Buying a new car can be an exciting time. Often in the excitement the best way to finance the car is forgotten and all too often people opt for quickest or easiest option.

Using the Car yard for finance: - You may get a great deal however be warned that that many dealers rely heavily on making large amounts of money out of the finance area. Offers of 1% interest rates and similar should be thoroughly investigated particularly if it prevents you negotiating a better price on the car. With car finance it's important to always compare repayments and any balloon or residual values. This is because disclosure of interest rates isn't as strongly regulated like (say) home loans.

Add loan to my existing home mortgage: - Many people ask us to do this. What readers need to remember is that the loan term is the important aspect to this. Let's explain..... if you have a $300,000 mortgage at 4% and a 20 year remaining term on your loan and you simply add a $40,000 car to this your repayments go from $1817 pm to $2060 which is a very affordable $243 pm. However you would be making 240 payments of this lesser amount over 20 years at a total cost of $58,320. If it turns out the best option for you is to use your house we would recommend a 2nd loan for the $30,000 with a term matching the expected life span of the car.

Should I get a personal loan/ chattel mortgage for the car: - Maybe! A personal loan and a chattel mortgage work in similar ways. In many cases the rates and repayments are fixed for the period of the loan. The loan is often secured by the car you are buying. This means the lender views these facilities as secured and therefore the interest rates and repayments can be competitive. For a $30,000 car using a secured personal loan repayments are currently $137 pw over 5 years (based on 7.45% rate (comparison rate 8.3%). Loans for vehicles for business purposes are substantially cheaper (see example under balloon heading below)

Using a novated lease: - A novated lease is generally a three way agreement between employer, employee and lease company. The employer pays the lease payments and deducts them from employee's pre-tax income. There are potential benefits which include income tax and access to fleet discounts. However get independent advice if this is suitable for you as there may not be sufficient income tax benefits and there are risks if current employment stops in regards ongoing lease payments.