How and when to consider finance for your new vehicle

Buying a new car is an important decision – and so is choosing vehicle finance. We look at how and when to consider finance, before setting out some options so you can decide what’s right for you. 

1. Do I need vehicle finance?

If you have savings at the ready for your dream vehicle, then finance may not be for you. But if you need extra cash, or you’d rather keep your savings for emergencies, then vehicle finance can be well worth considering.

Using finance can help you avoid putting other areas of your budget under pressure, especially in an emergency. It can also help you avoid compromising by settling for a vehicle with fewer features, including on-road performance and safety features. 

If you already have debt, it’s also worth comparing the overall cost of car finance to your other debt. For example, taking out vehicle finance could make good financial sense if it means you have money left over to pay off a credit card charging higher interest.

2. What are my finance options?

Consumer Loan

A Consumer Loan is a flexible option for borrowing some or all of the purchase price of a new or used car. In most cases it’s secured by your new car, in the same way that a home loan is secured by your house – but it also comes with a whole range of options you can use to personalise your loan. For example, you may be able to:

Increase or decrease your initial deposit.

A higher deposit can mean lower regular payments and less interest over the life of the loan. 

Choose your loan term.

With Volkswagen Financial Services Australia and our partnering brands, you can select a flexible loan term of up to seven years. A longer term means lower regular payments, while a shorter term allows you to pay the vehicle off sooner. 

Include a balloon payment.

You can reduce your regular payment amount by including a balloon payment at the end of the loan’s term. That means you can pay less now and more at the end of the loan, giving you more time to save.

Choose a fixed rate.

A fixed interest rate gives you certainty over the life of your loan by enabling you to lock in a rate upfront, so you won’t be affected by future rate movements. Volkswagen Financial Services Australia only offers fixed interest rates on our Consumer Loans.

Novated Leases

A Novated Lease is a salary packaging option that enables you to pay for your new car from your pre-tax salary.  Depending on your situation, a Novated Lease could help you spend more of your earnings on your car and less on tax, compared to buying a car from after-tax income. (Remember, though, that in some situations you may have to pay Fringe Benefits Tax – so check with your employer and seek professional advice before you make a decision).

Novated Leases also have other benefits, including:

Flexible loan terms.

Setting the length of your lease allows you to control the amount of each repayment and pay it off at your own pace.

A comprehensive solution.

You may be able to bundle your registration, insurance, on-road costs, Compulsory Third Party insurance and even maintenance (like the cost of tyres) into your repayments, so you pay less upfront.

The option to keep the car or upgrade.

At the end of your lease, you’ll have several options available, including returning the car, upgrading to a newer model or making an offer to purchase it.

Guaranteed Future Value

Guaranteed Future Value (GFV) can be an attractive option for financing your vehicle with the assurance of knowing exactly what its minimum value will be at the end of your loan.

You start by setting a loan term and an annual kilometre allowance to suit you (going over this allowance will reduce your GFV). Then, at the end of the loan term, you can choose from three convenient options:

Trade it in:

You can trade in your vehicle for a brand new one by returning it to the dealership. If the trade-in value is higher than the GFV, you can apply that to your new vehicle.

Retain it:

If you want to keep your vehicle, you can purchase it for the GFV amount set at the beginning of the contract. You can also choose to refinance the balloon payment at the end of your term. 

Return it:

If you’ve finished with your vehicle and you don’t want to buy it, you can return it to your Volkswagen dealership. If the vehicle meets the agreed kilometre and Fair Wear and Tear requirements, you’ll have no more to pay.

3. How much can I borrow for my new car?

If you decide that finance is the right option for you, the next step is to discover how much you can borrow. Every loan is different, and the amount you can borrow depends on your individual situation and the options you choose.

Fortunately, it’s easy to check your borrowing power, and see how different loan terms, interest rates and deposit amounts affect your loan. Simply visit one of our interactive online Car Loan Calculators and start exploring:

Volkswagen Car Loan Calculator

Audi Car Loan Calculator

SKODA Car Loan Calculator

Find your new car

Ready to start shopping? Then talk to the Business Manager at your local dealership, or visit a dealer from one of our partner brands. They can walk you through your options and help you find the right solution for you.