A car loan is your access to your dream car if you do not have enough cash to finance it. You can either save for a huge deposit to enjoy a low monthly payment. Bad credit car loans are also made available for people with bad credit who would want to finance a car purchase.
You pick a color that you want, a make and model that can meet your needs in terms of transportation. Some even plan on where to go first after your car is released. However, what most people fail to foresee is if they are qualified for car financing and if they are indeed capable of repaying it.
The price of the car is not the only thing that you should be worried about. There are other costs that come with your purchase. You’ll also need to cover expenses such as stamp duty costs, insurance, chattel mortgage as well as maintenance and servicing costs that come with your purchase. But, beyond that, the main question for you would be how easy or hard it is to access an Aussie car loan.
Car Loan Options Available for Australians
Car Loan
A car loan is usually offered by banks, a car dealership or standalone lenders. With this type of loan, your credit score will most likely dictate the interest rate and loan repayment terms offered to you. A higher credit score gives you access to better deals and low-interest rates. Such loans are available both for new and for old vehicles.
Secured Car Loan
A secured car loan is a car loan that requires assets, other than the vehicle purchased to secure the loan. These may include equity in a property, boats or even motorbikes that serves as collateral for a loan. Some banks may suggest you opt for such loan options if your credit score is not within their favorable limits.
Bad Credit Car Loans
Bad credit car loans are for people with black marks on their credit file. Some Aussies may have experienced a trying time in their finances once or twice in their life. Such personal finance issues can be reflected on their credit report. It stays there even after resolving such issues. Debts and other accounts can stay in your credit report for at least 7 years and may affect your chances of getting a loan or financing from a bank.
With bad credit car loans, these criteria are being overlooked. Your credit report is still reviewed but a non-conforming lender goes beyond understanding the reason behind such black marks on your credit. Although these type of car loans offers higher interest, this is a great opportunity to give people with bad credit the opportunity to finance their own vehicles.
Compare and choose a car financing option that fits your situation. You can even ask help from a loan specialist to be able to fully understand your financial circumstance and find a suitable loan type and lender for you. Intellichoice Finance can help you achieve such.
The Car Loan Application Process
Banks and lenders will have a different set of requirements for their car loan applications. A non-conforming lender may also have the same requirements as a bank but will require additional information and documents to fully understand a loan option that can work perfectly for your finances.
It would be best to have several options on your plate to find what’s the best car loan option for you. A car loan specialist can do this for you, without having inquiries on your credit file. If you would want to do a comparison on your end, you can ask for free quotations from different car loan lenders online to be able to see the different options available for you.
It would be ideal to use free quotes or get help from loan specialists and brokers instead of transacting directly with a bank. Every inquiry on your car loan will appear on your credit file with a direct bank application. A rejected application will also appear on your report if you fail to qualify and would hard your credit score in the process.
How to Effectively Compare Car Loan Rates and Payment Terms
After gathering options on where you can possibly apply for a car loan, you should check these different areas as your benchmark in deciding on which car loan suits your needs and payment capacities the most.
Additional fees and charges
Some banks and lenders charge additional fees in processing your car financing application. You should be aware of these charges and fees at the very beginning of your application. Some of these fees may include upfront fees, applications fees, monthly accounting-keeping fees, lump sum payments, and other annual fees. These may also include a balloon payment on your end or an early repayment fee. Closing your account may also require you a closing fee. Again, these fees vary from one lender to another.
Every financial product varies in terms of additional charges and fees to include on your budget. Always take note of this and add them to your computations to get a better idea of what you are to pay for after you buy a car.
Interest rates
You can either avail fixed interest rates or varying interest rates on your car loan. A fixed rate is the same all throughout the term of your car loan. Variable rate loans adapt the current interest rates in the market. Although you can enjoy a lower interest rate when the current market is good, the risk of a higher interest rate is still there as the market continuously changes.
Create a comparison rate chart together with the fees and charges of every bank or lender you intend to apply a car loan for. Loan amounts, its minimum and maximum, should also be included in your comparison chart.
Loan flexibility
Some loan allows you to pay extra or in advance and get a discount for doing such. Paying early on your monthly payments can also give you rebates or discounts. Be sure to be aware of these features included in your loan so you can take advantage of it. The possibility of a refinance should also be taken into consideration, if you intend to get a new car after a few years or if you simply want to reconstruct your loan in the future.
Check if you can revert from a fixed rate loan to a variable loan, or vice versa, in the event that you need to do so. Shortening a loan term or to loan early for a refinance are also considerations you should check to see how flexible a car loan offer is.
Knowing your options and keenly comparing the loan options available for you makes the task of securing a car loan a successful one. This is a general advice you should follow. Car loans usually take 3-5 years to repay so this will affect your personal finances due to monthly repayment in the next three years or so.
Read the terms and conditions of your car loan application. Just like when you were applying for a credit card, each bank product comes with a different set of “rules and regulations” that you are required to abide by when you sign a contract with them. Knowledge makes is easy and accessible to apply for car financing. This knowledge and professional help from car loan specialists ensures you of a guaranteed loan approval and a manageable repayment on your end.
