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Factoring in all the factors

Simon cautions against making choices about used vehicle financing on the interest rate alone. “Be careful, as some low rate interest offers can often come with higher restrictions such as minimum deposit requirements, restrictive loan terms, restrictions on what car you can purchase, or minimum credit score requirements.” In short: consider the whole package.

“Next, consider if the interest rate is fixed or variable. A fixed interest rate removes any future uncertainty as the rate and repayment will not change. Some interest rates may appear low, but they may be variable which means the rate and your repayment fluctuate based on the market conditions.”

Simon mentions it’s also worth considering whether you’ll want to pay the finance out early or not. “If this is the case, go with a financier who won’t charge you an early termination fee (or charge you a small amount) for doing so.”

Don’t let flexible work put you off finance

Plenty of Aussies are doing part-time, flexible or gig work these days, but this doesn’t automatically exclude you from being able to get used car finance. It may be a case of speaking with different financiers to understand their requirements for a second-hand car loan.

Because lenders need to be comfortable that a borrower will be able to make repayments, it is essential that your tax records accurately depict your circumstances. In Simon’s words: “Financiers will not accept cash in the hand income that hasn’t been declared for taxation purposes. The key consideration here is that income, no matter the pattern or type, needs to be documented and verifiable. Car finance can be tailored to your needs, and you should find a finance partner to help structure the loan to fit best with your budget and overall needs.”

Smart moves today can benefit you tomorrow

With so many of us juggling multiple financial commitments like HECS debt and rent, Simon suggests thinking ahead when entering into a finance arrangement to avoid trouble down the track. “For younger buyers, making a sensible choice around your first car purchase is critical. Not only should it fit in with your personality, it should fit in with your budget and financier’s expectations around what’s a sensible loan amount for someone of a similar profile.”

It might also help to start by building up some savings based on a similar repayment. “Prove to yourself that you are comfortable putting aside a certain amount each month. Then look to purchase a vehicle for a similar amount. For example, as a young person, if you can prove to yourself that you can put aside $500 a month for 5-6 months, then you might look to purchase a car with monthly repayments of around $500 a month.”

So – will a few fun subscriptions hurt your chances of a loan?

Of course day-to-day spending and living expenses are considered for any loan, including second-hand car finance, so any subscription services will be factored in. Somewhat sadly for our collective love of little treats, it’s all about building good habits over time.

However, the better news is that reliably making weekly or monthly car loan repayments can be a great way to nurture your credit score and credit history. As Simon explains, “It’s never too early to start building up your credit history. Financiers also like to see a gradual increase in your financial commitments. By building that credit history up, customers can later find it easier to finance other bigger purchases such as a home in the future.” So in that sense, sensible use of finance can be a building block.

The real takeaway (pun absolutely intended) is simply this: we all choose how to spend our hard-earned cash, whether it’s on our tiny joys or our long-term plans. Shopping around, thinking ahead and finding balance are all worthy steps. No matter how you spend, there’s no judgment here – just be sure to check if you're still paying for that meditation app you used once last January!