Compare Car Loans

With the 100’s of car loan products available it can be confusing when you are trying to sort through the car finance options to find the best loan to facilitate your car purchase, particularly when you have found the car you want to buy, and time is short. The comparison table below features a selection of car loans currently available and a handy repayment calculator, which enables you to enter the amount you wish to borrow and the period over which you would prefer to repay the loan, it then calculates the monthly repayments for each of the options. To rank these according to the lowest monthly repayment simply click the "monthly repayment" column header.

Car loan comparison

 

This car loan comparison guide is designed to help you navigate through the car loan finance options with the objective of identifying the best car loan for your circumstances. We’ll start with the basics of what types of car loan are available.

 

Types of car loans

Two main types of car loans are offered by pretty much all the lenders; both have their merits and the one that best suits you will be dependent on your financial situation and age of car you are looking to purchase.

 

1. Secured car loan

A secured car loan requires the borrower to provide an asset as security against the loan, this is generally the vehicle you are purchasing with the loan. The primary benefit of the secured car loan option is that they generally offer lower interest rates and fees, though these should be considered in conjunction with the fact that the lender has the right to take possession of your car if you fail to make the required repayments. If you are confident that you can cover the repayments on the loan for the full term of the loan a secured car loan should certainly be on your shortlist, as the lower rates and fees will make this a cheaper option so long as you do not default on the loan.

 

2. Unsecured loan

An unsecured loan does not require any security to be provided against the loan but the rates and fees will generally be higher than those offered on secured car loan. As no security is being offered against the loan, to successfully apply for these car loans you will need to have a blemish free credit report and be able to prove you have secure employment and your finances are such that you can afford the repayment son the loan.

 

3. New car loan

New car loans will generally feature better terms than used car loans as they are nearly always secured loans. Lenders offer lower rates and fees for new car purchases as they are considered a lower risk than a used car. If you end up defaulting on the car loan and the lender has to sell your car to recover their loss, new cars are far easier to sell than used cars.

 

4. Used car loan

Used cars are a popular choice as they can represent good value and see you avoid the instant depreciation associated with purchasing a new car. By purchasing a used car you will certainly save on the total cost of the car, though you will generally have to pay a higher interest rate and fees on your used car loan as lenders consider used cars a higher risk. The choice of a secured or unsecured car loan will also be influenced by the age of the car you choose to purchase as most lenders have an age cap on the cars they are willing to finance on a secured basis, this is generally 5 years.

 

Calculate your car loan repayments

Try our car loan repayment calculator, simply select your loan amount, term and interest rate. These calculations will help you undestand what you can afford to borrow to purchase your new car, and what this level of borrowing will cost you in interest charges over the full term of the car loan.

Car loan features to include in your comparison

 

  • Variable interest rate - This interest rate may change across the term of your car loan in line with the changes to the lenders cost of funding your loan. Any shifts in the variable interest rate on your car loan will in turn cause your repayment to change, to understand the levels of potential change on a $10,000 loan over 4 years, a 1% increase in your variable rate will increase the monthly repayment by around $5 and a 2% shift would increase your monthly repayment by around $10. Use the car loan repayment calculator above to consider various scenarios.
  • Fixed interest rate - This interest rate is locked for the full term of the car loan and will not change even if the lenders cost to fund the loan change. This fixed rate option can make budgeting a little easier as your repayments will stay the same for the duration of the car loan.
  • Comparison rate - This rate is designed to help consumers make a comparison of car loans as all the fees are included with the interest rate to provide a comparison rate for each loan.
  • Extra repayments - One of the most effective ways of minimizing the interest you pay on your car loan is to make additional repayments above your usual repayments. You may not think you will be in a position to make extra repayments now but over the course of your loan your circumstances may change which will make this a possibility so it’s a feature well worth considering even if currently it feels like one you may not use. Some lenders will charge a fee for each additional repayment, so be sure to look out for these and include them in your comparison.
  • Redraw facility - If you do manage to make extra repayments over and above your required repayments this redraw facility can be used to access the amount you have repaid as extra repayments, which provides god flexibility which could be useful if unexpected bills arrive which need to be covered such as a medical expense.
  • Payment frequency - Most car loans offer the flexibility of either weekly, fortnightly or monthly repayments with some even allowing you to name the date of the month you’d like the repayment date to be, which can be handy when you are looking to synch the repayment date with the date you get paid each month.
  • Loan term - This is the period over which you agree to repay the car loan in full, for secured loans this is typically between 1 and 15 years and for unsecured loan between 1 and 7 years.

 

Car loan fees

These can differ quite significantly by lenders so they should definitely be included in your car loan comparison. The key fees are:

  • Application fee - This is a one off fee which covers the lenders costs of administering your car loan application, you may it also referred to as asset-up or start-up fee, and it’s generally in the range of $100-$300.
  • Early Repayment fee - Break cost fee: If you to choose to pay off your car loan in full before the end of the loan term the lender will generally charge you this fee which is also referred to as the break cost fee the charge is usually in the range of  $100-$200, and in the main is applied to fixed rate car loans.
  • Monthly Service fee - Also referred to as an ongoing fee which is usually in the range of $10-$15 per month, which sounds quite small until you calculate the full cost of this, so for example over of 4 year loan the monthly fees would total $480 over the full loan term, assuming a $10 per month fee.
  • Document Release Fee - This is charged to cover the lenders administration costs associated with closing the loan once you have fully repaid it. It’s also referred to as the discharge or closing fee, though increasingly lenders are setting this fee at $0 as they improve their processing efficiency.
  • Late payment fee - This will be charge each time you fail to make a repayment on time, on time meaning that the money for the repayment arrived in the lenders account on or before the repayment date, not that you sent it on the repayment date.

 

Documents required to make a car loan application

To ease the application process pull these documents together prior to commencing your on line application:

  • Identification - Most lenders will require two forms of identification such as a Birth certificate, passport, driver’s license or a recent utility bill with your name and current residential address on it.
  • Proof of income - You’ll need to validate that you are in fact earning the amount you claim in your application, this can be by providing salary or wage slips or your latest tax return.
  • Expenditure - to assess your ability to pay your car loan the lender will be looking to understand how you are managing your money, sight of your recent bank statements from the last 3 months plus any credit card or store card bills will help with this. 

Frequently Asked Questions

Are the low rate car loan deals offered car dealers good value?

Many dealers, particularly new car dealers, may offer to provide finance to make your car purchase simple and quick. But do these dealer car loans and low rate finance offers represent good value?

In most cases the car loans offered by dealers are not as good value as their interest rates suggest, as these low rates, which are often in the 1-2% p.a. range mask the fact that the interest rates are linked to the cars full list price and fully loaded delivery charges. So if you opt to take the dealers finance option it is highly likely that you will have no opportunity to negotiate on the car price, which can mean you will be paying in the region of 5-10% more than you would if you had negotiated.

Here's some tips when considering dealer finance for your new car: 

  • Ask how much the total repayments are over the life of the loan, regardless of the interest rate.
  • Compare the dealers low interest rate offer with what's available outside the dealership.
  • Ask if the low finance rate is linked to the price of the car, or is the price of the car negotiable as well.
Can I get pre-approval for a car loan so I know how much I have to spend on my new car?

Yes many lenders will provide pre-approval for your car loan, subject to lending criteria. By getting pre-approval you can look for your next car with a firm understanding of your budget, and confidence that you can make the purchase relatively quickly once you have found the right car.

Can I use a car loan to buy a motor bike?

Absolutely, car loans are probably better referred to as vehicle loans, so can be used for motorbikes as well as cars.

Can I use a car loan to buy a used car from a private seller?

Yes, car loans can be used to purchase a car from private sellers. When you make your loan application you will need to supply some details on the car you are purchasing, such as registration number and vehicle identification number (VIN) for the loan to proceed. These details enable the lender to check the car actually exists and also maybe used when using the vehicle as security for the car loan.

How can I calculate how much I can afford to borrow to buy a car?

Our Loan Repayment Calculator is designed to help you assess waht your borrowing capacity is. Simply enter the loan amount you would like to apply for and your preferrred loan term and it will calculate your monthly repayments. These repayments can then be used to assess the affordability of the loan, given your financial situation.