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How much should I borrow for my car?

When borrowing money for a new car most people have a hard time gauging how much they’ll need. These tips can help you decide how much you’ll need to borrow.

If you’re ready to buy a new car but don’t have the liquid funds for such a big purchase you can borrow money. Car loans are a great way to get behind the wheel of your own car quickly and easily.

How much can I borrow?

Latitude New and Used Car Loan

Latitude New and Used Car Loan

From

6.99 % p.a.

fixed rate

From

8.10 % p.a.

comparison rate

  • Competitive low rate
  • Up to 7 years to repay
  • New or used vehicles accepted
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100% confidential application

Latitude New and Used Car Loan

A competitive fixed rate loan available for new and used vehicles.

  • Interest rate from: 6.99% p.a.
  • Comparison rate: 8.10% p.a.
  • Interest rate type: Fixed
  • Application fee: $295
  • Minimum loan amount: $5,000
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Car loans comparison

Rates last updated November 18th, 2018
$
Name Product Interest Rate (p.a.) Comparison Rate (p.a.) Min Loan Amount Loan Term Monthly Service Fee Application Fee Product Description Monthly Repayment
Latitude New and Used Car Loan
From 6.99% (fixed)
8.1%
$5,000
1 to 7 years
$10
$295
You'll receive a fixed rate between 6.99% p.a. and 14.99% p.a. based on your risk profile
Apply for a loan from $5,000 to finance a new or used car. Flexible repayments and options to finance a classic car.
Loans.com.au - New Car Loan
5.44% (fixed)
5.99%
$5,000
3 to 5 years
$0
$400
You'll receive a fixed rate of 5.44% p.a.
Finance a new car and benefit from features such as fast approval, no ongoing fees and an optional balloon payment.
Stratton Finance New Car Loan
From 5.14% (fixed)
5.8%
$18,000
1 to 7 years
$8.90
$457 (for private seller vehicles this fee is $608)
You'll receive a fixed or variable rate depending on the lender you are approved with
Apply for up to $100,000 and use cash or trade in a vehicle to use as a deposit. Optional balloon payment available.
Beyond Bank Low Rate Car Loan
From 5.69% (fixed)
5.97%
$25,000
1 to 7 years
$0
$175
You'll receive a fixed rate of 5.69% p.a.
Take advantage of a competitive rate, pre-approval and no early repayment fees when you finance a car under two years old.
IMB New Car Loan
5.89% (fixed)
6.24%
$2,000
1 to 7 years
$0
$250
You'll receive a fixed rate of 5.89% p.a.
A low minimum borrowing amount of $2,000 that you can use to purchase a new car or one up to two years old.
St.George Secured Personal Loan - Fixed Rate
From 8.49% (fixed)
9.6%
$3,000
1 to 5 years
$12
$195
You'll receive a fixed rate from 8.49% p.a. based on the value of your car
Get a competitive rate and apply for a larger loan up to $80,000 when you attach a new or used car as security to the loan.
Australian Military Bank Car Loan
From 5.71% (fixed)
6.57%
$1,000
1 to 7 years
$10
from $100 to $500
You'll receive a fixed rate between 5.71% p.a. and 8.66% p.a. based on your personal credit history
A flexible loan to help you finance a car, motorbike or boat up to five years old.
Westpac Car Loan
From 8.49% (fixed)
9.67%
$10,000
1 to 7 years
$12
$250
You'll receive a fixed rate of 8.49% p.a.
Finance a new or used car and benefit from convenient features for car buyers including a car search tool and the option to borrow extra for on-road costs.
RACV New Car Loans
From 5.99% (fixed)
6.55%
$15,000
1 to 7 years
$0
$399
You'll receive a fixed rate of 5.99% p.a.
A larger loan of $15,000 or more to help you buy a new or used car. 5-hour pre approval available and no ongoing fees.
IMB Secured Personal Loan
6.89% (fixed)
7.24%
$2,000
1 to 5 years
$0
$250
You'll receive a fixed rate of 6.89% p.a.
Benefit from this competitive rate by securing the loan with a vehicle up to 6 years old. Use this flexible loan for any purpose.
Latitude Personal Loan (Secured)
From 12.99% (fixed)
14.2%
$3,000
2 to 7 years
$13
$250 (Loans under $4000 - $140)
You'll receive a fixed rate between 12.99% p.a. and 28.99% p.a. based on your risk profile
Lock in a competitive variable rate when you offer security. Loan can be used for any purpose and repayments are flexible.
MyState Bank Secured Personal Loan
From 7.99% (variable)
8.96%
$10,000
1 to 10 years
$10
$200
You'll receive a variable rate of 7.99% p.a.
A secured loan up to $75,000 that you can have up to years to repay. Early repayments and redraw facility available.

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Things to consider when choosing your car loan

When deciding on the type of car loan you’ll be taking out there are a number of factors you should first consider.

  • Savings and credit score Before going for a car loan you should make sure that you’re able to repay the loan. The lender you go to will check your credit score and will also look into your savings account history in order to determine that you’re capable of repaying the car loan.
  • New or used car New cars will obviously cost you more than a used car will but they’re also more reliable. No matter which you choose make sure to check the valuation of the car through an authorised source like Australia’s Redbook to make sure you’re not paying too much money.
  • Remember the insurance You’ll want to take into consideration paying for auto insurance when thinking about how much you’ll need to borrow. If your insurance company requires you to pay a couple of months up front you may want to borrow for this as well. A lender may also inquire about your life insurance or your health insurance. This may seem unrelated to a car loan but a lender may check into it to make sure that you’re healthy enough to repay the loan. This may not be necessary and depends on the individual lender.

What factors determine how much can I borrow?

    • Amount in your savings Lenders will want to look into your savings account to see how much money you have in order to make sure that you’re able to repay the car loan. The amount they find, along with your overall credit history, is one of the main factors that will determine how much a lender will allow you to borrow.
    • Your total yearly income Your yearly income will also affect the size of the loan you can get. This, like your savings account, has to do with your ability to repay the loan. If the lender doesn’t feel that your income will allow you to repay a larger loan properly they may only approve you for a smaller amount.
    • Your dependents Lenders will look at your obligations including your dependents to see how your income is being spent regularly. If you have a large family that you care for they’ll take that into consideration.
    • Monthly living expenses Things like utility bills, credit card bills, student loans, or other monthly bills will also determine how much you can borrow. Your monthly expenses will be looked at in relation to your income and the lender can determine how your money is spent in a given month and how much you’ll have left to put toward your repayment.
    • Rent or mortgage payments Like your monthly expenses your mortgage or rent payments will be taken into consideration by a lender, too. If they see you are already putting a large amount of your income to your mortgage or rent repayments along with your other bills they may determine that you don’t qualify for a large loan.

How to compare car loans

Car loans, like most loans, are a large responsibility that should be considered from every angle before you actually finalise one. First you’ll want to decide if a car loan is even the right option for you. Then the best thing to do before settling on a car loan is to weigh the pros and cons of the available car loans and compare one to another so you ensure that you’re getting the best deal available. Make sure you look at the interest rates on each loan, the repayment schedule, and fees attached to the loan, the credibility of the lender, and any other options you see.

      • Interest rates.
        Look at the interest rate on the loan when you’re presented with the loan details. If one interest rate is lower than the other that loan is probably the better option in terms of your bottom line.
      • Loan terms.
        Different loans may have different terms. One car loan may last six months while another may have you carrying a debt for over a year. Compare the terms and pick the loan that is right for you.
      • Known fees.
        Some loans may have application fees or service fees attached to them. Make sure you compare these fees and other ones you see so you get the best deal on your loan.
      • Secured vs Unsecured loans.
        A secured loan is when a lender has some sort of collateral that acts as protection if you can no longer pay the loan. In this case the car would be their collateral. An unsecured loan is the opposite; there is no collateral or asset held by the lender. This puts the lender at greater risk which usually makes the interest rate higher.
      • Repayment options.
        There are usually a range of options available when it comes to repayment of a car loan. There might be specific payment plans available that will suit your needs better than others. Compare these repayment options and decide which loan has the best repayment options.

Car loans are available from a number of different lenders and can come with different options and terms. Be sure to shop around and compare each loan in order to get the best deal.

Picture: Shutterstock

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Car Loan Offers

Important Information*
Latitude New and Used Car Loan

You'll receive a fixed rate between 6.99% p.a. and 14.99% p.a. based on your risk profile
Apply for a loan from $5,000 to finance a new or used car. Flexible repayments and options to finance a classic car.

Loans.com.au - New Car Loan

You'll receive a fixed rate of 5.44% p.a.
Finance a new car and benefit from features such as fast approval, no ongoing fees and an optional balloon payment.

Stratton Finance New Car Loan

You'll receive a fixed or variable rate depending on the lender you are approved with
Apply for up to $100,000 and use cash or trade in a vehicle to use as a deposit. Optional balloon payment available.

Beyond Bank Low Rate Car Loan "Special Offer"

You'll receive a fixed rate of 5.69% p.a.
Take advantage of a competitive rate, pre-approval and no early repayment fees when you finance a car under two years old.

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