01
Loan security
Most car loans are secured by the vehicle, which keeps the rate lower than an unsecured personal loan. If the loan is not repaid, the lender can recover the car, which is why the rate is sharper.
Don’t Take the Dealer’s First Offer
Buying a car is exciting, but the finance is often arranged in a hurry at the dealership, where the rate on offer may be far from the best available. Over a five or seven year term, even a small difference in rate adds up to a meaningful sum, so it pays to treat the loan as carefully as the car.
Good car loans come down to three things: a competitive rate, a structure that suits how long you will keep the car, and no fees or conditions hidden in the fine print. As experienced Melbourne finance brokers, we compare lenders so you are not stuck with whatever the dealer offers. If the car is for your business, business car loans offer their own tax-friendly structures.
Buying a car? Call us on 1300 562 696 before you sign at the dealership, and we will check you are getting a fair deal.
How Car Loans Work
A car loan is usually a secured loan, with the car itself as the security, repaid over a fixed term. A few basics help you compare properly:
02
Fixed term and repayments
Car loans usually run over a fixed term, commonly three to seven years, with set repayments. A shorter term means higher repayments but less interest overall, and the opposite for a longer term.
03
New, used, dealer and private sales
Most lenders finance both new and used cars, and both dealer and private sales, though older vehicles and private sales can have tighter terms. The car’s age and value affect the rate and the maximum term.
04
Balloon payments
Some loans include a balloon, a lump sum owed at the end, which lowers the monthly repayment but leaves a larger amount to pay or refinance later. It suits some buyers and traps others, so it is worth understanding before you agree to one.
Rates, Fees and Structure
The headline rate is only part of the cost. Here is what really drives the cost:
| Factor | Why it matters |
|---|---|
| Security type | A secured loan is meaningfully cheaper than unsecured |
| Your profile and the car | Income, credit and the car’s age all move the rate |
| Comparison rate | The comparison rate folds in fees for a truer cost |
| Term | A longer term lowers repayments but costs more overall |
| Balloon | A balloon lowers repayments but leaves a lump sum at the end |
We compare on the comparison rate, not the advertised headline, so fees are included. Rates and terms vary by lender, the car and your circumstances.
What to Watch For
Dealer finance is convenient, but convenience can be expensive. A few things are worth watching:
- the rate offered on the spot, which is often not the best available
- the extended warranties and insurance bundled into the loan, which inflate what you borrow and the interest on it
- the balloon built into the loan, which leaves a large sum owing at the end
None of these are necessarily wrong, but each should be a clear choice rather than a default. Before you sign at a dealership, it is worth a quick comparison, which is exactly what we do, so you can buy the car you want on terms that suit you.
Explore Our Other Asset Finance Services
Car loans are one of six ways we finance assets. Explore our other asset finance services below to find the right fit.
Personal Loans
Flexible personal finance for a car, travel, renovations, consolidation and life’s larger expenses.
Business Car Loans
Vehicle and fleet finance for business through chattel mortgage, lease or hire purchase.
Car Finance and Leasing
Novated leasing and car finance options structured around how you use and own the vehicle.
Truck and Equipment Finance
Finance for trucks, trailers and business equipment, sized to the asset and your cash flow.
Yellow Goods and Plant Equipment Finance
Finance for excavators, loaders and heavy plant, new or used, for construction and earthmoving.
Why Buyers Use Loanworx Group for Car Loans
A few minutes comparing lenders can save you a lot over the life of a car loan. A car loan broker does that legwork for you, which is what you get with Loanworx Group:
We compare the market
Rather than one dealer rate, we compare lenders across our panel to find a competitive car loan suited to you and the car, often below the rate offered on the spot.
We structure it sensibly
The right term, the right call on a balloon, and no unnecessary add-ons. We structure the loan around how long you will keep the car and what you can comfortably repay.
We make it quick
Car purchases move fast. We arrange finance efficiently so you can buy with confidence, often with approval in place before you are at the dealer.
Buying a Car? Let’s Get You a Fair Deal
The finance can cost more than it should if you take the first offer. We will compare the market and structure a car loan that genuinely suits you. Call us on 1300 562 696.
Frequently Asked Questions (FAQs)
Should I use dealer finance or arrange my own car loan?
Dealer finance is convenient but the rate offered on the spot is often higher than you could get elsewhere. Arranging your own car loan, or having a broker compare lenders, frequently produces a sharper rate and a cleaner structure. It is worth a quick comparison before you sign at the dealership.
Are car loans secured against the car?
Most are, and that is usually the cheaper route. An unsecured loan is possible, with no claim over the car, but the rate is higher because the lender carries more risk. We compare both where it is worth weighing up.
What is a balloon payment?
It is a lump sum that falls due when the loan ends. The trade-off is a lower monthly repayment along the way, in exchange for a larger amount to pay out or refinance at the end. Whether it suits you depends on your plans for the car, so we model it both ways before you decide.
Can I finance a used car?
Yes. New and used cars both qualify with most lenders, including private sales. The difference with an older car or a private sale is usually a slightly higher rate or a shorter maximum term, since the car is the security and its value matters more. We place you with a lender comfortable with the car you are buying.
What rate can I get on a car loan?
It depends on your income, credit history and the age of the car. A strong borrower buying a newer car gets the sharpest pricing. Rather than guess, we compare lenders to find the most competitive rate for your profile, and we compare on the comparison rate so fees are included.
How long should my car loan term be?
Most run three to seven years, and the right length is a balance. A shorter term costs you more each month but less in interest overall; a longer term eases the monthly repayment but adds to the total cost. What works best comes down to the repayment you are comfortable with and how long you plan to keep the car, which we work through with you.
Will a car loan affect my home loan application?
It can, because the repayments are a commitment lenders count toward your borrowing capacity. If a home loan is on the horizon, it is worth planning the car finance around it. We look at your whole position so one does not quietly limit the other.
