Personal Loans

Pros and Cons of Extended Car Loans

What is an extended car loan?

Most financial specialists indicate that an extended car loan is a loan whose duration exceeds 60 months. If you’re thinking about applying for an extended car loan, you should get acquainted with the pros and cons of this decision. For the most part, extending car loans might facilitate some financial relief – and this can seriously be life-changing to people struggling financially. However, what should you know on this topic?

For many, the most important consideration is, of course, the amount of the monthly payment. As a matter of fact, you should note that there are many lenders out there that advertise unbelievably low monthly repayments, as a strategy to attract more and more borrowers.

However, what one might fail to realise is that a low payment is usually the result of long loan duration or the requirement to provide a significant down payment. While facilitating a down payment for car loans is highly recommended to benefit from more favourable terms, it isn’t always a possibility. And this could leave the buyer with only one possibility at hand: which is extended car loans – this could be the only way in which one can manage to keep the monthly repayment amount under control.

Extended Car Loans – Pros

First and foremost, the main reason why so many Aussies prefer extended car loans is due to the low monthly payments. If you have other monthly repayments, for your mortgage or other personal loans, this could mean that you cannot cope with a high monthly payment for your car loan; this could significantly minimise your financial possibilities.

At the end of the day, you should pick the option that works best for your situation, even though this could mean extended loan terms. Failing to cope with your payments is the worst case scenario, and it can happen if you aren’t realistic regarding your budget and needs.

At the same time, it is critical to pick a vehicle that meets your budget. And this doesn’t refer exclusively to the upfront cost of the car – but to its upkeep costs as well, since these add up over the course of time, as well.

While some experts believe that extended car loans should be avoided at all costs, as long as you are aware of both the pros and cons, you’ll know what to expect.

Extended Loans – Cons

Now we’d like to move on to presenting the main cons to extended car loans. As a rule of thumb, the prolonged lifespan of the loan translates into higher interest rates. This is the main disadvantage. Unfortunately, if you were to assess how much money you have spent, you may be shocked.

Evidently, this applies to all sorts of financing whose loan terms are extended. This is why most people prefer higher repayments and shorter loan terms. That’s because, if you go the other way, you’ll end up paying much more than the car’s worth. And you’ll be paying much more in interest and additional costs.

It goes without saying that no one enjoys the thought of paying more than they should. Therefore, perhaps it would be a good idea to consider getting a more affordable car so that you can deal with the repayments.

Taking It All in

When you’re looking for car loans, it’s important to assess a few critical things. For one thing: do you really need a car? For most of us, a car is a necessary acquisition. Do you need a new car? or can you work with a used car? Ultimately, this might suit your financial situation best.

Additionally, you should do your research and look for the most convenient interest rates and loan terms. The offers provided by the lenders can vary a lot. At the end of the day, make sure you factor in the consequences and implications of applying for an extended car loan. In other words, taking out a new form of financing shouldn’t make coping with your debt unmanageable.

If anything, perhaps it would be a better idea to wait until your financial prospects improve and you’re likely to benefit from more favourable loan terms. Of course, this is a possibility only if you can postpone the purchase of the car.

When in doubt, you can always contact Australian Lending Centre – our team of specialists is eager to help you out and get back on track. We provide car loans, refinancing options, and, most importantly, we are willing to customise our offers to your needs.


The Rise of the Six-Figure Granny Flat

In a time of rising rents and housing prices, Australia is experiencing a boom in the construction of Granny flats in a state wide quest to house occupants of all ages from teenagers to middle aged single parents to visiting travellers. Home owners with ample backyards are tapping into this trend whether it be to entice family members to spend a year or two more before leaving the nest, to construct a drinking shed for rowdy boys nights or to earn some extra $ on Air BnB renting a nicely renovated Granny flat out to foreign guests or travellers.

The Six Figure Granny Flat

In a recent survey conducted by Gateway Credit Union they were quite surprised to discover that approximately one third of Australian home owners are seriously considering building or extending their property by adding a renovated and self-contained Granny flat unit. The price is very attractive in comparison with that of a 1 or 2 bedroom apartment or small house with construction costs ranging from $15,000 for a simple extension all the way up to $100,000, the six-figure Granny flat. The obvious benefits being to increase recreation space for family & friends, to add a work from home office or simply to add resale value to the property.

There is also the option for a home owner to rent out a Granny flat extension and contribute a healthy sum toward the mortgage etc, in this case careful upkeep of the premises is fairly essential along with an up to date insurance plan including full liability inspection. In some states laws and regulations involving rental of extended property are presently being reviewed. It may be that from state to state there will be some slight differences in the housing laws. Air BnB is also taking Australia (and the world) by storm with opportunities for financial gain growing exponentially as travellers are offered novel alternatives to mainstream hotels etc. What used to be seen as a backyard, perhaps a swimming pool, or a BBQ area and a hit of cricket, is now being sized up as something more. Pay dirt. Prime real estate for the next Granny flat build, not unlike financing your first house or a larger apartment, the construction costs of a Granny flat may require a trip to your local lending centre to discuss a variety of popular options.

Back in 2009 the NSW housing laws were modified to allow the construction of Granny flats or second dwellings, across all residential zones, which could be approved often as fast as within 10 working days. The results really speak for themselves, an almighty growth in the erection or extension of Granny flats all across the state, a 260% increase in fact over the last six years.

Kim Hawtrey, Associate Director at BIS Shrapnel says “that while there’s been a lot of focus on the construction boom of high-density developments, the rise in the affordable alternative has gone largely unnoticed. It is a granny flat boom. We are building almost 5000 granny flats a year in NSW alone!” Of course it is not rocket science, behind every Granny flat story there exists a budget and a bank balance. Australians are improvising their way through a tough economy and ticking as many boxes as possible in the race to get ahead of the pack.

For the majority of people working a 9– 5 existence, a six- figure Granny flat in the region of $100,000– $150,000 will probably tick more boxes than a $650,000- $750,000 3rd floor, beachfront apartment. For those big European families who traditionally may have members from several generations living in unison in the family home, added recreational space at a premium cost will be an advantage. Likewise shrewd investors, who may buy first and develop later, would look favourably upon the opportunity to house multiple tenants within a single block of land. Particularly across the suburbs of Sydney, Bankstown, Blacktown and Parramatta there has been a tremendous increase in the number of Granny flats since the start of the decade compared with very little increase in the memberships of the local lawn bowls clubs. The six-figure Granny flat has never been hotter.