Car loans are a popular financing option for those looking to purchase a new car in Australia as they offer flexible access to funds over different loan term durations as well as ability to add in balloon repayments to modify repayments. In this article, we will explore the different aspects of new vehicle car loans, including benefits, general requirements, and what maybe involved in your application process.

Benefits of car loans for new vehicles

One of the biggest benefits of taking out a car loan for a new vehicle is the ability to spread the cost of the car over a a period which best suits your needs weather that be 3, 4 or 5 years. This can make buying a new car more affordable and attainable, as you don't have to pay the full purchase price upfront. Some customers will also choose to utilise a balloon option on their new car loan which represents a certain percentage of the vehicle value to be paid at the end of the loan term. For customers who like to change vehicles frequently, or are in a position where they currently don’t have funds for a larger repayment but will have the money for the lump sum payment in future this can be a great option. Along with the loan term and balloon option benefits, new vehicle car loans typically have lower interest rates than other loan products, such as personal loans or credit cards. Some lenders will sell a car loan as a personal loan, so its always worth checking that the loan you are getting is a secured loan against the vehicle which will likely result in a cheaper interest rate.

Requirements for new vehicle car loans in Australia

To apply for a car loan in Australia, you will typically need to meet certain requirements. These may include:

  • A good credit score: Lenders will typically look at your credit history to determine if you are a reliable borrower. A good credit score can increase your chances of being approved for a loan and can also lead to lower interest rates.
  • Proof of income: Lenders will want to ensure that you have the ability to repay the loan. You may need to provide recent pay slips or other proof of income.
  • Security: Depending if the loan is secured or unsecured a security for the loan maybe required. In the case of a secured car loan, this will be the vehicle the loan is taken out against.

Tips for getting the best new vehicle car loan

To get the best new vehicle car loan in Australia, consider the following tips:

Find the right vehicle for your needs. Different rates may apply for electric cars to traditional cars which can lead to further savings. It is best to check this is suitable for your needs though as electric cars may not suit your current situation.

Consider the total cost: Look beyond the monthly payment to consider the total cost of the loan, including interest and fees. With this in mind does a monthly payment suit or would a weekly or fortnightly payment fit in with your budget better?

If you are thinking of selling the car at the end of the loan term, finding a vehicle with a historically strong resale value can help get you in your next vehicle.

Be prepared, research and understand the best rate may not be the best deal. While this may seem confusing initially, its best understood through the example of securing your own finance with a lender such as, vs getting finance at a car dealership. Large car companies often have finance arms attached to them may have promotional offers with very low rates. What is less clear is there are often the catch of forgone discount opportunities on the new car or being locked into stringent terms and conditions of the use of the vehicle for example kilometers driven or where the vehicle is serviced.

Final Thoughts

New vehicle car loans can be a great option for those looking to purchase a new car in Australia. By understanding the benefits, requirements, and application process for these loans, you can make an informed decision and get the best loan for your needs. As always, it's important to do your research, shop around, and consider the total cost of the loan. If this isn't what you are looking for, consider a used vehicle or private sale vehicle loan.

Disclaimer **Rates as at 7 August 2023 for home owners. The interest rate is determined with reference to the age of the vehicle, eligibility criteria and the credit assessment, including home ownership. Interest rate loading may be applied. Vehicle age must be 12 years or less upon commencement of loan term. Balloon option available for fixed rate loan terms <5 years for vehicle age 4 years or less upon commencement of loan term. Target Market Determinations for this product available. *The comparison rate is based on a $30,000 loan over 5 years. 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. Lending criteria, fees and conditions apply. Rates, fees and conditions are indicative, available for new loans only and subject to change without notice. ^For purchase of New / Demo vehicles defined as up to 12 months old with under 5000kms. ~Subject to provision of all required information and supporting documents on application. +Loan terms over 5 years will incur 0.50% interest rate loading for fixed rate loan. #Based on the dollar value in the search field with P&I repayments over the selected term, not including monthly fee, with balloon payment if entered.

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