Best car loan rates in Australia – Find, compare & apply
You won’t find any single car loan that wears the crown for “best car loan.” But you can find the best car loan for your unique needs. BestFind also understands that low interest rates are a much sought after prize among borrowers and we’ve taken the time to explore your options when it comes to finding top deals and the best car loan rates in Australia.`
What’s the best car loan interest rate in Australia?
Chances are the best car loan rate for most borrowers is also the lowest car loan rate. But since the market is full of ups and downs, the lowest available car loan rate isn’t a figure you can lock onto or set in stone. Therefore, the best car loan rate has everything to do with what’s currently available when you decide to apply.
As mentioned earlier, the best deal for you depends on your circumstances and needs. Generally, the following factors will affect your access to the best auto loan rates:
- Credit score. The best car loan offers are typically available to people with excellent credit. Your credit score summarises your payment history, credit experience, income, and overall financial situation depending on the credit scoring model. This number determines your capacity to service your debt, so if your rating is in the green, lenders will reserve the best terms for you.
- Secured or unsecured. When you apply for a car loan, the lender’s main worry is whether you can afford it. As a show of good faith, you can offer your asset, (typically a car) as security. This is a win-win solution for the lender since they still profit by selling your car if you default. Therefore, it’s no surprise that secured car loans tend to have lower rates than unsecured car loans.
- Type of vehicle. Used cars are usually cheaper but buying one costs more in the interest rate department. That’s because if you’re using the vehicle to secure the loan, new cars carry less risk for lenders than second hand cars which are more prone to breakdowns and failures.
Where can I find the best car loan rates in Australia?
The type of lender can also influence the best rates available to you. If you’re searching for a car loan in Australia, you’ll come across:
- Banks. Banks like NAB and ANZ are often referred to as traditional lenders. They still hold a large share of the lending market, and while they’re generally reputable and reliable, they may have stricter lending criteria.
- Credit unions. Credit unions are another type of popular traditional lender. As non-profit financial institutions, they generally offer lower rates than banks. However, some credit unions only provide car loans to qualifying members.
- Car dealerships. When financing through a dealer, you can save yourself some time and effort since the dealer usually sets the whole thing up. Some dealers dress up their finance offers with discounts on the car price, so this option can be worthwhile as long as total costs remain low.
- Online lenders. These credit providers make getting a car loan simpler, faster, and more convenient. Through digital lending, you can receive your car loan funds without having to join a banking queue. Additionally, interest rates on offer can be a steal because of lower overhead costs.
- P2P lenders. Peer-to-peer lenders are a special type of lender that takes banks out of the equation. Borrowers are connected to investors via P2P platforms or websites.
Which types of car loan rates are available?
When it comes to interest rate type, you can opt for either variable rate or fixed rate financing:
- Fixed rate car loans. Your car loan’s interest rate will not change during the repayment period. Before you apply, you can calculate your repayments and total costs which is convenient if you prefer an easy budgeting process. Although there’s less risk involved (your repayments won’t increase), you don’t get to save when market rates fall. Fixed rate financing is best when choosing a longer loan term for more peace of mind.
- Variable rate car loans. True to its name, a variable rate loan can be full of surprises. The surprise could be pleasant, in which case your rate goes down together with your repayments. But it won’t be fun if the opposite happens (you end up paying more). Generally, variable rate financing is best for shorter loan terms, and when you want greater repayment flexibility as well as a lower rate.
How to find the best car loan rates for Aussies
What’s good for the next borrower isn’t necessarily what’s right for you. In a market flooded with all sorts of offers, there are a few things that can help you find your best car loan match.
- Shopping around. There’s no better and faster way to compare car loans than through a comparison website such as BestFind. All the top lenders are in one place, including interest rate details about each financial product. Our product table even lets you apply different filters for a more effective side by side comparison. All this helps you decode the best option for you.
- Lowering the risk for the lender. Finding a top-tier rate is possible if you’re an ideal borrower. For lenders, that’s someone with an excellent credit score, a clean credit history, a reliable income, and a low debt to income ratio. If a borrower’s resume has all these features, the lender has more confidence in their ability to repay the loan. They’re then more likely to offer the lowest available rate.
- Talking to a loan advisor. Car loans may have any number of features attached. When there’s a lot to figure out, a loan advisor or other qualified financial professional can guide you through the process to ensure a more favourable outcome.
- Negotiating with your lender. Your interest rate is a cost that’s not completely immune from haggling. However, the odds of success tend to be better if you’re a creditworthy client. Keep in mind that you can also negotiate other terms of your loan, such as due dates and repayment frequency.
Can you get the best car loan rate with bad credit?
On average, car loan rates tend to be higher for bad credit borrowers. What’s best for you, in this case, is to look up the range of offers available to borrowers with a poor credit rating. If the cost of bad credit is too much, it’s possible to push the rate down by opting for a secured loan or joint application.
Another way (if you have time) is to go through your credit file and fix errors that could improve your credit score. Having a deposit ready also helps – the less you borrow, the lower your interest rate.
Is the lowest car loan rate always the cheapest?
The best car loan interest rate may be the lowest, but if it’s not partnered with low fees, the deal might not be worthwhile. Australian credit providers usually charge the following fees for their car loans:
- Application fees
- Establishment fees
- Ongoing monthly fees annual fees
- Extra repayment fees
- Early repayment fees
- Late payment fees
The standard loan fees are usually wrapped up in the comparison rate together with the interest rate. So if you want a quick peek at the true cost of your loan, check out the comparison rate.
Other factors to consider when searching for car loans with the best rate
Getting the best car loan rate is a victory but finding the best car loan overall is an even bigger win. Here are some additional features to consider in order to seal the deal properly:
- Loan amounts. You can generally borrow up to $50,000 or more if the loan is secured. If you have pre approval, you already know how much the lender is willing to give you so you can go shopping with a budget in hand. Alternatively, you can find a car loan you like and can afford, then apply for car finance. In any case, it’s important to factor in additional costs of car ownership such as registration and insurance.
- Repayments. Once you’ve figured out the amount you would like to borrow, it’s time to think about how you want to pay it back. Car loan terms range from 1-7 years. The longer the term, the smaller your car loan repayments, and the more you pay. Besides choosing a longer term, you can lower your monthly repayments by making a deposit or opting for a balloon payment (this is a lump sum paid at the end). Either way, our car loan calculator can help you with your monthly budget.
- Extra repayments. Making extra repayments allows you to pay off your loan early, which reduces interest costs. It’s a bonus if there are no penalties and if there’s a redraw facility that gives you access to extra repayments.
- Additional features. When comparing car loans, there’s more to look at than the features mentioned so far. The best car loan rate for you could also come with perks such as online loan management, pre approval, affordable insurance, and more relaxed lending criteria. Use every bit of information in our comparison table to narrow down your options and make sure you qualify before applying.
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