If you’re anything other than a gazillionaire, you’re probably feeling the pinch these days when it comes to… well, everything. And you’re not imagining it: the RBA cash rate has been bumped up 13 times since 2022, and we’re spending around 11% more on groceries than we were just one year ago.

So what’s really breaking the bank during this cost-of-living chaos? First, let’s look at the most obvious menace from our modern times:

Good ol’ subscription creep

Ever done that thing where you add up your monthly subscriptions and delivery app charges, then immediately felt a bit sick? Yep, same here. Weekly takeout and deliveries, rideshare trips, streaming platforms and audio subscriptions – our little treats are undeniably awesome, but of course they add up.

Sadly for our entertainment levels, this is why subscriptions are one of the first places people look when funds are tight. 2024 data from NAB showed that 37% of Aussies had recently cut back on a streaming service, and 33% had cut back on magazines, apps and the like. Plus when you think about it, paying for regular deliveries or rideshare trips can get ‘uber’ expensive pretty quickly and easily amount to regular car repayments for your own car.

So how can you make sure you’re getting a good deal when it comes to the essentials, like a second-hand car loan? We asked Carma’s Director of Customer Finance, Simon Bozzi, about how to find the right car finance if a new (used) car is on the cards. His first tip? Don’t get just one finance quote.

The value in shopping around

Simon says (touch your nose – no wait – sorry) that it’s important to start with some comparison quotes when seeking the best used car loans. “Multiple quotes really help the customer to make an informed decision. At Carma, this is why we have four preferred finance partners: to ensure our customers are provided with comparison quotes across a range of lenders. Finance may not always be the solution, but it should always be a consideration when looking to purchase a car.”

Simon also explains that when it comes to the decision itself, it’s really important to consider the financier’s overall finance package – not just the interest rate.

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!