transmission and metallic paint.

Now that you know what you can afford, it's time to look at finance options. Consider getting Conditional Approval before you start kicking tyres. That way you'll know in advance if there are going to be any problems, rather than getting caught out after you've put down a deposit. Conditional Approval usually lasts for 30 days, so you'll have plenty of time to shop around for the right car.

A car loan uses the car you're buying as security for the loan. This typically reduces the annual interest rate charged. However there are usually some conditions for the car to be eligible - for example, it may have to be above a certain value or below a certain age. Getting a longer loan term can be a way to reduce the regular repayments you have to make to service the loan, but make sure you're aware of any penalties that might exist for paying back the loan early.