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Car Loans

Car Loans

Car financing is what we do and clients have our team on their side that can assist in getting great rates and competitive payment terms.

Having a reliable vehicle has for many become one of life's necessities. However it comes at a significant cost over time.

Apart from a home, the car is often one of the single biggest purchases people undertake. Importantly, never let the excitement of buying a car get in the way of making good financial decisions.

Apart from the initial purchase price, there are many more expenses that must be taken into consideration such as, interest and fees on the loan, registraton fees, insurance costs and ongoing fue and mainanence.

Buyers need to consider how much the car will cost overall, firstly to buy, then the repay a loan plus the expense of insurance and registration and then to maintain and the fuel to run it.

Beware, getting the wrong car loan at the start can be financially damaging to buyers in the long term.

What Is A Car Loan?

A Car Loan is a personal finance product used by the car buyer for funds to purchase a vehicle for personal or business use. The loan is secured against the vehicle and at the end of the contract the customer retains the full title of the vehicle.

If the borrower fails to make the agreed repayments, the lender can seize the vehicle as payment and take legal action against the borrower for any outstanding monies due on the loan.

Types of Car Loans

The number of types of car loans is quite diverse.

Firstly there are car loans for new as well as used cars, each normally come with different interest rates and charges. Some of these loans can be secured or unsecured. Also some car loans have a fixed rate while others have a variable rate.

Then there are different types of product in each of the above categories such as Hire Purchase, Personal Loans and Leases. Some of these products come with what is termed "Ballon" options which is a large amount of the loan (from 30% to 50% of the car value) that has to be paid in one payment at the end of the loan period. Beware of "Balloon" options, look deeply into the long term financial impact of such a delayed repayment.

Confused? Then you need to contact us so our team can help you find a deal that suits your needs

Interest Rates and Charges

Car loans come with either a fixed or variable interest rate. There are advantages and disadvantages with either rate option. The cost of interest and loan fees on a loan can be quite hefty so a buyer needs to ensure they are choosing a finance deal that has a low rate and low fees.

Always closely focus on the charges and fees associated with the car loan being considered. Importantly look at any loan establishment charges by the lender and in particular the individual who is arranging the loan. At times these establishment charges can vary from $350 to $1,250 or even more, for the same deal!

Budget - Can You Afford the Repayments

Before a buyer decides on a vehicle, they need to determine what they can afford in car loan repayments. If they determine they can afford $20,000, they need to stick to that limit and not be pressured by anyone else to go higher, this included the car salesman.

Buyers will need to prepare a budget ahead of applyng for a loan. This will be a requirement of any lender.

For assistance in setting a budget, check out ASIC's site Budget Planner.

Things to Watch For

Unlike a home loan, you cannot easily compare car loans based on the interest rate alone. Some rates are fixed, some variable. Some loans come with monthly charges, some dont. To accurately compare the actual costs of a car loan, the buyer needs to focus on the amount of repayments multiplied by the number of repayments required, PLUS add the final balloon payment (if applicable). Be cautious as a loan product that has a slightly higher rate may come with lower fees and be cheaper during the term of the loan.

Buyers need to remember that normal cars (not rare collectables) are not an investment as they depreciate in value over time so buyers should never extend the debt on that vehicle past the normal expecetd use of the vehicle.

For more information check ASIC's site - Car Loans.

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