Welcome to Car Loans web site
All about car finance
What is a Car Loan? This is a secured personal loan used
specifically to buy a new or used car or any other type
of vehicle. Some lenders will provide you with an unsecured
loan to buy a car, meaning you will get the cash loan which
you would use to buy a car.
How do these two types of loans compare? A secured personal
loan will have lower interest rates but you are required
to take full comprehensive insurance on the vehicle before
the loan is approved. With an unsecured loan the interest
rate will be 2% - 3% higher than the interest rate for a
secured personal loan, but you don't need to take full comprehensive
insurance on your car.
The interest rate can be variable or fixed. In general,
if you think you will repay your loan before the end of
your contract, you should take a variable interest rate.
If you would like to have lower monthly payments then you
should opt for a fixed interest rate. Other fees and charges
include an establishment (application) fee which can range
from $50 to $250. Also some lenders will have a monthly
fees for the duration of your car loan contract.
If you pay out your loan before the end of the loan contract
you may also have to pay an early repayment fee. This fee
will vary from one lender to another. You should also enquire
if there are any missed payment fees, meaning each time
you are late with your monthly payment you may be penalised
with an additional fee. Taking a new loan could place an
additional strain on your finances. If you are not able
to repay your loan and no debt
help is available, your car could be repossessed.
Another option is to use debt
consolidation and merge
your car loan into your mortgage reducing the interest rate and repayments.
Depending on the intended car use (ie. business, personal
use, etc), car loans can be categorized as:
Car Loans, Commercial
Hire Purchase, Finance
More to consider when looking for car finance
To obtain a car loan you may approach a lender directly
such as banks, credit unions, building societies and private
lenders. Many car yards offer car loans as well. You may
also wish to contact a broker who will shop around for you
and look for the best car loan available.
When looking for a car loan you should consider the following:
Can car loans be pre-approved?
Knowing your budget in advance will help you with negotiating
the price of the car. Also, it will prevent you spending
more money than you have.
Are there application fees for car loans?
Different lenders have different application fees. They
may range from $0 to $250. In some cases you are better
off to pay a $250 application fee and have a lower interest
rate rather than have a $0 application fee and a high interest
Are there ongoing monthly or annual fees?
Some lenders will you charge an ongoing monthly fee, they
may call it an account keeping fee and it could be up to
$15 per month.
What is the interest rate?
This is the obvious question when applying for a car loan.
The higher the interest rate the more you will pay at the
end of your car loan.
Is there a choice of fixed and variable interest rates?
If you are planning to make additional payments on your
car loan, and in doing so pay off your loan more quickly,
you should take a variable interest rate. A fixed interest
rate is more suitable for you if your goal is to have your
monthly repayments as low as possible.
Can I make extra repayments or lump sum repayments?
Make sure this is written into your car loan contract, so
that you are not penalised if you pay your car loan early.
The more extra payments you make the more money you will
save and your loan will be repaid sooner.
Is there an early repayment penalty?
If there are penalties make sure the amounts are clearly
outlined in your loan contract.
Are there missed payment penalties?
Again, different lenders will have different penalties for
missed payments. Make sure that you know what they are.