Car Loan Comparison

Buying a new or used car, but don’t have the spare cash stashed away for a rainy day? Then you need a cheap car loan with a low interest rate to get the car you need. Finding the best finance doesn’t have to be difficult. In fact, the whole process of applying for a car loan deal is easy. Whether you are looking to finance a new or used car, you’ll be able to find exactly what you need right here. You don’t even have to go into your bank to fill out forms, you can do it all online at home!

A Step-by-Step Guide to Car Loans

A car loan is one of the easiest ways to get into your next car sooner. By purchasing your new or upgraded car using a loan, you can get the car you want now and spread the repayments over the years whilst you get to enjoy use of the car. There are a numerous lenders in Australia offering car loans, and many of them have different features and benefits, along with a range of fees and interest rates.

Saving up to purchase a new car outright is not an easy task, but a car loan can get you into your dream car much sooner. And if you choose the right car loan, you can save hundreds or even thousands of dollars in fees and interest.

Various Types of Car Loans Are Available

Car loans can generally be split into two different categories – secured car loans and unsecured car loans. There are other types of vehicle financing options such as novated leases and hire purchase agreements, but here we will concentrate on standard car loans.

Secured car loans: With a secured car loan the lender takes security over the vehicle you are purchasing. This means that if you default on the loan and don’t make acceptable arrangements to repay the loan, the lender can take possession of your vehicle. Because the lender has ability to take possession of your car to recoup their losses, this type of car loan is generally seen as lower risk by the lender and they may offer you a lower interest rate. Secured car loans are generally restricted to newer vehicles or vehicles over a certain value, however there are some smaller lenders who will offer a secured car loan over almost any type of car.

Unsecured car loans: An unsecured car loan is basically just a personal loan. There is no asset or security attached to the loan and no restriction over the type of car that can be purchased. If you default on the loan the lender cannot automatically take possession of your car, however they can apply to the court to take possession of the car or any other asset in order to recoup their money. An unsecured loan will generally feature a higher interest rate than a secured car loan. Regardless of whether you choose a secured or unsecured loan, most car loans issued in Australia will have a fixed interest rate, meaning that the interest rate will not change.

Help With Choosing a Car Loan

The first thing most people will look at is the interest rate. Whilst the rate is important and will have a major impact on your monthly repayments, there are a number of other factors you should consider when choosing a car loan.

Many car loans will feature an establishment fee and ongoing fees. You need to take these figures into account when comparing interest rates so that you are aware of the total cost of each loan.
One of the biggest decisions to make will be whether you choose a secured car loan or an unsecured car loan. Generally a secured loan will feature a lower interest rate, so if your car is acceptable by the lender a secured loan could be the way to go.

It is ideal to find a car loan that offers plenty of flexibility. Your car loan should enable you to make weekly or fortnightly repayments, as well as additional lump sum payments without any penalty. It should also allow you to repay the loan early without excessive break costs.

Tips for Repaying Your Loan

Overpaying: As with any other type of loan, the key to repaying your loan sooner is to pay more money more frequently. By paying your car loan fortnightly you will make one extra monthly repayment per year, which can save you considerable time and interest over the life of your loan. This works because you will pay 26 fortnightly repayments over the year, which equates to 13 monthly repayments.

Pay more than the minimum: It is also best to pay more than the minimum repayment. By paying the minimum repayment you will be paying the full interest amount over the full term of the loan, but by paying extra you will reduce your loan balance sooner which saves time and interest.

It is recommended that you pay as much extra as you can afford in order to reduce your loan balance as quickly as possible, but if this is not an option it is good to at least try to round up your repayment to the nearest $10. This may not seem like much, but it will make a difference over time.

Typical Features

A standard car loan will be relatively similar from one lender to the next, but there are a few different factors that you should take into account before choosing one.

Secured or unsecured: A secured car loan will generally feature a lower interest rate, however they are often only available on vehicles younger than a certain age. The loan provider will generally dictate which type you are eligible for.

Loan term: All car loans must be repaid within the loan term. This will generally be between one year and seven years, with larger loan amounts generally featuring longer loan terms.

Ongoing fees: Many car loans will feature an ongoing monthly fee. This isn’t necessarily a bad thing, but you should do your research to ensure you’re not paying higher fees than you need to.

Establishment fees: An establishment fee will be payable when setting up most car loans. This fee is designed to cover the lender’s costs of setting up the loan and can vary greatly from one lender to the next.

Interest rate: The interest rate charged on your car loan will have the biggest impact on your monthly repayments. A lower interest rate is favoured, provided that excessive fees and charges don’t offset the lower interest rate.

Repayment flexibility: Your car loan should give you the flexibility to make weekly or fortnightly repayments, additional repayments and the ability to repay your loan sooner without penalties or break costs.