Need to finance your vehicle? How to find the best car loan* for you.
A car is an expensive yet necessary purchase for the majority of Australians. For people who aren't able to finance the total amount for the car, a car loan can help you get into your new car sooner and then budget for the repayments over time. There are various lenders who offer different types of car loans, so you should always compare your options to find the best car loan* for you.
Car Loan Offer
Apply for Beyond Bank Car Loan and enjoy a great low fixed interest rate with no ongoing fees. You'll also get access to a limited time 'Special Offer' rate on your loan.
- Interest Rate From: 5.69% p.a.
- Comparison Rate: 5.97% p.a.
- Interest Rate Type: Fixed
- Application Fee: $175
- Minimum Loan Term: 1 year
- Maximum Loan Term: 7 year
- Minimum Loan Amount: $25,000
* The offers compared on this page are chosen from a range of products finder.com.au has access to track details from and is not representative of all the products available in the market. Products are displayed in no particular order or ranking. The use of terms 'Best' and 'Top' are not product ratings and are subject to our disclaimer. You should consider seeking independent financial advice and consider your own personal financial circumstances when comparing products.
How do car loans work?
Car loans work much in the same way as other personal loans, except that the vehicle you're purchasing is used to guarantee the loan. This is why car loans come with much more competitive rates. If you don't want to attach your vehicle to the loan, you can consider an unsecured personal loan to finance your car purchase.
A car loan can be offered as a dealership finance loan or as a standard car loan from a bank, credit union or standalone lender. The type of loan you are eligible for will depend on whether the car is new or used, how much the car is worth as well as your own credit history and financial situation.
Which car loan is the best?
The truth? There is no one best car loan. This is because not everyone looking for a car loan is buying the same car, earns the same income or is in the same financial situation. The best car loan really depends on what you need from your loan, what loan you're eligible for and what will work well for your budget and lifestyle. However, you can find the best loan by comparing your options and considering your own needs, which we'll show you how to do in the next section:
How to compare your car loan options
Here are a few things to keep in mind when you're comparing your car loan options above – this will help you settle on the best loan for your needs.
- What are the fees?
This is an important aspect to consider when comparing car loans. Excessive fees can offset any benefit offered by a low rate. You should look out for upfront fees that cover the cost of setting up your loan as well as ongoing fees which include monthly and annual fees. The comparison rate includes these fees and can give you an idea of the true cost of your loan.
- What interest rate will you be paying?
When comparing rates you should look to see if they are fixed or variable, and also check if the rates offered are only for an introductory period or whether they will apply for the life of the loan. If the loan does have an introductory rate, you need to check the revert rate.
- What are your loan terms?
The length you are able to take out the loan for will differ between lenders, but generally it will be between one and seven years.
- How much can you borrow?
The loan amount you are offered by the lender will depend on a couple of factors. For most lenders your credit history and financial situation will be a determining factor, and for a secured car loan the amount will also depend on the cost of the car. Car loans are generally for between $1,000 and $100,000.
- What is the type of loan?
Take note of the specific type of car loan that you are looking at. This can be a new or used car loan, low-interest car loan, bad credit car loans or pre-approved car loans. The category type your loan falls under will help you compare it to other similar loans.
- Consider a newer vehicle. New car loans come with lower interest rates than used car loans because the lender is taking on less of a risk. Most new car loans don't require you to purchase a brand new car; you can usually secure a vehicle less than two years old for this loan.
- Rate quotes without credit enquiries. While credit enquiries are not a bad thing to have listed on your file, too many enquiries can have a negative impact on your credit score. If you're submitting an enquiry for a car loan rate estimate make sure no hard credit checks are listed on your file. If a credit check is required, don't enquire with too many separate lenders.
- Detail all of your assets and finances when applying. Some lenders offer lower interest rates if you have a strong net position (assets minus liabilities). So even if you are applying for a secured car loan, listing your other assets may give you access to a better rate.
- Leave a down payment. If a lender sees you don't need to borrow 100% of the purchase price of the vehicle you may be eligible for a lower rate.
- Compare your options before you apply. This will show you which lender has the lowest rate car loans available. If you don't want to sort through your options yourself you can consider using the services of a car finance broker. Click on the "speak to a broker" tab above the table.
Have you weighed up the benefits and drawbacks of car loans?
- There are various lenders to choose from so you have more options to choose from
- Car loans are available for people with bad credit or who receive Centrelink payments as income
- Set fees and repayments help you to budget your repayments with fixed rates
- Depending on the lender, your car loan might have various restrictions around what you can use the loan amount for
- If the car loan is a variable rate option then you may find your rate change over the life of the loan, making it difficult to budget for your repayments
What you'll need before applying
The type of information you will need to provide usually depends on the lender and the type of loan you have chosen. You will generally need to provide
- Proof of your identity with a passport or driver's licence
- Details of your finances including credit, debt and assets
- Proof of your income
- Details about the car (if you've found it) including make, model and year
For a secured loan you will also have to provide details about the vehicle including the Vehicle Identification Number, the dealership. Check with your lender before you submit your application.
How you can apply
To apply for a car loan, simply use the comparison table at the top of this page to compare your options. Once you have found a loan that meets your needs you can follow the secure link to the lender's online application form. The eligibility criteria differ between lenders, but you will most likely need to be over the age of 18 and be a permanent Australian resident to qualify.