Car loans are an important step when purchasing used cars Australia wide.
Many used car customers require car loans to enable them to purchase their next car. Car loans can be found advertised online by many car loan lenders, and it is wise to make a car loan comparison between several before selecting one; as well as discussing your situation with a finance professional.
Car loans are secured personal loans
Car loans are an example of secured personal loans; which is any loan that is taken out against the value of some specific item of value, in this case a car. A mortgage or bill of sale is taken over the car meaning that any failure to repay the car loan lenders/personal loan lenders can result in the repossession and sale of the car to cover the outstanding balance of the car loan.
There are various different types of car loan products in the market today, however the most common by far is a commonly referred to as a personal loan. Other types of car loans include:
- Unsecured Personal Loans
- Car Lease
- Hire Purchase
- Chattel Mortgage
Car loan products that is where the car is taken as security generally come with a lower interest rate than with an unsecured personal loan and they are generally much easier to obtain an approval for. This is because of the added security, which protects the car loan lenders from any inability on the borrower to repay the car loan. The car must be able to be registered, and the car loan lender will use the vin or chassis, engine and registration numbers to register their interest over the car.
Are you after a car loan with the lowest interest rate?
Compare the different car loan lenders advertised to find the best car loan possible taking into account your personal situation, then work out the repayment amount for each and the interest component with a car loan repayment calculator.
There are different types of car loan lenders in the market place, and cater for different types of customers with different credit histories.
- Payday or Cash Advance Lenders and Pawn Brokers
- Finance Companies
- Credit Unions and Building Societies
- Banks
Payday or cash advance personal loan lenders and pawn brokers primarily look after people requiring cash fast, typically in the range of $1500 dollars. The interest rates are generally the highest of all the secured personal loan lenders Australia has. Some of these are not regulated by the UCCC (Uniform Consumer Credit Code) so make sure you understand the consequences of not repaying the loan on time, as there are often large late fees involved.
Finance companies such as ‘GE Money’, and ‘Aussie’ have taken a large piece of the car loan market away from the banks and credit unions because they will lend money to people with some past credit issues. Often in addition to the security taken, they will ask for some deposit, to ensure the security to loan ratio meets their lending criteria.
Credit unions and building societies are one of the most popular car loan lenders in Australia, and you don’t have to be a member to obtain car loans from them. There are many credit union branches scattered through out Australia, so they are also quite convenient.
Banks are the traditional car loans and secured personal loan lenders in Australia, if you regularly have your salary go into a savings account with a bank, and you have a good credit rating, this could be a good place to apply for a car loan.
The advantages of a car loan or secured personal loan over the unsecured personal loan option are:
- Lower Interest Rate Loans
- Larger amounts lent (up to $80,000 for most car loan lenders)
- Lower fees – the application and account keeping fees are lower
- Easier to apply for, borrowers with credit history issues are looked at
It is also worth remembering that each application is assessed on its merits, and each lender will have their own lending criteria for the car loans that they offer, so do some research first to find the best car loan for you taking your own situation into account before making an enquiry or application. Too many enquiries on your credit file can cause you problems. If you are unsure of your credit rating, you can receive a copy of your credit file and a comprehensive credit file report with your credit score at My Credit File Report.
