How to find the best car loan rates in Australia
Buying a car isn’t just about searching for the right vehicle. For many car buyers, it also involves finding car finance.
Don’t rely solely on the dealer to finance your wheels. Compare car loans from different lenders to find the best deal. It can save you hundreds of dollars over the life of your loan.
4 ways to find low car loan rates in Australia
There are several factors that influence car loan interest rates. Here’s what to take into account when shopping around for the best car loan rates in Australia.
1. Choose the right type of finance
For personal vehicles, there are two main types of car loans:
- Secured loans are the most common type of loans for car purchases in Australia. With this type of loan, the car acts as your collateral (or security). If you fail to meet your loan repayments, the bank or lender may repossess the vehicle. Secured loans tend to have lower interest rates than unsecured loans, because they offer less risk for the lender.
- Unsecured loans are similar to personal loans. They don’t require collateral ,which is riskier for the lender and the reason they usually have higher interest rates.
2. Compare interest rates
You may notice two interest rates advertised when shopping for a car — the nominal rate and comparison rate. The nominal rate is usually lower than the comparison rate. But, don’t be fooled. The reason it’s lower is because it doesn’t include additional fees and charges such as loan establishment and monthly administration fees.
Comparison rates do include these fees. When comparing interest rates from various lenders, check both rates. Comparison rates give you a more accurate picture of what you’ll pay over the life of the loan.
3. Fixed or variable interest rate
With most secured loans, your interest rate and term is fixed. This means your rate will remain unchanged even if the lender makes company-wide changes to its interest rates, which can help you budget. However, it also means you won’t be able to make extra payments or settle the loan early if you have some spare cash.
If you have a variable interest rate, your lender can change it whenever it likes. That’s great news if the rate decreases; not so great if it increases. But, the advantage is it allows you the flexibility to pay your loan off sooner, thereby reducing your total interest paid.
3. Make a bigger deposit
If you don’t need a vehicle urgently, you can delay buying a car to save for a bigger deposit. The larger your deposit, the smaller the loan amount you will require. With a smaller loan, you could opt for a shorter term period. And the shorter the term, the less overall interest you pay.
5. Compare car loans before visiting a dealer
Visit a broker and compare car loan rates before you visit a car dealer*. Generally, a broker will offer you more choice and be able to find you a better loan than a dealer.
Where to begin your search for low car loan rates? You can start right here with National Loans. We’ll help you find a low-rate car loan from one of over 30 lenders in our network. Click here to get a car loan quote or call 1300 358 358 to speak to a finance consultant.
* Link to article “Should I apply for a car loan before going to a dealer?”