If you're on the hunt for a new set of wheels and have a budget of $30,000, there are a number of cars to choose from. But the process doesn't stop here, make sure you compare your financing options to ensure you aren't paying more than you need to.
While it's becoming more common for people to purchase cars in the $30,000 and above range, it's still important to consider whether this is a price you can afford. Depending on the type of finance you choose, you will need to consider not only the cost of the car but also the interest rate and fees you'll need to repay.
Factor this in with the running costs of the car to see if it will be affordable on your budget. This includes the cost of fuel, parking, insurance and registration as well as the cost of servicing. It adds up to own and run a vehicle.
Types of $30,000 car loans
Secured car loan. This car loan uses the vehicle you buy as security for the loan. You benefit from a lower rate as there is less risk to the lender. Rates for these loans start from around 5% p.a. and can go up to 13% p.a.
Unsecured loan. Don't want to offer your car as security on a loan? Then you could look at an unsecured car loan, but the chances are the interest rates won't be as competitive though.
A car lease (or a novated lease). This is where you're able to rent the vehicle for a set fee and use it as if it were your own vehicle. However, you don't own the car as the financier retains ownership. You pay a monthly lease fee in order to use the vehicle. Once your loan term is up, you can either pay to take ownership of the car, continue the lease or hand the car back (depending on your contract).
A chattel mortgage. This is where you receive advance funds from your lender to purchase a vehicle. You take ownership of the car at the time of purchase. Since the lender is advancing the funds, they then take a "mortgage" over the vehicle as security. You pay a monthly instalment until the contract is over, at which point you will own the vehicle outright.
Dealership finance. Finance for your car can be obtained through dealership finance. This usually comes with low-interest rates or no interest at all. This means that you are able to benefit from lower repayments, but you may be required to pay a balloon payment at the end of the loan term which can be a big chunk of money.
Should I buy a new or used car?
You need to think about this considerably. It all comes down to your personal preference. For some people, they simply must have a brand-new car. For others, they like to spend hours researching car models, reading car reviews and sourcing vehicles online. Here are the pros and cons of buying a new car.
New car
Benefits of buying a new car
It's brand new. Only a handful of people will have driven your car before you. It smells new, the tyres are fresh and it's squeaky clean.
Warranty. Depending on the car manufacturer, you don't have to worry about manufacturing faults and breakdowns for 3, 5 and sometimes 10 years.
Economy. Newer models should be more fuel efficient than older models with outdated tech.
Safety assists. In an effort to make cars safer, car builders are standardising advanced safety equipment that aids the driver. Thanks to the development of safety tech and a lack of corrosion, your car should fully meet the ANCAP safety rating it was given in a crash.
Choice. If you're buying a new vehicle, you get to select the colour, the trim, the equipment and the options. You can tailor your car to suit your taste or lifestyle.
Fewer unknowns. If you're buying the car direct from a dealer, you shouldn't have to worry about someone poorly maintaining the car in the past, the previous owner hooning it within an inch of its life or the car having been stolen.
Gadgets. In an effort to entice modern buyers, many cars are now equipped with smartphone connectivity and other useful features by default.
Consumer protection. When buying a brand new car, you're protected by Australian consumer guarantee rights ensuring the car is fit for purpose, as described, of acceptable quality and has replacement components and repair facilities available.
Downsides of buying a new car
Depreciation. New cars depreciate in value, the rate of which is influenced by many outside factors. Things like demand and popularity, reputation for reliability and annual distances travelled can all determine how quickly a car devalues. You need to factor in depreciation to the real-world cost of owning a car.
Price. Buying a new car, some of the money you spend is going to cover car dealers' wages and running costs and contribute to a manufacturer's profit.
Reliability and recalls. Occasionally, new vehicles may have a component that fails prematurely. Sometimes, vehicles are subject to ACCC recalls. If that's the case, then it can result in extra effort on your part to organise the repairs. Also, completely new car models could have a flaw that has yet to come to light.
Buying a used car
Advantages of buying a used car
Value for money. Your money should stretch a bit further if buying a used car. Because the used model has begun depreciating in value, you can sweep in and get a nearly-new vehicle for a substantial saving. The older you're willing to go, the more equipment and tech you'll get in ratio to the cost.
Let someone else pay for depreciation. As soon as you fill out the papers for a new car purchase and drive it away, it starts to devalue. This is called depreciation. Cars depreciate the most during the first three years of their life. After that, they tend to stabilise and decrease comparatively less in value. Buying a used car means you don't have to cover the depreciation costs.
You're not as precious about it. We've all done it, whether it be with a new laptop or phone, when something is straight out of the box, we can be a little overly cautious about using it. Once you accidentally scratch it the first time, you begin to be less precious about it and just get on with using it. The same can happen with cars.
It can be less flashy. Some people don't need (or want) to be seen in the latest thing. Buying a used car might be the way for these people to go.
Save on insurance. A newer car could be more expensive to insure.
Potentially more eco-friendly. If you want to lower your impact on this planet, buying a used car could help. It is said that sometimes as much as 25% of a car's lifetime carbon dioxide emissions are generated during assembly and transport before the vehicle is even driven on public roads. Of course, you'll need to factor in the vehicles tailpipe emissions and fuel efficiency also.
Warranty and roadside assistance. Now cars have such lengthy warranty periods (decades ago, it was uncommon to have a one-year warranty), some manufacturers will actually transfer them from the first owner to you.
Cut out third parties. Buying a used car privately lets you avoid having to talk with pushy salespersons and lets you deal with the owner directly.
Downsides of buying a used car
Sellers. Not all used car sellers are dodgy, but some are. You have to take extra precautions when buying a used car because you don't have the same level of consumer protection. You should ask lots of questions, take along a mechanic and treat everything the seller tells you with suspicion until proven otherwise. Perform credit checks and strongly think about ordering a vehicle report.
Mechanical problems. Buying used doesn't guarantee you're purchasing a lemon, but there could be undiscovered (or undisclosed) mechanical issues with the vehicle.
Riskier. If you don't know much about cars, you really need to take along someone with you who does. They'll want to take a look under the car, inspect under the bonnet and just generally make sure it is in a roadworthy and safe condition. Rust and poorly repaired crash damage can cause all kinds of problems with cars.
What to look for in a $30,000 car loan?
Some elements that you should pay attention to in a $30,000 car loan (or any loan for that matter) include the following:
The interest rate. Whether the rate is fixed or variable will help you out a great deal. If you choose a fixed rate car loan, you'll have the certainty of knowing what your repayments will be each time. With a variable rate loan, you have the option of making extra repayments without charge and redrawing on those payments whenever you need access to the funds. If interest rates go up though, you'll see your repayments increase.
Secured or unsecured. If a lender is asking for a secured loan, this means that they are able to take the vehicle from you if you're unable to meet your repayments. If a lender is asking for an unsecured loan, you don't have to provide an asset as security. However, you'll be charged a higher interest rate as there is more risk to the lender.
Fees. The kind of fees that are associated with the loan is another thing to consider when looking for loans. The possibility of a high application fee, whether there is a monthly fee and whether there are high late fees are all things to look into before choosing a lender.
Balloon payments. Whether a lender offers the option to make balloon payments is something to consider as well. A balloon payment is required at the end of some loans and can be upwards of thousands of dollars depending on how much is left on the amount owed. It does mean though that technically you're "borrowing" less and can sometimes come with a lower interest rate.
Repayment flexibility. Being able to benefit from the option of weekly, fortnightly or monthly repayments is something to consider for your loan. If you're able to tailor your repayments to your cash flow, then it could take some of the stress out of unexpectedly losing a job or having to pay emergency bills.
Do you own the vehicle? Whether you own the vehicle is something to consider as well. Owning the vehicle outright is beneficial as it's yours and it won't be taken away. It also means you can make modifications to it if you wish. Sometimes you don't own the vehicle until you've fulfilled your loan obligations.
Speaking generally, the smaller the car, the more car you'll get for your money. Look at well-reviewed vehicles like the Toyota Corolla, Mazda3 and Hyundai i30. If you go to compact cars, you'll be pretty much buying the top of the line model for $30k and still have change leftover.
There are also some very popular small SUVs in your price bracket, such as the Mitsubishi ASX or the Mazda CX-3.
In terms of utes, you're basically always going to be seeing the very basic work trucks for this kind of budget unless you're open to going to lesser-known car brands like LDV and Great Wall.
Can I finance an older car with a loan?
This depends on the lender. Some lenders have no limit as to the age of the car whereas others will only accept the car if it's less than seven years old.
Should I get a secured or unsecured loan?
That's up to you. If you don't have an asset to put forward in order to be used as security for the loan, an unsecured car loan is better for you. However, if you do have an asset you can use as security (like the car itself), a secured loan is better as you can benefit from a lower rate.
What do I need to make available in order to apply for a $30,000 car loan?
You need three recent payslips, an Australian driver's licence and an accurate assets and liabilities assessment to prove you are able to pay off a $30,000 car loan in the required time frame.
Ben Gribbin is an automotive writer at Finder. He is a life-long car enthusiast, bringing many years of experience working with and writing about cars. During his time, Ben has been a freelance writer, editor and reviewer for a number of leading publications across the UK. He was voted the Guild of Motoring Writers Breakthrough Blogger in 2015.
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Finding the right car loan shouldn't be as hard as finding the right car. Get a loan that will give you pre-approval so you can go shopping with the right amount of funds.
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