How to find the finance you need to buy a new Toyota.
From the safe and reliable Camry to the unbreakable Hilux, Toyota has long been the first choice for many Australian car buyers. In fact, figures from the Federal Chamber of Automotive Industries reveal that Toyota was Australia’s most popular car manufacturer in 2016, accounting for 17.8% of new vehicle sales.
If you’re thinking of buying a Toyota but you need help to pay for your new car, it’s essential that you understand the finance options available. Let’s take a look at all the finance options you can choose from, so that you can decide which one is right for you.
What types of Toyota finance options are there?
There are several finance options available to help you buy a Toyota:
- Secured loan. Commonly referred to as a car loan, a secured loan is where you borrow money from a lender to purchase a vehicle and then pay it back over a set period. Interest rates can be fixed or variable and the car acts as security for the loan.
- Unsecured loan. An unsecured loan is similar to a car loan but with the key difference that the vehicle is not used as security for the loan. As a result, the lender faces an increased level of risk and you can expect higher interest rates on an unsecured loan compared with a secured loan.
- Novated lease. A novated lease is a salary sacrifice arrangement between you and your employer whereby you lease a car and your employer deducts the lease repayments from your pre-tax income. Once the lease agreement ends, you have the option to purchase the vehicle at an agreed price. This can be a tax-effective way to purchase a Toyota and is also an innovative way for employers to reward their employees.
- Car lease. This commercial finance arrangement sees the financier purchase the vehicle on your behalf, and then lease the vehicle to you in return for monthly lease payments. You then have the option to purchase the vehicle when the term of the lease ends.
- Chattel mortgage. A chattel mortgage is where a financier loans money to you to purchase a car, and you make regular repayments towards the loan amount. While you take ownership of the vehicle straight away, the financier also takes out a mortgage over the vehicle. Once the loan term has been completed and the funds repaid, the mortgage is removed from the vehicle.
- Dealer finance. The final option is to obtain Toyota finance from the car dealer. This is often a convenient option because you can sort everything out at the same time you buy your car. Loan terms are generally three to four years, with a larger balloon payment required at the end of the term.
- No monthly fees
- No early repayment fees
- Borrow up to $75,000
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- Interest rate from: 5.99% p.a.
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Loans suitable for purchasing a new Toyota
Features to consider when comparing your finance options
Make sure to keep the following features in mind when weighing up the pros and cons of different finance options:
- Loan term. How long will you have to repay the money you borrow? Terms usually range from one to five years for fixed-rate loans and up to seven years for variable-rate loans.
- Interest rate. The interest rate is a crucial factor that affects your regular repayment amounts and the total cost of financing. Rates can vary substantially depending on the financing option and the lender you select, so shop around for a competitive rate.
- Fees. Be aware of any fees that apply to your finance, including upfront application fees and any ongoing monthly fees. Also make sure you know whether you will be charged a penalty for missing a repayment or repaying your loan ahead of schedule.
- Comparison rate. Don’t just look at the interest rate when comparing car loans. You can get a much better idea of how a loan stacks up by looking at the comparison rate. This figure takes into account the interest rate and all fees that apply to determine the total cost of a loan.
- Loan amount. Check the minimum and maximum loan amounts that apply – do they suit your borrowing requirements?
- Repayment schedule. Make sure that any loan you choose has a repayment schedule that can be tailored to suit your budget. Check that you will comfortably be able to afford to repay the monthly amount and whether you are allowed to make additional repayments at any time.
Things to consider before you finance a Toyota
Before choosing a Toyota finance option to help you buy a new vehicle, make sure you’re aware of all the pros and cons that apply to any loan you select. Each of the finance options listed higher up this page has its own benefits and drawbacks, so you’ll need to be aware of those before you sign any loan contracts.
For example, dealer finance can be an easy and convenient solution for some buyers, and also offers lower interest rates than many other options. However, be warned that a low interest rate may reflect the fact that you are paying a higher purchase price for the vehicle, while you should also be aware that balloon payments at the end of a loan term can be large and difficult to manage.
Another important factor to consider is whether or not a loan provides additional repayment flexibility. Being able to get ahead on your repayments if you come into some extra money can be hugely beneficial, but some loans will not allow extra repayments or will see you incur a fee any time you make a payment ahead of schedule. This can greatly affect the total cost of your loan, so remember to check the loan terms and conditions before you apply.
What you will need to apply for Toyota Finance or a loan
Once you’ve settled on the right finance option, it’s time to prepare an application. Before you apply, however, it’s important to check that you satisfy any loan eligibility criteria, such as:
- You must be at least 18 years of age
- You will need to have a good credit history to qualify for most finance options
- You may need to satisfy minimum income requirements
- You are eligible to live and work in Australia for the duration of the loan
To apply for car finance you will need to provide a range of information and supporting documents, including:
- Proof of ID. A current driver’s licence or passport will do the trick.
- Financial information. You’ll need to provide proof of income (such as pay slips and bank statements) and details of your credit history, including any outstanding debts or liabilities.
- Vehicle information. You’ll also need to provide some details about the car you plan on buying, including its make, model and purchase price.
If you’re planning to purchase a new Toyota, there are plenty of finance options available to help fund your purchase. Just make sure to compare your options and research any terms and conditions attached so that you end up with the right type of loan for your financial situation.