Financing An Imported Car – 4 Important Things You Should Know

Financing An Imported Car – 4 Important Things You Should Know

Buying a car is usually a normal event in anyone’s life. But if someone wants to drive something offbeat, such as an imported car, financing the new car is not as easy as financing a family vehicle. Hence it’s helpful to be educated about the available options.

1. Type of Car Matters

For most car finance lenders, the type of car you wish to finance is important when they evaluate your loan application. There are many reasons for this.

First off, based on the loan product selected, the vehicle is taken as collateral security for the loan as mortgage. When the loan amount is forwarded to you, the bank will enter its interest in the car on a public register.

After you fully pay out the loan, the security interest is removed and mortgage is released. However, if you fail to repay the loan, you may have to return the car to help finalise the loan.

Once the vehicle is sold at an auction, the progress of the sale is applied to your account and if there is still a shortfall, you will be personally liable to pay the outstanding debt.

If in such a condition the imported car is unique, there may be only a limited number of buyers interested to buy it which means that the bank can recover a lower amount than expected. The probability of a lower recovery rate is considered in their evaluation of your loan application.

Second reason is that, the type of car may generate part of the lenders credit score matrix, together with the total amount you wish to derive and the deposit you have contributed.

Because of the lesser expected recovery rate in the situation of a compelled sale, imported cars or grey imports are often thought to be higher risk and thus incur a higher interest rate.

2. Price and Associated Expenses

While applying for a loan, considering only the price won’t suffice when you want to import a car. It’s because there are many associated expenses other than actual price. Some of them are:

Shipping and Customs Costs

You should consider customs charges for both the countries, i.e. Australia and the country you are importing your car from. Plus you should count fees for quarantine inspection, cleaning, port service and international freight. You can hire Dazmac for quarantine service in Australia.

Duties and Taxes

You should count luxury car tax and GST. Depending on the type and age of your car, you will also pay duty of the car.

Compliance Costs

You will need to modify your car to make it roadworthy in Australia.

Insurance and Registration

You should also count the registration fee, stamp duty and insurance cost.

3. What Lenders Cater for Imported Cars?

Overall, the secured loan products of most financial institutions are meant for financing Australian cars that were sold originally as new cars up to 7 years of age.

Imported cars and cars above 7 years of age are typically financed with a personal loan product. The problem here is that the loan evaluation criteria for a personal unsecured loan is considerably higher as there is no security of the bank over the car.

A limited number of lenders specialise in lending a secured vehicle loan for imported cars. Most of the times, the appropriate loan products are circulated through finance brokers because of the extra work needed for starting a loan for imported cars.

4. Finance Broker

You can use a finance broker to get a loan for an imported vehicle. However, you should remember that you may have to pay an obligation fee apart from the lender’s fees and charges. But your lender can also finance that as a part of your loan.

If a finance broker is used, ask for their credit guide and get a credit quote from them.

After you complete all the procedures, importing vehicles to Australia with Dazmac Logistics is a smart move to minimise costs as well as headaches. This will make you a proud owner of the car of your dreams.

Categories: Auto

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