How to finance your new car

Another option is to get finance from the dealership where you buy your car. Car dealer finance usually only applies to new cars.

Similar to car loans, you should ask the dealer about interest rates, fees, repayments and loan terms. There are a few other important questions you should ask a car dealer when exploring this option:

Leasing a car means you’re renting it from a company, rather than buying it yourself. This can mean lower monthly payments, the ability to upgrade to newer models, and the possibility that servicing costs will be included.

However, you don’t own the car, which means you can’t sell it when you’re done with it. There may also be restrictions on how many kilometres you can drive per year, and penalties for wear and tear. You’ll likely also end up paying more over time – you’ll keep paying leasing costs for as long as you drive the car, unlike car loans or dealer finance where you pay off the money you borrowed over time.

There are all kinds of leasing arrangements available. Speak to a tax specialist about the tax implications before you make a decision.

Novated leasing

If your employer offers salary packaging, it’s worth explored novated leasing. This allows you to lease a car and have the repayments come directly out of your salary. Keep in mind that this option may also come with restrictions around wear and tear and how many kilometres you can drive. Chat to your employer to find out how it might work for your circumstances.