Looking for an easy way to get behind the wheel of a new car? Try financing a vehicle through a car loan.
You’ve found a car that you love. The colour is perfect, the size is just right, and it drives like a dream — but that price tag causes a problem. Car financing is a way for you to purchase that vehicle without emptying out your bank account. You can purchase your car and pay it off while you drive instead of saving up and waiting to purchase your vehicle later on.
In order to properly navigate the world of car financing there are a number of factors that you should consider, as well as factors that will help determine your eligibility for a car loan.
IMB New Car Loan
Apply for IMB New Car Loan and enjoy a great low fixed interest rate with no ongoing fees.
- Interest Rate From: 6.34% p.a.
- Comparison Rate: 6.62% p.a.
- Interest Rate Type: Fixed
- Application Fee: $199
- Minimum Loan Term: 1 year
- Maximum Loan Term: 7 year
- Minimum Loan Amount: $2,000
- Maximum Loan Amount: $75,000
Car loan comparison
How does it work?
Much like personal loans, car finance consist of money borrowed from a lender. The main difference with this type of finance is that it’s intended to be for the purchase of a car. Once you find a loan that suits your personal needs and matches your financial situation you can finalise the loan and get your use it to purchase your vehicle.
Once you secure your car finance you’ll be subject to interest rates and will have to repay the loan based on the terms set out in the original agreement. These terms will be set by your lender and may have additional fees, stipulations, and built-in penalties for failing to pay. Due to these differences in terms it’s wise to compare different car finance options to get the best deal.
Types of car finance loans
A general car financing product is money borrowed for the purchase of a vehicle, but there are different types of car loans that can offer you different options and terms. Be sure to look at all of your available options and decide which type of car finance option is right for your situation.
- Secured loans. This type of car finance is when the lender uses something, in this case the car, as collateral if you can no longer repay the loan. These usually have lower interest rates since there is less of a risk on the lender’s part. This type of car finance is usually mandated for the purchase of a vehicle only and the money can’t be used for other purposes.
- Unsecured loans. The opposite of a secured loan, an unsecured loan is one without any collateral. They usually come with higher interest rates and fees since the lender has more to lose and no protection against default.
- Dealership finance. This is a car loan that is done through a car dealership. A dealership usually has their own financial institution with set terms that they use to offer finance options to buyers. The loan is paid directly to the dealer and their finance company.
- Chattel mortgage. This is a commercial option that allows a business to purchase a vehicle while the lender holds a mortgage over the car or commercial vehicle. This is done as a way for the lender to secure the loan.
- Novated lease. This is where the loan is an agreement between you, your employer, and the lender in question. There is an agreement struck between the parties that says your employer will take out the repayments from your paycheque and deposit it to the lender. Keep in mind that this isn’t offered by all employers.
- Fixed and variable rate car loans. These types of car finance are where the interest rate may stay the same throughout the course of the term (fixed rate) or it may change along with market rate fluctuations. A fixed rate loan may see you miss out on favourable market conditions, but a variable rate is harder to budget since the rate can change.
How to compare your car financing options
All loans are not created equal, and some may have stipulations that can hurt you in the long run. With any type of finance you should shop around for the best deal and compare options to find one that fits your individual circumstances. Here are a few things to consider when comparing your car financing options:
- Fees. Loans may have additional fees attached to them that you’ll have to pay. Compare things like application fees, annual fees, and other additional charges and choose the loan that won’t hurt your finances too much in the end.
- Repayment options. Some loans may give you the option to pay in instalments that line up with your repayments, whether that be weekly, fortnightly or monthly, while others may allow you to make additional payments to pay off the loan faster. Compare repayment options between loans to find one that suits you.
- Rates. Some interest rates may be higher than others depending on the lender. Compare these rates to see which will give you the best deal and decide if you’d rather pay a variable rate or a fixed rate.
- Loan terms and amount. Some loans have a certain minimum amount which may be higher than the actual amount you need, and may see you wasting money in the end. Be sure to choose the loan amount that best fits your needs. You’ll also want to compare the length of the term, as some loans can be for as short as one year while others can be stretched as long as seven years.
- Flexibility. You may want to find a car loan that offers some flexibility in repayments. Some loans will allow you to pay more than the designated instalment so you can pay off the debt faster. Some may even offer discounts for bundled package, like a car loan and personal loan combined.
- Restrictions. A car loan may have certain restrictions that may not meet your needs. Some lenders may say that the borrowed money can only be used toward the purchase of a vehicle, while others may say that you can only pay designated amounts at set intervals. Compare these restrictions between loans and find your best fit.
Things to watch out for
There are pros and cons of car financing but if you take the time and compare different loans, do your research on restrictions and fees, and choose the best option for your situation the process can be easier.
You should also make sure that a car loan is something you can handle financially; you don’t want to default on the loan because you can’t repay it. Failure to repay can be an even bigger problem if you chose a secured loan since the lender has the right to repossess the vehicle and sell the it to regain their lost money.
How to apply for car finance
Once you’ve compared all of your car loan options and decided on the loan that is right for your financial situation, you can easily apply for the loan simply by hitting ‘Go to Site’. All institutions will have their own policies, qualifying factors, and methods but there are some general rules that most lenders follow.
- When you apply you’ll need to have proof of your identity on hand. This includes personal details like your date of birth and full name.
- You’ll also need financial information including your income and credit history (debts, liabilities, obligations). You’ll need proof of all of this, too.
- You’ll also have to have information regarding the car on hand. This includes the make and model of the car along with the value of it (especially for a secured loan).
Car financing may seem a bit overwhelming at first but if you take one step at a time and do your research, the process can be much easier. Remember to compare your options in order to get the best deal and find the right fit for you.
Once you choose the best car financing option for your situation you can finally get behind the wheel of your new vehicle without emptying your bank account.