Discover and compare cheap car loans in Australia
Are you eager to slip behind the wheel of your new ride, but worried about finance costs? Check out our handy guide on finding affordable car loans that suit your budget and needs.
What is a cheap car loan?
When buying a vehicle, cheap loans may not be a one-size-fits-all solution. Your definition of ‘cheap’ likely depends on your financial situation and other factors. With BestFind, you can window-shop for the right vehicle loan in the comfort of your own home.
Our comparison table features competitive offers from authorised Australian lenders. All you have to do is compare the available options to find the cheapest option for you.
What are the main features of auto finance?
- Interest rate. A low interest rate is no doubt, the hallmark of cheap credit. Still, beyond that, you also need to choose between a fixed or variable rate. Fixed rates are uniform throughout the repayment period. That means although your repayments never stray from your budget, you miss out on savings if market rates fall. Conversely, variable rates offer potential savings if the rate drops. But, your repayments will require unexpected top-ups if the rate jumps.
- Secured/Unsecured. When it comes to low-priced finance, secured car loans can be cheaper. That’s because the purchased vehicle guarantees the debt in case you fail to repay. In contrast, unsecured car loans have no collateral requirements. As a result, the lender will raise their rates to shield themselves from the higher risk.
- Type of vehicle. New car finance covers brand-new vehicles or any ride under three years old. Generally, it’s easier to score a more competitive rate when buying a new vehicle. On the flip side, lenders consider used car finance to be riskier. Therefore, you may have to deal with a higher interest rate when buying a pre-owned auto. On the whole, these finance solutions give you the freedom to buy most types of new and used vehicles. The list includes caravans, trucks, boats, jet skis, classic cars, and motorbikes.
What types of car loans are available?
- Standard auto finance. A financial services provider will buy the vehicle for you. In turn, you repay the debt over a fixed period. This drive-and-pay deal is mutually beneficial since the lender charges extra on top.
- Dealer finance. Some dealerships will let you shop for both a set of wheels and vehicle finance under one roof. With this arrangement, you can drive away quickly and with less paperwork involved.
- Car lease. You enjoy the ride while making regular payments. Once the lease contract expires, you can renew it. Alternatively, you can purchase or return the automobile.
- Chattel mortgage. This option offers secured vehicle finance to business owners and the self-employed.
- Car hire purchase. This business finance solution covers asset purchases while preserving cash flow. The asset belongs to the lender, and transfer of ownership only occurs when repayments are complete.
- Operating lease. You make repayments in a straightforward rental agreement. Once the lease expires, you turn over the vehicle.
- Novated lease. A novated auto lease is one of your top options if you want to shave some costs off your debt. However, it requires your employer’s blessing since repayments come from your pre-tax earnings.
How do I find the cheapest car loan?
Applying for a loan doesn’t mean you have to deal with aggressive charges and restrictive terms. Consider these factors to keep your borrowing experience flexible and pocket-friendly:
- Comparison rate. Finding the cheapest car loan interest rate may be your top priority. Still, it’s a good idea to keep your eyes peeled out for the comparison rate. This percentage is a more realistic measure of how affordable borrowing money is, as it includes all standard fees, plus interest.
- Extra repayments. If you want to speed up the pay-back process, find out whether this is possible. Making early repayments should, ideally, cost nothing to keep things inexpensive.
- Monthly payments. Our calculator is handy if you want to work out suitable, estimated repayments for your debt. This easy-to-use tool will help you choose manageable and cost-effective payments in record time.
- Unique features. Finding the best, cheap auto finance requires a more comprehensive sweep. Look over everything from insurance and pre-approval to balloon payments and other requirements. Ultimately go for the option that ticks many boxes when it comes to your needs and budget.
What other methods can I employ to get inexpensive vehicle finance?
If your policy is “every cent counts” we have extra tips that will lock down borrowing fees even further:
- Become the ideal borrower. Credit providers will offer low-interest car credit if they trust your ability to repay debts. Factors that boost your creditworthiness include having a high credit score and steady income. Paying a deposit also works in your favour in terms of keeping costs low.
- Negotiate. Some lenders have fixed borrowing costs while others base their calculations on your risk profile. The second option leaves more room for favourable negotiations. If your credit profile looks good, you can easily bag a cheap deal for yourself.
- Pay it off early. Exiting your agreement at an earlier date helps to avoid further ongoing charges. Minimal payments may seem attractive, but if they stretch on for a long time, borrowing costs will add up.
Frequently asked questions
How do I apply for a loan in Australia?
Our comparison table provides a convenient way to get reasonably-priced loans. Once you find the right offer, kick-start your online application by clicking “Go to Site.” You will need to provide documents such as your driver’s licence, passport, payslips, tax returns, and bank statements.
What’s my borrowing capacity?
You qualify for amounts between $1,000 and $100,000, payable over one to ten years. However, the specifics depend on your lender, income level and creditworthiness.
Which costs should I look out for when borrowing money to buy a vehicle?
Standard charges for vehicle finance include:
- application fees;
- ongoing service fees; as well as
- early and late payment fees.
When you check out our comparison table, you will notice that these vary from lender to lender. You can click “View fees and additional info” to investigate all costs, so you know what to expect.
Do I still qualify for the low-priced car loan rates if I have bad credit?
If your credit rating needs some work, you may still qualify to get affordable loans. But, you may have to stick to secured and guaranteed loans to minimise the lender’s risk.
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