If you’ve decided to get a family car, whether it be your first one, an upgrade or a downgrade, it’s important that you finance it right. A car loan could be with you for a few years, so doing your homework now will benefit you later on.
IMB New Car Loan
IMB New Car Loan
No monthly fees
No early repayment fees
Borrow up to $75,000
100% confidential application
IMB New Car Loan
A low rate loan to finance new vehicles or cars up to two years old. Borrow up to $75,000.
Secured car loan. You can apply for a car loan from a bank, credit union or standalone lender. As the car you're buying is used to guarantee the loan you can lock in a more competitive rate. You can get a secured car loan for new or used cars but your car will need to meet eligibility criteria.
Unsecured personal loans.Unsecured personal loans can also be used to finance a car purchase, and these loans do not require a guarantee. You can expect a higher interest rate than a secured loan as its more of a risk to the lender. However, these loans are generally more flexible in how you are able to use the loan amount.
Dealership finance. If you're purchasing your car from a dealership you may see some dealership financing on offer. These are notoriously low interest deals that last for up to five years. While repayments remain low during your loan term, there will be a balloon payment, in upwards of a few thousand dollars, to pay at the end of your term. Read more about dealership finance vs car loans on this page.
How you can compare family car loans
With all car loans there are some common features that you can use to compare them in order to find the best deal. Here are some things to look at when you are weighing up your options:
What fees will you be charged? You need to look at all fees that the lender may charge with the loan, whether you think they apply to you or not. You should look for upfront fees that cover the costs of establishing the loan, ongoing fees such as monthly account-keeping fees, and any additional fees that may be charged for extra repayments or paying back the loan early.
What is the interest rate? The rate charged on the loan should also inform your decision as to which option to go with. As explained above, you may opt for a variable or fixed rate loan depending on your needs and situation.
How restrictive is the loan?. Certain loans may impose restrictions on the way you are able to use the loan amount or what features you have access to. For instance, most secured loans only let you use the loan amount to finance the car and do not let you use the money for anything else.
Are the repayments flexible? Some car loans are more flexible than others. If you want to be able to take advantage of being able to make additional repayments, you should check that you will be able to do so.
What are the loan terms? The amount of time you are able to borrow the money for will differ between lenders, so make sure the loan you want to apply for offers the terms you are looking for.
How much can you borrow? Car loan amounts vary from between $1,000 to $100,000. Depending on the type of car you want and your financial situation, you may only be able to borrow a certain amount. Check with the lender that you will be able to access the loan amount you need.
What you should consider before applying
When you’re buying a family car it’s important that you opt for a loan you can afford so as not to get your family into any financial difficulty. You need to consider your family’s needs when deciding whether to choose a fixed or variable rate loan, how much you should borrow and also how long to borrow for. If you have young children, consider that they may be starting school soon and your expenses may increase. You also need to check the restrictions on the loan before you apply, as you may find that you cannot use the loan in the way you want.
Ready to apply?
You can use the finder.com.au comparison tables to find a car loan that is right for you and your family. Once you have chosen a loan you can follow the link through to the lender’s website to fill out an online application form. You will generally need to be over the age of 18 and be a permanent Australian resident to apply for a loan, though lenders will differ on their credit rating requirements. You will need to have the following information handy when applying:
Personal information including your name and proof of ID
Financial information including your income, assets, debts and open credit accounts
Your employer’s name and contact information
Information about the car including make, model and condition
Matt Corke is the head of publishing in Australia for Finder. He previously worked as the publisher for credit cards, home loans, personal loans and credit scores. Matt built his first website in 1999 and has been building computers since he was in his early teens. In that time he has survived the dot-com crash and countless Google algorithm updates.
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