New car loans in Australia – Upgrade and drive in style
Sometimes, taking out a new car loan is well worth it so you can drive only the best. It may cost more, but you’ll likely get a shinier, smoother ride with the latest technology and all the fittings that make you proud to slide behind the wheel. However, finding finance may seem simple, but there are a few essentials to consider.
Here’s a guide that will gear you up to find the best new vehicle finance for your budget and needs.
How does this type of loan work?
You can use a new car loan to buy a mint, factory vehicle complete with the distinct brand-new smell. Or, it could be a slightly used version that’s already garnered a few kilometres on the dashboard. However, lenders generally prefer to finance vehicles under 3 or 2 years if you’re buying from a used car dealer or a private sale.
Here’s more to add to your understanding of how new car loans work in Australia:
Loan amounts. This type of finance deal typically involves loan amounts of up to $100,000. Your borrowing capacity generally depends on the lending criteria and your ability to repay.
Loan terms. You’ll have to repay the funds in full and then some more to cover interest and fees, usually over a period between 1 year and 10 years.
New car loans vs used car loans
You can also finance a second-hand vehicle with 3 or more years on the road. However, you’ll have to sign up for a used car loan. But, between the depreciated value and the likelihood of breakdowns and write-offs, pre-owned vehicles often have steep financing charges.
New vehicles, on the other hand, are less risky, which makes them suitable as collateral. That means the lender can relieve you of ownership rights if you fail to repay. By selling the vehicle, they’ll still recover some or all losses. Although the risk of loss transfers to you, a secured car loan costs less in terms of interest and fees than an unsecured car loan.
Types of new car loans in Australia
- Fixed-rate. A fixed-rate loan has a no-surprises interest rate that toes the same line until all repayments are through. Because you’re locked in from market changes, your budget stays consistent when an increase happens. However, you also can’t count on any savings when rate cuts start to trend.
- Variable-rate. A variable rate loan has a pliable interest rate that can be changed to match market rates. Your budget will also need the same flexibility because your car loan repayments can change with little notice. It’s worth it when rates take a nosedive since you pay less, but you might be hard-pressed once they start to climb.
- Bad credit. If your credit doesn’t stack up well, you can still buy a car with a bad credit car loan. However, the catch is you’ll typically need to secure the loan and agree to a higher rate so the lender can get over the risk factor.
How to find a new car loan that’s right for you
There are two main factors you need to keep front and centre when comparing new car loans: the cost of the loan and flexible terms. That’s because while paying less is undoubtedly great, you also want to tailor the debt to your situation.
Here’s a breakdown of what to do if you want to tick both boxes:
- Look at the comparison rate. Besides just getting a lower interest rate, you should also aim for a favourable comparison rate. This percentage represents a greater portion of borrowing costs, including the interest rate, establishment fees, ongoing fees, and late payment fees. As a side note, it’s also important to make sure the lender informs you of other fees and charges usually not bundled into the comparison rate.
- Use the new car loan calculator. BestFind’s easy-to-use tool comes in handy if you want to keep your monthly repayments and budget on the same page.
- Consider the maximum amounts. If you can afford it, being able to borrow more means you won’t have to settle for anything less than your dream ride. Also, check if the lender will play along if you ask for extra funds to cover related expenses like registration and stamp duty.
- Extra features with benefits. Additional repayments with zero penalties is a feature that should always get your nod of approval. You might also consider a redraw facility that allows you to pull back any extra repayments when you need them. Keep in mind this extra benefit may also have additional fees.
Pros of financing a new vehicle
- You don’t have to wait on your savings since you can borrow up to 100% of the car’s value
- The cost is split into affordable instalments paid over long loan terms
- New car loan rates are typically affordable
- Easier financing process
Cons of financing a new vehicle
- You’ll likely have to borrow more even though the vehicle’s value starts to depreciate as soon as you take the first drive.
How to apply
Once you find a workable finance solution, it’s now a matter of clicking the ‘Go to Site’ button in the comparison table above. You can then jump straight into the application process on the lender’s website.
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