If you're in the market for a used car, you may be considering financing the vehicle through a a used vehicle car loan. In this article, we will explore the advantages of a used car loan, as well as some common requirements for used vehicle car loans in Australia.
One of the main advantages of a used vehicle car loans is that depending on the customers individual circumstances. they can be a more affordable option than a new car loans. This particularly suits people on a budget, limited income or anyone needing access to a car immediately and can’t wait for delivery of a new vehicle.
Outside of car shortage periods, used cars generally have a lower price tag than new cars, meaning you may be able to finance your purchase with a smaller loan amount. There are generally two types of car loans being secured loans and unsecured loans. Used car loans that are secured use the vehicle as collateral in the loan and as a result of this security, typically have lower interest rates than personal loans or credit cards.
To be eligible for a used vehicle car loan in Australia, you will typically need to meet certain requirements. These may include:
A good credit score: Just like with new car loans, lenders will look at your credit history to determine if you are a reliable borrower. It can be a great step to check your credit score before applying to make sure everything is as expected and the score reflects the standards of a borrower in good standing order. By having a good credit score. this usually increases your chances of being approved for a loan and can also lead to lower interest rates.
Proof of income: You will need to provide proof of income to show that you have the ability to repay the loan. This may include recent pay slips or bank statements.
Age of the car: Often, and in particular with secured loans, lenders may have restrictions on the age of the car you can finance with a used vehicle car loan. For example, they may require that the car be no older than 10 years.
To get the best used car loan in Australia, consider the following tips:
Secured Loans: Apply for a secured loan for your vehicle. By using the vehicle as security on the loan, it can reduce your repayments. At the end of the loan term or when the loan is paid back in full, the lender no longer holds an interest in the vehicle and it is completely in your name with no other interested parties listed.
Get a vehicle inspection: Before buying a used car, have it inspected by a mechanic to ensure it is in good condition. You may choose to do this with an independent mechanic if it is a private sale purchase. With dealer used car sales, they often come with a period of warranty so it is worth checking.
Get a great deal from loans.com.au! If buying from a dealer, it can be tempting to take dealership finance out at the dealership at the time of purchase. These often need to be proceeded with caution as it can reduce negotiating power on the vehicle price. Dealerships can offer low finance rates by making up the difference on the vehicle price. Remember they are quite often resellers of a larger finance company.
Consider the total cost: Look beyond the monthly payment to consider the total cost of the loan, including servicing and maintenance.
Have a deposit: If possible, make a down payment on the car to reduce the total amount you need to borrow.
Pay on time: Make your payments on time to avoid late fees and damage to your credit score.
After considering the information, if a used car and used car loan isn't the right option for you, perhaps you would like to consider a new or private sale car purchase.
*Comparison rates based on a loan of $30,000 for a five-year loan term. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of 1 December 2023.