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Do homework on financing, car shoppers told

Do homework on financing, car shoppers told

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Date Published : Friday, June 13, 2008

While people on the lookout for a new car may enjoy the browsing and comparing of the different models on the market, it is also important to put some detailed planning into how they are going to finance their purchase, it has been claimed.

The Sydney Morning Herald says prospective car buyers can spend "weeks, perhaps months" looking for the right vehicle - but without doing some homework on the range of financing options available, they could end up paying over the odds for their automobile.

Many consumers cannot afford to make large purchases like buying a car outright, so they find themselves in a "world of loans and leases", the publication notes.

And while it can be tempting to go for the quickest option to get those wheels on the road, the newspaper warns that financing options vary from the "dead simple to the deadly complicated" and therefore investing some time in picking the right option could pay off in the long-run.

When looking at car finance, it is important to calculate the full life costs of the deal, it continues.

One option for buying a car is taking out an unsecured personal loan. The advantage of such a product is that calculating its overall cost is "easy", the site says.

It adds that average personal loans cost have interest rates of around 14 per cent a year, so a loan of $47,200 paid back over three years will result in monthly repayments of $1625.48 - equal to $19,500 a year.

And, because the loan is unsecured, assets such as the borrower's house are not required as collateral.

According to a Motoring Channel report on webwombat.com, new car sales hit record levels last year, with 1.05 million cars bought in Australia.

Find and apply online for the best loan deals.
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