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What’s the best way to pay for a car?

How using a car broker could save you time and money

As a driver, you’ll no doubt trade in and upgrade your car many times over your driving career. But did you know that if you don’t approach this process in the right way, you may well end up paying more for your finance than you do for your new car?Of course, there are many ways to go about upgrading your car – yet most of us go about it all wrong. It’s a mistake that can cost you thousands of dollars if you do decide to upgrade your wheels without fully knowing the ramifications of your choice.   

The first step in buying a car should be to look at the finance options available to you, and think carefully about how each option impacts your personal finances and cashflow position. Naturally, your aim is to save as much money as you possibly can, both on the amount of the changeover and the way you fund the changeover. You should never buy a car your cashflow indicates you can’t afford. 

Let’s take a look at the possible funding options when you’re buying a new or used car. 

1) Salary sacrifice

If your employer allows you to salary sacrifice, this could be very good option (depending on your cashflow). But should you lease the vehicle or take a Chattel Mortgage? Again, this will depend on your individual situation since everyone is different.

2) Personal loan

A personal loan can be a good way to finance a new car, once again if your cashflow allows.

3) Redraw on your home loan

Depending on your cashflow position and financial goals, redrawing on your home loan could be an option. However, you may be better off investing the funds from your home equity and taking out a personal loan. Again, it all depends on your position and needs.

4) Pay cash for your car

You might think this option is the right (or easiest) one. Yet there’s an old adage that you should never put cash into a depreciating asset (such as a car).

A better option may be to invest your cash and take out a personal loan on the car. You may find this is far more beneficial to your cashflow and/or long-term financial position.


As you can see, there are many finance options available when upgrading your car. But it’s important to remember that all of them will need to be modelled against your financial position and personal objectives (outside of just the car upgrade). Deciding on any one of these four options could end up costing you far more than just the cost of the car changeover, if you don’t choose the option that’s best for you.

They all need careful consideration based on your overarching needs and financial position. If you are not able to conduct the analyses yourself, you should speak to a financial adviser.

Don't wait to get started "some day"

How can a car broker help save you time and money?

What if there was a way to get the car you want, without spending endless hours ruling out lemons and just missing out on great deals? Well, that’s what a car broker can do for you!

A car broker is a professional who negotiates the purchase of your new car, and sometimes the sale or trade in of an existing car on your behalf as well. The car broker can either buy through a private sale, or source a new or used vehicle from a car dealer.

While you go about your day, a car broker does the hard yards to find you the car you want, and ensure you get value for money. They’ll consider the timeframe required to source your vehicle, and look for special deals such as end-of-year sales, new model releases, or special offers with trade-ins.

Here’s a quick snapshot of how a car broker can save you a lot of time and money when buying or selling your car.

Buying a new vehicle through a car broker

Let’s look at the example of buying a new car. The “best deal” that a car dealer offers to you – as a private buyer in a once-off exchange – may be quite different to a deal they offer a car broker they negotiate with every week, or even more frequently.

That’s because there is an existing relationship that the car broker can leverage to get you a better deal. It’s also heavily in the interest of the car dealer to provide an excellent deal for the buyer, knowing that the car broker is sourcing vehicles on a very regular basis.

Car brokers work every day doing what you might only do once or twice a decade – seeking quality vehicles and negotiating deals on them. This process often involves contacting dealers and wholesalers daily for quotes on the type of car you’re looking for, then gathering and comparing the quotes, before beginning the negotiations. Getting quotes from a wide range of dealers results in highly competitive offers, which can then be passed on to you.

Outside the potential savings of working with a car broker instead of negotiating on your own, one of the biggest advantages is the significant time and hassle you’ll save. You can attend to the important things in life while your car broker is negotiating on your behalf.

What’s more, when you’re buying a car using a car broker, there’s no expense to you, as the car companies pay the broker’s fee.

Meeting with a HM financial adviser

Need advice on financing a new car? Talk to HM

If you have questions about the best way to finance your new car, a conversation with a financial adviser can pay dividends. 

Arrange a complimentary no-obligation chat with an HM financial adviser by calling 07 3229 3688 or using the simple contact form here.

Topics: budgeting, wealth creation

Posted by Henderson Matusch on Mar 18, 2019 1:49:54 PM
Don't wait to get started "some day"

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