Buying a car with a personal loan

Buying a Car with a Personal Loan

Information verified correct on October 28th, 2016

If you need a car but don't have the money, you might want to consider a personal loan.

In a country as big as Australia, a car is often a necessity rather than a choice. The trouble is, cars can be expensive and not all of us have a spare couple of grand lying around to purchase a vehicle that is often needed. This is where a personal loan can help. If you need a car but don't have the money saved you can access credit through a personal loan. There are a few different types of personal loans that can help you finance a car, so make sure you compare your options before applying.

How can you buy a car with a personal loan?

A personal loan from a bank or other financial institution can help you finance a new or used car purchase. There are various lenders offering a range of loans so you have options to pick a loan that meets your needs. Personal loans are usually for amounts of between $1,000 and $100,000, which is a wide range of money, especially if you are in the market for loan to finance a car. Depending on the loan you choose, you can also use part of the loan to make other purchases, such as furniture or a holiday.

HSBC Personal Loan

HSBC Personal Loan Offer

HSBC Personal Loan offer a low interest personal loan with a low ongoing fee.

  • Interest Rate From: 11.99% p.a.
  • Comparison Rate: 12.54% p.a.
  • Interest Rate Type: Fixed
  • Application Fee: $150
  • Minimum Loan Term: 1 year
  • Maximum Loan Term: 5 year
  • Minimum Loan Amount: $5,000
  • Maximum Loan Amount: $50,000

Comparison of Personal Car Loan Interest Rates

Rates last updated October 28th, 2016
Interest Rate (p.a.) Comparison Rate (p.a.) Min Loan Amount Loan Term Application Fee Monthly Repayment
HSBC Personal Loan
A competitive fixed interest rate loan with the option to make extra repayments. Min. income $30,000
From 11.99% (fixed) 12.54% $5,000 1 to 5 years $150 Go to site More
Latitude Personal Loans (Unsecured)
An unsecured loan designed for multiple purposes – renovating, buying a car or travelling. Funds can be in your count in as little as 24 hours.
From 13.99% (fixed) 15.2% $3,000 2 to 7 years $250 (Loans under $4000 - $140) Go to site More
CUA Fixed Rate Personal Loan
A competitive fixed-rate loan with flexible repayments that can help you consolidate debt or make a large purchase.
From 11.99% (fixed) 12.83% $1,000 1 to 7 years $120 Go to site More
ANZ Fixed Rate Personal Loan
A flexible loan option that lets you pay off your debt, buy a car, fix up your house or cover travel costs.
From 13.95% (fixed) 14.81% $5,000 1 to 7 years $0 Go to site More
IMB Unsecured Personal Loan
An unsecured loan offering from IMB with a competitive interest rate
From 11.69% (fixed) 13.09% $2,000 1 to 5 years $199 Go to site More
Pepper Money Unsecured Personal Loan
Apply for up to $50,000 and receive conditional approval within minutes.
From 11.99% (fixed) 11.99% $5,000 1 to 7 years $0 Go to site More
RACQ Unsecured Loan
An unsecured personal loan that lets you borrow funds for what you need. Repay the loan on terms up to seven years.
From 13.95% (fixed) 14.52% $5,000 1 to 7 years $378 Go to site More
SocietyOne Unsecured Personal Loan
Interest rates range from 7.9% p.a. to 24.25% p.a. Comp rate from 9.58% p.a. to 27.99% p.a. depending on your credit score
From 7.9% (fixed) 9.58% $5,000 2 to 5 years 2.5% (of loan amount) Go to site More
RateSetter Personal Loan
Ratesetter allow you to get a personalised rate based on your credit score.
From 9.42% (fixed) 9.42% $2,001 0.5 to 5 years $0 Go to site More
St.George Unsecured Personal Loan - Variable Rate
The Variable Rate Unsecured Personal Loan St.George lets you borrow up to $40,000 for a period of up to 7 years.
From 14.74% (variable) 15.61% $3,000 1 to 7 years $195 Go to site More

Personal loan options for buying a car

  • Car loan. A car loan is a type of credit designed specifically to purchase a vehicle. These loans can have lower rates and fees because the lender uses your car as security, whch they can repossess if you default on the loan. Car loans are offered by lending institutions and by car dealerships in the form of finance or leasing.

information on car loan comparisons

  • Secured personal loan. A secured personal loan is similar to a car loan in that you are required to attach an asset as security, but in this case it doesn't have to be a car. This type of loan also does not limit the use of the loan amount to purchase the car as it can be used for other purposes as well, depending on the lender.

information on secured personal loan comparisons

  • Unsecured personal loan. An unsecured personal loan can be used to finance a car without having to use the car as security in case of a default. The rates on these loans tend to be higher because they are more of a risk to the bank.

information on unsecured personal loan comparisons

  • Instant or low documentation personal loan. These type of loans provide loan options for people who may have bad credit or find it difficult proving their income, such as those who are self-employed or have their assets tied up in investments.

information on instant loan comparisons

How to compare

  • Fees. The fees of any loan are one of the main contributors to the cost of the loan and they are a feature that many people fail to take into proper consideration. You need to consider the upfront as well as ongoing fees when determining the true cost of the loan and you should also consider any fees that are applicable if you decide to make early repayments or refinance the loan at a later stage.
  • Interest rates. When comparing interest rates you should look to see if the rate is offered for an introductory period, or whether that rate will apply for the life of the loan. You should also take into consideration whether this loan is offered as a fixed or variable rate option. A car loan repayment calculator can help you with this process.
  • Loan amount. Ensure the lender is able to offer you a loan amount that meets your needs. For example, some lenders offer a minimum loan amount of $10,000 which may be more than you need.
  • Loan terms. You should also take the loan terms into account when comparing your options. The maximum loan term for most fixed rate loans is five years, whereas variable loans may offer loan terms of up to seven years. The minimum loan term is usually one year.
  • Features and flexibility. Some lenders offer other features that may be of benefit to you, such as discounts on other products from the same lender - it is important to decide if these extras are of use to you as it may incur other fees.. These features can also include things like the ability to make extra repayments or access to a redraw facility.

Things to avoid

  • If you have any concerns about being able to afford your loan repayments then you may want to consider getting a personal loan
  • Avoid applying for multiple personal loans within a short space of time as this information will show up on your credit file
  • Make your repayments on time as your payment history will be visible on your credit file from March 2014.

How to apply

To apply for a personal loan to finance a car you can compare your options and follow the secure link for the lender you have chosen. From there you can fill out the lender's online application form which will require you to provide personal and financial details. To be eligible for a personal loan in Australia you generally need to be over the age of 18 and be a permanent Australian resident.

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