Affordable loan repayments

Want to know more about the cost of car loan repayments and what your options are?

Repayments and your budget

No matter how manageable a loan repayment amount might sound, if you don't have a handle on your budget it could be more than you can afford!

Understand your budget

If you haven't done a budget for a while - or never have - it is worth taking a few minutes to understand exactly how much of your income you have spare to use for loan repayments.

There are some great online budget planners available that do most of the work for you.

Put your car in context

If you know you can afford car loan repayments, also take a moment to consider...

What other financial goals (or obligations) do you have?
When do you want to achieve them?

For example, if you're planning a big holiday next year, paying for airfares and spending money could take a chunk of your income that you need to plan for now.

These questions could influence the repayments you want to commit to.

What you can afford

Once you know how much you want to put towards car loan repayments from each pay, you can work backwards:

Use a car loan repayment calculator to figure out what you can borrow
Find a car that suits your budget
 

Finance options that influence your repayments

The main variables of your car finance that have an impact on your repayment amounts are:

Amount you borrow

The most effective way to reduce your repayments may well be to spend less on your car purchase so you borrow less, or put up a bigger deposit.

Loan term

Spreading your repayments over a longer period reduces each repayment amount (but could increase the total cost of the finance!).

Interest & fees

Interest is built into your repayments. The more your loan costs you in interest, the more you'll have to pay back, either through larger individual repayments or over a longer payback period.

Alternative car finance options

A car lease can reduce the regular repayment amounts you make by defer a large one-off payment at the end of the lease term.

Read Considering a Car Lease for more information.