Your car is no longer cutting the mustard and you may need a car loan to get a new car.
Buying a car is something most of us have to do at some stage and some people will upgrade their cars on a regular basis while others will keep their car until it needs to be replaced.
When buying a new (or second hand) car – There are seven ways it can be done:
- You have cash to buy it outright
- You get a loan usually a personal loan
- You get finance from the car dealership
- If your work situation allows it you can get a Novated leases
- If you run a business you can get a chattel mortgage
- With a credit card
- Refinancing a home loan to include a car loan
Every option needs to be considered as they all have their pros and their cons. Talking to a broker will answer any questions you have and they will be able to guide you in the right direction.
Most car loans are between 1 and 7 years and will either be a secured loan ( where the car you are buying is the asset to offset the loan) or it will be unsecured and these will have higher interest rates as they are a higher risk loan.
If you are getting a car for work purposes you should also talk to your accountant to maximise any tax areas.
Can I Get A Car Finance?
Being successful in a car loan application will depend on a variety of factors such as:
- The car make and model
- Is it new or secondhand
- Different lenders and loans will have their own prerequisites
- Your income and this includes wages and Centrelink benefits
- Your credit score and credit history
- Your assets and liabilities
- Do you have any savings
Having a bad credit rating will not stop you getting a loan but it will limit the choices that you have. We can help you with Debt Consolidation
Being on Centrelink is also not a reason to stop you from getting a loan but it can also limit the choices you have in loan types and lenders. Read our article on Centrelink Loans
What Makes a good car loan?
There are a couple of key factors and this is where a broker can really save you from making a costly mistake.
Brokers have several lenders that they can apply to for a loan and they ensure they get the best loan that is right for you.
A bank will only ever offer their own loan products and they may not be the best ones for you or you may not meet their requirements.
A car dealership can have some great loans on the surface but look at the fine print carefully – there are always catches when a loan seems too good to be true. They will also upsell you different insurance policies for the car and these are often over priced and have limitations
The Interest Rate Of The Loan
Do not focus on the advertised interest rate, You must read the fine print of the loan carefully and see advice if you are not sure of what it all means.
Often a low interest rate on the loan will have high fees to make up for the low rate. They have to make their money somewhere!
You need to look out for things like an upfront set up fee and what the ongoing fees for the term of the loan are and often there will be fees like an early payout fee.
Some Other Loan Features
And please get advice for all of these features as they will have catches or conditions somewhere.
- Pre Approvals – Some loans will offer this and it will help when negotiating for a car
- Flexibility to switch between weekly, fortnightly and monthly repayments
- Flexibility to make additional repayments
- Redraw facility
- Balloon Payments
How To Prepare To Get Vehicle Finance
What you need to have ready before you start applying for credit.
- A steady income – You will need several recent payslips
- Proof of identity: driver’s license, Medicare card, passport etc.
- Show your ability to save money – Start saving 3 or 6 months before applying for a loan
- What assets do you have – shares, appliances or jewellery,
- What liabilities or debts do you have – like credit card or afterpay
Not having all of these prepared can impact your success in getting a loan or it will give you less lending options.
Using a broker will give you the best chance of being successful in getting the best loan for you
Call us on 0403 211 361 or send us an email and book a Zoom call with us