An Overview of All kind of Car Finance Options in Australia
What is a secured car loan?
Secured Car Loans. A secured car loan is for customers purchasing or refinancing a car with a value of greater than $10,000 that will be 12 years old or younger at the end of the loan. Using your car as security means you get a reduced rate of interest, so your repayments will be less. Find more at secure car loans here
Can I get a loan for a car?
Start close to home. “Even if you don’t think you can get a loan, go to your bank, go to your credit union first,” says Van Alst. Apply at the bank where you have a checking account or your credit union. And see if your employer or insurance company offers auto financing.
What is a car on finance?
A car loan is a way for you to purchase a new or used vehicle. You borrow money from a lender and pay them back over time, usually with interest. The amount you borrow is called the loan principal. Car loans almost always include interest, which is how lenders make a profit on the money they lend you.
Car financing: Your complete guide
Let’s face it, if you’re reading Drive you probably like cars … a lot. That means you’re more likely to be thinking about make, model and colour than the best way to finance the deal when the time comes to purchase. The danger is that in making the wrong choice, you could end up paying a supercharged price for a mid-range car.
When it comes to the financing, people just want to get it done rather than spend time weighing the alternatives, says a financial planner with Multiforte Financial Services, Kate McCallum. “A lot of the emotion and energy seems to go into, ‘Which car will I buy? What options will I have on it?’
“The golden rule is if it’s a depreciating asset, it’s a good idea if you don’t have to borrow or you can minimise your borrowing.”
An analyst with financial products researcher Canstar Cannex, Joshua Zenas, says a car purchase isn’t regarded as good debt because the borrowing isn’t for something that will appreciate in value. “With this in mind, working out the cheapest borrowing option and being disciplined is the key,” he says.
“They say not to get emotionally attached when buying a home, because that’s when you make mistakes. I think the same applies when it comes to a car.” More information
How does car finance work in australia
There are six major categories of car finance:
Fully Maintained Novated Lease
Each financing option has pluses and minuses depending on your situation.
Car Loans process in Australia
Car loans are similar to Personal Loans, however the car being purchased is security for the loan (some lenders may call it a Secured Personal Loan). Having your car as security means that if you default on your loan repayments your car can be seized. Compared to an unsecured loan, this means the interest rates can be lower.
In order for the car to be eligible to be security it generally must meet some criteria. For example:
- New – cars may have to be brand new and purchased from a dealer only. New car loans generally have lower interest rates.
- Used – can be limited to cars less than seven years old for some lenders, and for many used cars the minimum loan amount may have an impact.
- Minimums – secured loan minimums (the borrowing amount, not the car purchase price) can range from $4,000 to $10,000 for car loans.