LENDING TIPS

Assess your financial position.
This is the first and most important step in the car buying process. You must know how much you can spend before you can determine what you can afford. You don't want to get stuck making a car payment that will leave you living on baked beans.

First of all, you need to have a monthly budget. This is very easy to calculate. Just add up all of your fixed monthly expenses, such as your rent, telephone bill, credit card repayments etc. Subtract that from your take home income. Then subtract your estimated  extraneous expenses (and be realistic here!), such as food,electricity, gas, and living. The result is your uncommitted monthly income. This is the figure needed to calculate your borrowing capacity.

Approaching the financiers
When you go to see the broker or bank for the loan, have all your financial details including a monthly income and expenditure, financial statements (if in business) or salary slips and a statement of your assets and liabilities. The statement of assets and liabilities is quite simple - just list you assets on one side - your liabilities on the other - take your liabilities from your assets to get a total of your net assets - hopefully this is a positive figure!

What is the market doing?
The first and most important thing to do is research the vehicle you want. Check out newspaper and Internet listings and get to know the prices of vehicles similar to the one you wish to buy. Dont forget, cars devalue rather quickly - some faster than others, so preferably buy a vehicle that hold its value.. The more informed your buying decision, the better it will be.

Loans
The type of loan you select will affect not only the amount of interest you pay to the lender and the term or life of the loan, but can also have other options and add-ons that can help you realise future financial goals. Interest rates and your own circumstances change over time. So the more flexible your loan, the more likely you’ll be happy with it over the longer term.

Interest rates and your own circumstances change over time. A lower interest rate and shorter term on the loan means you will pay less interest to the lender over the term of the loan; Saving you money. However, monthly payments on a shorter loan will generally be higher than those on the same loan set for a longer time period. The higher payments are obviously required to repay the debt sooner.

Conversely, a long term loan with smaller payments can be easier to budget for and mean less lifestyle sacrifices will need to be made. If you can afford to pay off your loan sooner, then a shorter term loan is often more advantageous.

Be aware of the costs associated with your purchase: Inspection and legal costs, stamp duty, loan establishment fees etc and mortgage insurance.

As soon as you sign the contract to buy a car have your insurance in place to cover all eventualities.