Choosing a suitable loan for car in Australia can be tricky.
There are fundamental differences between the car loan and the home loan.
For starters, loan for car carries higher interest rates. The finance is usually less than $20K and the term is set to 3-5 years.
Therefore, auto loan companies insist on minimum amount to borrow and minimum period to pay off the debt. There are fundamental things to remember when trying to get car loans:
Currently, the lowest interest rate on car loans Australia wide is 8.95%. However, the lowest does not mean the easiest to obtain.
If you have an equity or attach some security to your car loan then there is a little trouble to get the best deal.
For example, Defcredit offers a variable new car loan of 8.95% and charges only $50 in fees. However, the Defcredit's deal applies only to borrowers who provide 20% equity. Further, if you choose to buy a second hand car then the same company charges 10.95%.
Hassle-free Westpac car finance in Australia offers a fixed 11.99% loan with no securities. However, Westpac demands minimum loan of $4K and $250 in bank charges.
Esanda has similar product as Westpac but the interest is %10.25 and a minimum car loan of $7.5K. Other banks like ANZ and Bank of Queensland incorporate auto loans into their personal loans. Although the freedom to use personal loans as a car finance means flexibility, the interest rate is very high - +/-15%.
First, you need to determine what security or equity is available to bargain with the bank.
Secondly, the age of the car will fundamentally decide on the interest rate.
It makes sense that the older the purchased car, the higher is the interest.
The reason for this is that lenders often use the car as the security.
Thirdly, decide on the strength of your repayments. The more you can repay, the less interest is charged. If you intend to repay your auto loan quickly then insist on a variable loan. The variable loan for car in Australia has a lower interest than the fixed type.
Finally, check the fees and charges. There are a lot of scammers who demand little security but expect outrageous hidden charges. Thus, if the lender offers unsecured variable car loans Australia wide below 9.0% interest then you must read the small print carefully!
Even if you are a responsible person you may have issues with credit history. Fortunately, if you have a steady job, you can still get car loans with bad credit under certain conditions. If you are thinking of applying for a car loan in Australia you need to: