Car Loans

Borrow for a new or used car loan. Look to refinance your existing loan if you can get a better deal. Know what you are paying each month with a fixed interest option. Choose the term of the loan and how much you wish to borrow.

Westpac car loans

Carloanworld Car Loans

Why pay more? Car loans starting from 4.99% p.a. For fast approvals, low interest rates, and a wide range of loans and lenders, choose Car Loan World for all your car finance needs. No matter if its for a new or 2nd hand car, a novated lease, from a dealer or private sale, we can help you with our free service.

4.99% p.a.*
No obligation quote
Westpac car loans

Westpac Car Loan

$0 establishment fee (save $250) if you apply before 31 January 2018. Borrow between $10,000 and $100,000 for a new or used car. Your dream car could be closer than you think with a Westpac Car Loan.

8.49% p.a.
fixed rate loan
$250 establishment fee is waived if you apply by 31 Jan 2018
St George car loans

St George Car Loan

Bring your next dream purchase a little closer with a St George Secured Personal Loan. Choose between a fixed rate or variable rate and borrow between $3,000 and $80,000.

8.49% p.a.
fixed rate loan

12.74% p.a.
variable rate loan

establishment fee
BankSA car loans

BankSA Car Loan

Choose between a fixed rate or variable rate and borrow between $3,000 - $80,000 using your car as security.

8.49% p.a.
fixed rate loan

12.74% p.a.
variable rate loan

establishment fee
BOM car loans

Bank of Melbourne Car Loan

Offer your car as security and borrow up to $80,000. Choose between a fixed rate or variable rate.

8.49% p.a.
fixed rate loan

12.74% p.a.
variable rate loan

establishment fee

Applying for a car loan can allow you to buy the car you want, when you don’t have the money to cover the cost of the car upfront. Instead of paying for a car outright, with a car loan, you can spread the cost of the car over a number of years, making the car buying process much easier on your budget.

However, buyers who opt for car finance need to think about more than just comparing cars during that car buying process – they also need to compare car loans. If you want to get the most out of your car loan, you need to compare the options to pick the right one. That means knowing what to look for, what features are worthwhile, and how to compare the options.

Luckily, Credit World makes car loan comparison super easy. With a wide range of car loans in one place, Credit World allows you to compare car finance options side-by-side, to choose the right car loan for you. So, with that in mind, what do you need to know about car loans before you start your car loan comparison?

What is a Car Loan?

A car loan is a type of personal loan that allows buyers to spread the cost of a new or used car over a number of years. While loan terms vary according to the lender, car loans are generally taken out over one to five years, although some car loan options allow the buyer to repay the loan over a period of up to seven years.

Loan amounts can also vary – according to the lender and the borrower’s circumstances. The lender will usually assess the borrower’s credit history and income to determine the limits of the car loan.

Types of Car Loans

Standard car loans are split into two main categories: those that are secured, and those that are unsecured.

  • A secured car loan is secured against some form of collateral, usually the car itself. Providing the lender with more ‘security’, secured car loans are usually easier to get approved for. If the borrower fails to repay the loan, the lender has the option to repossess the car to make back its losses. This is one reason why secured car loans typically offer lower interest rates.

  • An unsecured car loan is not secured against collateral, which means the borrower must have an excellent credit history to get approved, and will usually pay higher interest rates on the loan.

Talking of interest rates, the type of interest applied to the loan is another factor to take into consideration. A car loan will either feature a variable or fixed rate of interest.

  • A fixed rate car loan has a fixed rate of interest applied through the life of the loan. This can make budgeting easier for the borrower, as the repayment will always remain the same. It can also protect the buyer against interest rate rises while the loan is being repaid.

  • A variable rate car loan has a variable rate of interest applied, which may increase or decrease over the life of the loan. If interest rates fall, the loan may become cheaper, but if they rise, the loan may become more expensive.

Car Loans vs. Other Types of Loans

It’s worth bearing in mind that there are many types of car financing options out there. Let’s take a look.

Standard Car Loan

This type of loan can offer a number of features, with a variety of options on the table. Buyers may find it easier to get approved with a secured car loan, paying lower interest rates with agreed repayments over a given period of time. Flexible terms are available and on-road costs can be included in the financing arrangement.

Commercial Hire Purchase

With this option, the financier buys the car and hires it to the borrower over a set period, with options for both individuals and businesses available. Once the entire loan has been paid off, the vehicle is transferred to the borrower. As a flexible option, it allows borrowers to finance the total cost of the car, or reduce repayments with a trade-in, deposit or final lump sum payment.

Finance Lease

When taking out a finance lease, the financier buys the car and leases it to the borrower, usually with fixed, monthly repayments. The borrower is financially responsible for ongoing maintenance, and has the option to refinance, return, sell or buy the car for the residual amount at the end of the agreement.

Novated Lease

In this three-way agreement, the borrower leases the car from the financier, utilising a novated deed on the borrower’s wages. A form of salary sacrifice on pre-tax income, this option also makes the borrower financially responsible for all car maintenance costs. At the end of the agreement, the borrower can choose to buy the car.

Operating Lease

This option has the financier buying the car and renting it to the borrower. As the financier retains ownership of the car, it also retains all risks associated with ownership, including the residual amount at the end of the agreement. At this point, the borrower can choose to buy the car, continue to rent it, or switch to a lease on a newer car.

Chattel Mortgage

With this option, the financier provides the amount needed to buy the vehicle, to then hold a mortgage over the car, which is used as security on the loan. Borrowers may finance the total cost of the car, or reduce repayments with a trade-in, deposit or residual payment.

Tips: Getting Approved for a Car Loan

No one want to find the car of their dreams only to get rejected on their car loan. To help you improve your chances of getting approved for a car loan, check out these tips.

  • Understand Your Credit Rating: Apply for a copy of your credit report before applying for car finance, and have any mistakes corrected. Build up your credit score by paying all bills and repayments on time, on items such as your electricity bill, mobile phone and credit card. It can also be a good idea to clear any debts, if possible, before applying for a new loan, and show you can save.

  • Choose the Right Car Loan: This means working out what you can actually afford. Use a car loan calculator to find a repayment schedule that fits your budget, without stretching out the loan and paying over the odds in interest. Take into account costs associated with owning a car, such as insurance, petrol and maintenance.

  • Don’t Make Multiple Car Finance Applications: Comparing car loans is a great idea – but only apply for the one you actually want. Assessing your car loan application, lenders can see how many recent credit applications you have made. Multiple applications may make you seem desperate for credit – and more of a risk.

  • Make Sure You Meet the Criteria: As with any loan, always read the fine print when comparing car loans, and be sure to check the lending criteria. This will vary according to the lender and the car loan, so make sure you tick all the boxes before you apply, to avoid getting your application rejected.

Pros and Cons of Car Loans

If you’re still weighing up your options and need to look at the pros and cons of car loans, here are the top factors for you to consider.

Car Loan Pros

  • Ability to spread the cost of the car over a number of years, instead of paying for it upfront.
  • Variable loan amounts available (depending on borrower circumstance).
  • Flexible loan terms.
  • Flexible repayment options.
  • Choice of secured or unsecured car loan (with secured options being easier to get approved for, generally with lower interest rates).
  • Choice of fixed rate or variable car loan.
  • Some options allow for lower repayments with trade-in, deposit and residual payments available.

Car Loan Cons

  • The car loan may attract various fees.
  • The car loan will likely attract interest, making the overall cost of the car higher.
  • If a borrower fails to repay a secured loan, the car may be repossessed.

Getting the Most out of a Car Loan

If you want to get the most out of your car loan, there are a few simple rules to follow.

  • First up, choose a car loan from a reputable lender, after reading the small print in detail.

  • Choose a car loan with a repayment schedule you can afford.

  • Try not to take out a car loan over a longer period of time, as you may pay over the odds in interest.

  • Take into account ongoing costs associated with owning a car.

  • Always make repayments on time, either using a direct debit payment, or by setting yourself a reminder.

  • If you get into trouble with your repayments, contact your lender sooner rather than later to discuss the problem.

Now it’s time to compare the options! Check out Credit World to find your perfect car loan today!